SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-11-3264-00
DATE: 20120314

IN THE MATTER OF Section 217 of the Insurance Act , R.S.O. 1990, c.I.8, as amended and the Statutory Accident Benefits Schedule – Accidents on or After November 1, 1996 , O.Reg. 403/96

AND IN THE MATTER OF a policy of insurance, number C108-702-60, between Ronald Payne and State Farm Mutual Automobile Insurance Company

RE: Sara Ahou by her Guardian of Property, Michael Ahou

v.

State Farm Mutual Automobile Insurance Company

BEFORE: MacKenzie J.

COUNSEL:
Ms. T. Romano, for the applicant

No one appearing for the respondent

HEARD: March 5, 2012

C O S T S E N D O R S E M E N T

[ 1 ] This is the costs disposition on a motion under Rule 7.08 for approval of a minor’s settlement arising out of a catastrophic injury suffered by the minor plaintiff in an automobile accident.

[ 2 ] The costs issues arise out of the settlement on behalf of a minor relating to an accident benefits claim. The focus of the concern is the amount of the fees and disbursements sought by counsel for the minor applicant and her guardian.

[ 3 ] Very briefly, Sara Ahou (born July 22, 1991) was a child of tender years, one month shy of her sixth birthday when on June 8, 1997 she suffered significant injuries while riding her bicycle. The child rode her bicycle on a driveway and onto the road and was struck by a large pick-up truck. She was knocked off her bicycle and hit her head on the pavement. She was not wearing a helmet. She suffered extensive injuries, both physical and mental, full particulars of which are set out in the materials and are not in issue here. Suffice to say, they were sufficiently serious to be fairly characterized as catastrophic.

[ 4 ] In March of 1998, her uncle and statutory guardian of property, the plaintiff Mr. Michael Ahou entered into a retainer agreement with the law firm of Gluckstein & Associates LLP (Counsel) to act on their behalf in relation to claims for damages arising from the accident and resulting injuries. One of the terms of this agreement was that the fees were to be “20% plus party to party costs, plus disbursements.” The 1997 retainer agreement predated the 2002 amendments to the Solicitor’s Act , R.S.O. 1990, c. S.15 , which permitted contingency fees in the type of litigation here.

[ 5 ] In 2011, the parties reached a settlement of all statutory accident benefits (SABs) claims. The salient details of the settlement are as follows:

(a) The total settlement amount is $1,275,000;

(b) A structured settlement annuity for $1,000,000 has been acquired. This annuity provides the minor plaintiff with a monthly income of $2,329.82, indexed at two percent per annum for her lifetime;

(c) Her uncle and guardian has used $250,000 of the settlement fund to purchase a home. (This amount when added to funds flowing to the minor plaintiff from the settlement of her tort claims enabled the purchase of the home in which the minor plaintiff, her parents and siblings reside. The family members supply the necessary attendant care for the minor plaintiff without charge. Although they reside in the home together, only the minor plaintiff is the beneficial owner of the house); and

(d) $25,000 has been contributed by the SABs insurer on account of the plaintiffs’ costs.

[ 6 ] In pursuance of the settlement, this motion was brought under Rule 7.08 for approval of the settlement and the fees of $218,500 and the disbursements of $36,500, all-inclusive, being sought by Counsel. The fees portion of the total costs of $255,000 is an amount representing 17.14 percent of the total settlement sum.

[ 7 ] The motion came before this court on or about September 15, 2011. Dawson J., of this court, referred the issue to the Office of the Public Guardian and Trustee for comment on the costs issued in the proposed settlement.

[ 8 ] On or about November 14, 2011 the Public Guardian and Trustee issued a report in letter form to the court. A copy of such report was forwarded to Counsel for appropriate action.

[ 9 ] In the November 14, 2011 report, the Public Guardian and Trustee’s office raised the following items:

(e) it wished to know the amount of remaining accident benefits (non-earner, medical/rehabilitation, and attendant care) available to the minor plaintiff;

(f) it wished to review a copy of the retainer agreement in effect relating to the claims; and

(g) it wished to review the time summaries (dockets) for work done and services provided relating to the SABs claims and the settlement.

[ 10 ] In addition, the Public Guardian and Trustee has recommended that Counsel reduce the fees portion of its costs from $160,000 to $115,000.

[ 11 ] In its report, the Public Guardian and Trustee has referred to current case law from this court in which the rule of thumb for fees for plaintiffs’ counsel in SABs claims is about 15 percent of the amount of the settlement amount for such claims: see Aywas v. Kirwan , [2010] O.J. No. 2713 (S.C.J.) .

[ 12 ] Mr. C. E. Gluckstein of Counsel has filed a supplementary affidavit, sworn January 31, 2012 addressing the above concerns and points made by the Public Guardian and Trustee. I am persuaded that the supplementary affidavits adequately and satisfactorily address the concerns raised in the November 14, 2011 report.

[ 13 ] It must be noted that each case has features unique to it despite the common thread and applicability of the governing principles. In my view, there should also be some consistency in the courts’ rulings in quantifying compensation to counsel for minor plaintiffs in these types of actions.

[ 14 ] In response to Aywas, supra, case, Mr. Gluckstein has cited two other cases dated from 2007 (i.e. three years before the Aywas case in 2010) wherein the legal fees in relation to the accident benefits claims were set at approximately 18 percent of the settlement of damages recovery in one case ( Rivera v. LeBlond , 2007 CarswellOnt 1482 ) and 16 percent in the other case ( Lau v. Bloomfield , [2007] O.J. No. 3200 (S.C.J.) ).

[ 15 ] I am persuaded that the fees portion fixed at 17.14 percent of the settlement sum is fair and just compensation for the work done and services rendered by Counsel for the minor plaintiff in this action. In so ruling, I take into account the factors under Rule 57.01(1) of the Rules of Civil Procedure . I also note that counsel did obtain, as part of the settlement, a contribution from the respondent’s SABs insurer of $25,000 on account of costs. In addition, the minor plaintiff’s guardian herein has no objection to the claim for fees and disbursements.

[ 16 ] These types of actions by their nature necessarily require counsel to take into account the difficulty of ascertaining ultimate disability and impact of injuries to children of tender years. Here counsel, who delivered services over an extended period of time, i.e. 13 years, should not have the value of their services discounted by further debits against the amount of fees that are in all other respects reasonable on their face and that take into account the Rule 57.01(1) factors as applied to the case. In this regard, the spread from the “usual” 15 percent to the present rate of 17 percent can hardly be described as unreasonable, let alone unconscionable, in terms of the results achieved and recovery made for the minor plaintiff.

[ 17 ] In the result, an order shall go approving the settlement and fixing the fees and disbursements in the amount claimed by counsel for the minor plaintiff and her guardian.

MacKenzie J.

DATE: March 14, 2012