Court File and Parties

COURT FILE NO.: CV-18-76627 DATE: 2023/06/29

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

BRAYDEN GABLE and GAVIN GABLE by their litigation guardian STEVEN GABLE and STEVEN GABLE, Plaintiffs

– and –

SHARON GABLE, Defendant

COUNSEL: Brent Meadows, for the Plaintiffs Michael Van Dusen and Jennifer Guth, for the Defendant

HEARD: In Writing

INTERIM RULING (No. 2)

(Motion under rr. 7.08 and 7.09)

CORTHORN J.

Introduction

[1] The plaintiffs’ motion is for the approval of (a) a settlement of the minor plaintiffs’ claims, (b) the proposed management of the net settlement funds payable to the minor plaintiffs, (c) a contingency fee retainer agreement, (d) the proposed solicitor-client account, and (e) the proposed contributions from the minor plaintiffs respectively towards payment of the solicitor-client account. The motion is made pursuant to rr. 7.08 and 7.09 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[2] At mediation conducted in February 2021, a settlement of the plaintiffs’ claims was reached. The settlement is for the all-inclusive sum of $280,000. That amount is broken down in the chart which follows on the next page:

Brayden Gable	$ 215,255
Gavin Gable	$ 26,910
Steven Gable	$ 8,965
Sub-total	$ 251,130
Costs [1]
Fees	$ 27,120
Disbursements	$ 1,549
Total	$ 279,799
Rounded to	$ 280,000

[3] In the late summer of 2021, plaintiffs’ counsel began to address the court approval process. The original motion record, filed in 2021, did not comply with the requirements, at that time, for electronic filing of documents. In 2022, the motion record was successfully filed electronically.

[4] In May 2022, the court issued an interim ruling: Gable v. Gable, 2022 ONSC 3175 (“the 2022 Ruling”). In summary, the outcome of the motion, on an interim basis, was as follows:

• The settlement of the claims advanced on behalf of Brayden Gable, born in April 2010, was approved;
• The settlement of the claims advanced on behalf of Gavin Gable, born in November 2007, was approved;
• The request for approval of the contingency fee retainer agreement executed by Steven Gable and plaintiffs’ counsel was dismissed; and
• The balance of the motion was adjourned to permit the plaintiffs to file additional supporting evidence.

[5] The issues which remain to be determined include requests for procedural relief and several of the substantive issues. Regarding the former, the plaintiffs request an order dispensing with the requirement to serve the defendant with the motion records filed to date. The latter form of relief includes approval of (a) the proposed management of the net settlement funds payable to each minor plaintiff, and (b) the solicitor-client account on a quantum meruit basis. The court is also asked to approve the respective contributions of the minor plaintiffs towards payment of the account.

[6] I will deal first with the procedural, and then with the substantive, relief.

Procedural Relief

[7] Service of documents on the defendant was addressed in the 2022 Ruling. It was unclear from the materials then before the court whether the plaintiffs were seeking an order dispensing with the requirement to serve the defendant with the motion record. At para. 79, item 9 of the 2022 Ruling, the court ordered, “If the plaintiffs seek an order dispensing with the requirement for service on the defendant of both the motion record and the supplementary motion record, then the plaintiffs shall, in their supplementary motion record, include evidence in support of that relief.”

[8] Item (f) of the relief requested in the notice of motion dated April 13, 2023 is an order “dispensing with the requirement for service of the motion record on the defendant”. The court assumes that the request is for an order dispensing with the requirement to serve both the 2022 and 2023 motion records on the defendant.

[9] The only grounds in support of the procedural relief are items (c) and (f) of the April 2023 notice of motion. At item (c), the plaintiffs refer to the defendant’s consent to the relief requested, including an order dispensing with the requirement to serve the motion record and the supplementary motion record on the defendant. The court assumes that the supplementary motion record is the April 2023 record titled “Motion Record”. At item (f), the plaintiffs cite “Rule 16.04(1) of the Rules of Civil Procedure: Dispensing with Service”.

[10] The April 2023 notice of motion is completely lacking in any narrative explanation of the grounds in support of the procedural relief requested.

[11] Returning to the citation of r. 16.04(1), it is insufficient, when setting out grounds in support of a motion or an application, to merely cite a rule, regulation, or statute. It is incumbent on the moving party to provide a brief summary of the relevant rule, regulation, or statute. In their notice of motion, the plaintiffs do nothing more than identify the existence of a rule which is relevant to a request for an order dispensing with service of a document.

[12] Rule 16.04(1) sets out the criteria to be met for the court to exercise its discretion and make an order for either substituted service of a document or dispensing with the requirement to serve a document:

Where it appears to the court that it is impractical for any reason to effect prompt service of an originating process or any other document required to be served personally or by an alternative to personal service under these rules, the court may make an order for substituted service or, where necessary in the interest of justice, may dispense with service.

[13] The plaintiffs do not rely on any evidence which would support a finding that “it is impractical for any reason to effect prompt service” of the motion record on the defendant. The first criterion is not met.

[14] In any event, I consider the second criterion: Is there any evidence that it is in “the interest of justice” to dispense with service of the motion record on the defendant? The plaintiffs do not address that criterion at all. The plaintiffs rely on the following statement made by counsel at para. 4 of his 2023 affidavit: “it is in the Plaintiffs’ best interest” that the requirement to serve the motion record on the defendant be dispensed with. Counsel does not frame that statement as his belief; the statement is conclusory.

[15] At para. 5 of his 2023 affidavit, counsel says, “The affidavits contain private and privileged information outlining strategy and steps taken throughout the litigation.” Counsel does not,

• identify which of the paragraphs in the several affidavits from him and/or from the litigation guardian include such information; or
• provide a list of either the “private information” or the “privileged information” (i.e., distinguishing between the two types of information).

[16] No factum was filed in support of the distinction between “private” and “privileged” information or in support, generally, of the procedural relief requested.

[17] At para. 6 of his affidavit, counsel says, “Should the settlement for whatever reason be nullified, however remote that may be, the children might be prejudiced regarding the assessment and discussion of damages and threshold.” As already noted, the settlement of the minor plaintiffs’ respective claims was approved in the 2022 Ruling. What remains to be determined is the minor plaintiffs’ respective pro-rata shares of the solicitor-client account and whether Brayden is granted relief pursuant to r. 7.09 (i.e., payment of a portion of the settlement funds other than to the Accountant for the Superior Court of Justice).

[18] Those issues are addressed in this ruling. Subject to additional evidence regarding the proposed structure and a further draft order being filed, the matter is resolved. There would be no prejudice to the plaintiffs of the kind described in para. 6 of counsel’s 2023 affidavit, if the motion records were served on the defendant.

[19] The plaintiffs do not rely on any rule, other than r. 16.04(1) in support of their request for an order dispensing with the requirement for service of the two motion records on the defendant. For example, the plaintiffs do not rely on r. 1.04(1) which requires that the Rules “shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.” Nor do the plaintiffs rely on r. 1.04(2) which addresses proportionality as follows: “In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.”

[20] Regarding rr. 1.04(1) and (2), I note the following:

• There is no evidence to support a finding that requiring the plaintiffs to serve the motion records on the defendant will delay the determination of the matter or result in an increase in expense to the plaintiffs. The motion records can be served on the defendant by sending a copies of them by email to counsel for the defendant (i.e., at no cost to the plaintiffs other than the time required for an administrative staff member to send an email with the motion records attached and, thereafter, prepare and file an affidavit of service);
• There is no evidence to support a finding that a just outcome will not be possible if the motion records are served on the defendant – specifically because the quantum of the settlement of the minors’ respective claims has already been approved; and
• As to the importance and complexity of the issues, as discussed below, the court is not satisfied that either party has fully addressed the contents of (a) the order to be issued and entered, and (b) the release to be signed on behalf of the minor plaintiffs – both as a result of a portion of Brayden’s net settlement funds being placed in a structure.

[21] The plaintiffs rely on the defendant’s consent to an order dispensing with the requirement for service. The defendant’s consent is to an order that is not being granted – because the evidence does not support granting all of the relief requested. It would be unjust for the court to dispense with the requirement for service of the motion records when the defendant has not yet had an opportunity to consider the terms of the order required, including because of the proposed structure.

[22] In all of the circumstances, the defendant’s consent is not sufficient to support making an order, pursuant to one or more of rr. 16.04(1) or 1.04(1) and (2), dispensing with service of the motion records on the defendant.

[23] As discussed below, additional evidence is required regarding the request to approve the placement of a portion of the settlement funds payable to Brayden in a structure. For that reason, the order made at para. 79, items 9 and 10 of the 2022 Ruling, regarding the procedural relief related to service of documents on the defendant, is repeated in the order made at the end of this ruling.

The Substantive Issues

[24] The following substantive issues remain to be determined:

1. Is the proposed solicitor-client account, in the amount of $42,039.81 for fees, disbursements, and applicable HST approved?
2. Are the amounts which it is proposed each of the minor plaintiffs contribute to payment of the solicitor-client account approved?
3. Is the proposed management of the net settlement funds payable to Brayden approved?
4. Is the proposed management of the net settlement funds payable to Gavin approved?

Issue No. 1 - The Solicitor-Client Account

[25] When the motion was before the court in 2022, the solicitor-client account proposed was in the total amount of $45,000. The account could not be approved at that time because of a discrepancy between the amount of the disbursements, including HST, identified in counsel’s 2022 affidavit and in the list of disbursements attached as exhibit “X” to that affidavit: see the 2022 Ruling, at paras. 58-60. In addition, there was a lack of evidence as to the work done in support of the $38,326 proposed at that time for fees (excluding HST).

[26] The amount of the proposed solicitor-client account is now something other than the all-inclusive amount for which approval was sought in 2022. The solicitor-client account proposed at this time is in the total amount of $42,039.81. That amount is broken down as follows:

Fees	$ 35,553.75
HST on fees	$ 4,621.99
Disbursements (incl. HST)	$ 1,864.64
Sub-total	$ 42,039.81

[27] Based on the combination of (a) counsel’s evidence as to the work done to and including negotiating the settlement, and (b) the computer-generated printout of docketed time, I am satisfied that the fees proposed are reasonable. I am also satisfied that the disbursements proposed are reasonable. The solicitor-client account in the amount of $42,039.81 is approved.

Summary – Issue No. 1

[28] The proposed solicitor-client account in the amount of $42,039.81 for fees, disbursements, and HST is approved. That approval does not end consideration of the proposed solicitor-client account. The court must also approve the contributions made by each of the minor plaintiffs towards payment of the solicitor-client account.

Issue No. 2 - Brayden and Gavin’s Respective Contributions to Pay the Account

[29] At para. 26 of his 2023 affidavit, counsel (a) sets out the total amount of the account, and (b) says the “fees are billed pro-rata in relation to the breakdown of the settlement.” Counsel does not explain how disbursements are apportioned, if at all. The court understands, for example, that the majority of the disbursements relate to the advancement of Brayden’s claim. Counsel also does not explain how HST on fees is apportioned (although one might assume that the HST on fees is apportioned in the same manner as are the fees).

[30] It is incumbent on the plaintiffs to provide the court with the specific calculation of each of their respective contributions to payment of the solicitor-client account. It is not the court’s role to guess at, attempt to reverse-engineer, or otherwise determine the arithmetic calculation used for that purpose.

Summary – Issue No. 2

[31] The portion of the motion related to approval of the contributions of the minor plaintiffs, respectively, to the solicitor-client account is adjourned to permit the plaintiffs to file additional evidence.

Issue No. 3 - The Proposed Management of the Net Settlement Funds Payable to Brayden

a) Introduction

[32] When this matter was before the court in 2022, the proposal was for all of the settlement funds payable to Brayden – estimated at that time to be $201,428 – to be placed with Sun Life Financial and managed by Waterhouse & Associates Inc. At paras. 65-70 of the 2022 Ruling, the court explained why the evidence in support of the relief requested was insufficient.

[33] In addition, the court questioned whether consideration had been given to place at least a portion of the funds in a structure – specifically to avoid having Brayden, at age 18, have access to an estimated $283,000 (assuming the growth projections panned out). For that and several other reasons, the proposal made in 2022 for the management of the net settlement funds payable to Brayden was not approved.

[34] At paras. 71-73 of the 2022 Ruling, the court addressed the requirement for a guardian of property to be appointed if the funds were placed with Sun Life Financial and managed by Waterhouse & Associates Inc. The court ordered that the relevant materials be served on the Office of the Children’s Lawyer (“OCL”).

[35] In his 2023 affidavit, counsel says that the net settlement funds payable to Brayden will be $203,965.29. That amount is net of Brayden’s contribution to payment of the solicitor-client account. As that substantive issue remains to be determined, the precise amount of the net settlement funds payable to Brayden cannot be determined at this time.

[36] The present proposal for the management of the net settlement funds payable to Brayden is for $53,965.29 to be paid to the Accountant for the Superior Court of Justice and a $150,000 structure to be purchased. The plaintiffs do not require leave to pay the $53,965.29 to the Accountant; they require leave, pursuant to r. 7.09, to purchase a $150,000 structure Brayden.

[37] Despite the uncertainty as to the precise amount of the net settlement funds payable to Brayden, the court is in a position to consider, generally, the revised proposal for management of those funds. The court does so on the assumption that the principal amount available to fund the structure will remain $150,000 regardless of any changes to the portion of the net settlement funds to be paid to the Accountant for the Superior Court of Justice.

b) The OCL’s Report

[38] The OCL’s Report, dated June 19, 2023 was received by the court on that date. The author of the OCL’s report is Diane Carter. The OCL approves the proposed management of the net settlement funds payable to Brayden, including the proposed structure. That approval is based on the amounts set out in counsel’s 2023 affidavit.

[39] Ms. Carter reviewed the affidavit of Jessica Vickerman, sworn on September 1, 2022 (“the Vickerman affidavit”). A copy of that affidavit is included in the April 2023 motion record. Ms. Vickerman is a Partner and Structured Settlement Consultant with Henderson Structured Settlement (“Henderson’s”).

[40] The Vickerman affidavit is five paragraphs, including an introductory paragraph. In the four substantive paragraphs, Ms. Vickerman,

a) lists the three life insurance companies with whom Henderson’s is licensed for the purpose of structured settlements; b) states that she was consulted by plaintiffs’ counsel regarding settlement funds payable to Brayden; c) states that she was asked to “prepare a report” to be provided to the court regarding a $150,000 structure with level annual payments made to Brayden commencing on his 18th birthday and ending on his 25th birthday; and d) refers to exhibit “A” and identifies it as “a copy of the proposed payment schedule”.

[41] The payment schedule attached as exhibit “A” set outs a capital cost for the structure of $150,000. The schedule provides for level annual payments of $26,118.84 commencing in April 2028 and ending April 2035, for a total payout of $208,950.72. All payments are described in the payment schedule as fully guaranteed to a “secondary payee (beneficiary)”. There is no evidence as to who the secondary payee is.

[42] Ms. Vickerman does not say whether the structure was placed pending court approval or the payment schedule is a sample, based on the market as of July 2022 (i.e., the date which appears on the payment schedule). At p. 5 of the OCL’s Report, Ms. Carter discusses correspondence between her office and Ms. Vickerman. In an email sent to the OCL in May 2023, Ms. Vickerman advises that “due to an anomaly in the market at the time this structure was placed, the fully guaranteed plan, attached, produced higher monthly payments that the same plan without a guarantee. Accordingly, there was no ‘cost’ to the guarantee and the best return for the client was to proceed with the fully guaranteed plan.”

[43] The OCL’s Report is very helpful in this process. The references therein to communication between the OCL and Ms. Vickerman and the inclusion of a copy of the above-noted email from Ms. Vickerman to the OCL do not make the information in the email evidence on the motion.

[44] The court requires additional evidence regarding the proposed structure to address the following matters:

• Is the payment schedule attached as exhibit “A” to the Vickerman affidavit a copy of the payment schedule of a structure that has been placed pending court approval?
• If not, what will the payment schedule be if a $150,000 structure is approved?
• Is there any cost to Brayden for the payments to be fully guaranteed?
• If there is a cost to Brayden for the payments to be fully guaranteed, (a) what is the cost, and (b) what would the payment schedule be if the payments are not guaranteed?
• Who will the secondary payee (beneficiary) be?

[45] In principle, the OCL approves a $150,000 structure for Brayden, including based on the payment schedule which is exhibit ‘A’ to the Vickerman affidavit.

c) The Draft Order and Release

[46] As noted by Ms. Carter at p. 6 of the OCL Report, the draft order filed as part of the April 2023 record is not appropriate for a structured settlement. Specific wording is required for the structure payments to maintain their tax-free status. In the OCL Report, Ms. Carter refers to CRA Taxation Interpretation Bulletin IT-365R2 as relevant to structured settlements.

[47] The court understands that the wording of the release is also important to maintaining the tax-free nature of structure payments. All counsel will want to consider the wording of the release to ensure that the tax-free status of the structure payments is maintained.

[48] The court requires evidence from either the plaintiffs’ counsel or a representative of the structure company confirming that a Structured Settlement Consultant has reviewed and approves the wording of (a) the draft order, and (b) the release to be signed in relation to the structure. It appears that counsel did not ask Ms. Vickerman to carry out that type of review.

[49] It is not clear whether a copy of the OCL’s Report was provided to counsel for the defendant; a copy of the report shall be provided to counsel for the defendant. All counsel will then be in a position to ensure that the next draft order presented to the court for approval satisfies the CRA requirements relating to the tax-free status of structure payments.

[50] It is incumbent on counsel for the plaintiffs and counsel for the defendant to exercise diligence when submitting an order for signature based on the consent of the parties. The failure of all counsel to consider the terms of the draft order and the release to be signed regarding the structure is another reason why the court again adjourns the portion of the motion regarding service of the motion records on the defendant.

[51] The OCL approves of the payment to the Accountant of the Superior Court of Justice of the balance of the net settlement funds payable to Brayden. At pp. 6 and 7 of the OCL Report, Ms. Carter highlights that Brayden’s parents will, if necessary, be in a position to apply for lump sum funds to be paid out to assist in meeting Brayden’s needs. Ms. Carter therein discusses the “OCL’s Minors’ Funds Program”, including how a request for a lump sum payment may be made.

Summary – Issue No. 3

[52] The portion of the motion related to approval of the proposed management of the net settlement funds payable to Brayden is adjourned. The plaintiffs shall file additional evidence and a further draft order.

[53] Counsel may wish to review the recent decision of Firestone J. in Spicer v. Wawanesa, 2023 ONSC 3221. In that decision, Firestone J. reviews the court approval process – including the evidence required – regarding structured settlements.

[54] In the 2022 Ruling, counsel were referred to “Guide to Court Approval of Settlements, Personal Injury Litigation and Accident Benefits Claims”, available on the County of Carleton Law Association website. That document also addresses the evidence required when the proposed management of settlement funds payable to a person under disability includes a structure.

Issue No. 4 - The Proposed Management of the Net Settlement Funds Payable to Gavin

[55] When this matter was before the court in 2022, the proposal was for all of the net settlement funds payable to Gavin – estimated at that time to be $25,179 – to be placed with Sun Life Financial and managed by Waterhouse & Associates Inc. At para. 77 of the 2022 Ruling, the court explained why the evidence in support of the relief requested was insufficient. At para. 78, the court required the OCL to review the proposed management of the net settlement funds payable to Gavin.

[56] In his 2023 affidavit, counsel says that the settlement funds payable to Gavin will be $25,496.17. That amount is net of Gavin’s contribution to payment of the solicitor-client account. The proposal now made is for that amount to be paid to the Accountant of the Superior Court of Justice.

[57] The OCL also approves of the payment to the Accountant of the Superior Court of Justice of the entirety of the net settlement funds payable to Gavin: see p. 7 of the OCL Report.

Summary – Issue No. 4

[58] The proposed management of the net settlement funds payable to Gavin is approved in principle. Issue No. 4 remains unresolved, pending further evidence as to the calculation of Gavin’s contribution to payment of the solicitor-client account and the net settlement amount payable to Gavin.

Summary

[59] For the reasons set out above, I make the following order:

1. The solicitor-client account in the total amount of $42,039.81 for fees, disbursements, and applicable HST is approved.
2. The balance of the motion is adjourned to permit the plaintiffs to file additional evidence, a further draft order and, if obtained, the consent of the defendants to the balance of the relief sought.
3. The plaintiffs shall serve a copy of Interim Ruling No. 2 on the defendant.
4. If the plaintiffs continue to seek an order dispensing with the requirement for service on the defendant of both the 2022 motion record, the April 2023 motion record, and the further record to be filed (collectively, “the records”), then the plaintiffs shall, in their further motion record, include evidence in support of that relief.
5. If the plaintiffs do not seek an order dispensing with the requirement for service on the defendant of the records, then the plaintiffs shall serve the defendant with the records and file the related affidavit of service.
6. The plaintiffs shall serve on the Office of the Children’s Lawyer (“OCL”) a copy of Interim Ruling No. 2 and a copy of any further motion record filed with the court.
7. The court directs that, once the OCL has been served with a copy of Interim Ruling No. 2 and a copy of any further motion record upon which the plaintiffs rely, the OCL shall make a written report stating any objections her or has to the proposed settlement and make recommendations, with reasons, in connection with the proposed settlement.

[60] The April 2023 record includes a notice of motion which differs from the notice of motion included in the 2022 motion record. A further notice of motion is not required. The further record (“Motion Record No. 3”) need only include the additional affidavit evidence required and, assuming the defendant consents to the additional relief sought, the defendant’s consent to the draft order.

[61] I thank the Office of the Children’s Lawyer for their assistance in the matter to date and for their continued assistance in bringing this matter to its ultimate resolution. I specifically thank Ms. Carter for her diligence in the review of the relevant materials and the preparation of the OCL Report.

[62] I remain seized of the matter; Motion Record No. 3 and the OCL’s further report shall be filed to my attention.

Madam Justice Sylvia Corthorn Date: June 29, 2023

Footnote:

[1] The amounts listed for fees and disbursements are both inclusive of HST.