COURT FILE NO. 06-CV-315750

DATE: 20120808

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN: Stephanie Marie Henricks-Hunter, by her litigation guardian, the Office of the Public Guardian and Trustee, Britney Starr Henricks, by her litigation guardian, Michael Alberts Henricks, Arianna Monique Hunter, a minor by her litigation guardian, Atley Hunter, Michael Albert Henricks, Cecilia Delprima Henricks and Michael Edward Henricks (Plaintiffs)

AND : 814888 Ontario Inc., carrying on business as Phoenix Concert Theatre and Sherbourne Community Clinic Inc. (Defendants)

BEFORE: J.C. WILKINS J.

COUNSEL: Ms. Laurie Redden for the Public Guardian & Trustee

Mr. J. Gardner Hodder for Howie Sacks & Henry

ENDORSEMENT

[ 1 ] Since the release of the original Endorsement, the receipt of the Endorsement in the Court of Appeal and the further two Endorsements released by me, I have received correspondence from the solicitor, J. Gardner Hodder, counsel for the law firm of Howie, Sacks & Henry, who have undertaken these proceedings in order to enforce their contingency fee agreement ("CFA") against the recovery obtained by way of settlement on behalf of the catastrophically injured Stephanie Marie Henricks-Hunter.

[ 2 ] This was a matter in which the material filed with the Court made it clear that an initial complexity with respect to liability issues was sorted out and that there was a relatively straight-forward route to liability against one of the Defendants, who was insured by a policy of insurance capped at $2 million.

[ 3 ] The second Defendant as landlord was regarded by counsel with carriage of the file as not having any liability, as they were no longer occupiers. The material did not clearly set this out, nor did it establish the terms of the lease or the relationship that would have prohibited an action by the tenant as against the landlord for the circumstances comparable to those that were occasioned surrounding Ms. Henricks-Hunter's injuries. Nonetheless, the overall circumstances warranted approval of the settlement in first instance in order that monies could be obtained and used for the benefit of Ms. Henricks-Hunter, who is currently lodged in a government-run institution in the State of Missouri, in which virtually anything that might give life some pleasure has to be provided for by herself out of her own funds, such funds being only those which she can recover in this litigation.

[ 4 ] For reasons set out in the endorsement of the Court of Appeal, the process by which a CFA can be enforced against the monetary recovery of the incapable plaintiff was set out.

[ 5 ] The endorsement in the Court of Appeal did not state that the CFA was binding upon the person under a disability, but rather established a court process in which the solicitor could enforce that agreement.

[ 6 ] It is unnecessary to go into the details of how that agreement became enforceable. The tests established in the Court of Appeal were twofold and the Court determined on the basis of the information in front of it that the first test, being that of fairness at the time of the making of the agreement, had been established.

[ 7 ] The issue of reasonableness as at the time of the settlement was sent back to the Motions Court to be determined in that forum.

[ 8 ] With the matter returned to me and on review, I determined it was necessary to issue certain instructions as to how the motion in respect of the issue of reasonableness should proceed.

[ 9 ] In those two endorsements, I noted that issues arose as to whether or not the Public Guardian & Trustee ("PG&T") was in a conflict by reason of having drafted the CFA and having supported the application of the solicitor for its enforcement, which involved the setting aside of the Order of this Court, which had been in favour of Stephanie Henricks-Hunter and awarded her an increase in her financial share of the monies available over and above that proposed by the solicitor.

[ 10 ] Notwithstanding that Ms. Henricks-Hunter had a financial interest in the result, she was a Respondent in the Court of Appeal, unrepresented and without a litigation guardian appointed by the Court as required by Rule 7.03. The question that I requested be argued on the return of the motion on reasonableness was as to whether or not the PG&T was in fact the litigation guardian for Stephanie Henricks-Hunter in her role as a Respondent on the appeal or whether the failure to have an appointment and also the conflict that I perceived to exist between the positions taken by the PG&T and Rule 7.05(2). A significant difference existed between the financial security of Ms. Henricks-Hunter occasioned by the determination as to the amount of the fees the solicitor recovered: 100% of his contingency fee being $516,000, his docketed time being $233,676.80, or such other fee as might be appropriate.

[ 11 ] Under the circumstances, I directed that the PG&T retain independent counsel to represent Ms. Henricks-Hunter on the return of the motion and that all of the issues arising from those difficulties should be argued at that time.

[ 12 ] Solicitor J. Gardner Hodder raises a further foundation on which I ought to recuse myself by reason of the invocation of the Court's parens patriae jurisdiction "without stating the need for evidence to show the necessity to invoke such jurisdiction, contrary to the established caselaw…" I do not intend to embark upon a review of the law or the determination of that issue. Just what counsel meant by "invocation" is not clear. As I understood the directions being given, it was an issue that should have been argued on the return of the motion which, of necessity, would involve independent counsel to properly raise and present those submissions.

[ 13 ] Rule 7 is of itself a codification of the concept of royal parens patriae delegated to the Court to approve disability settlements and protect the best interests of the person under a disability, the best evidence of which is the motion itself.

[ 14 ] Solicitor J. Gardner Hodder further complains that the CFA was established by me as not to be binding on the plaintiff, when in his view the Court of Appeal had ruled that the CFA in the case at bar met the fairness test. If meeting the fairness test, if it is to be submitted, is sufficient to constitute a binding agreement, then that is something that J. Gardner Hodder will have to raise on the motion. The Court of Appeal established two tests. Both tests have to be complied with in order for the CFA to be enforced against the monies available. From my reading of the Court of Appeal's endorsement, at no time do they state that the CFA is binding, but rather only deal with it as enforceable by the Court.

[ 15 ] Solicitor J. Gardner Hodder further raises the issue that the PG&T was the litigation guardian at the time of the appeal. No appointment order was made and so this is an issue which, in my view, warranted submissions to be made on the return of the motion. Solicitor J. Gardner Hodder treats the matter in his letter to me of August 3 as if it had been decided in the Court of Appeal which, in my view, is a submission he may make on the return of the motion, and, if independent counsel represents Ms. Henricks-Hunter then, presumably, submissions will be made on all sides.

[ 16 ] Solicitor J. Gardner Hodder further raises a repetition of the complaint about the lack of an appointment of a litigation guardian and the fact that the jurisdiction of the Court of Appeal could be called into question, and submits that the issue is binding upon me. The endorsement issued by me was a direction that those issued be canvassed without any statement on my part as to the law or acceptance or fact, but rather the direction that the issue be reviewed and properly canvassed on the return of the motion which, with counsel on both sides, would allow a proper airing of the question.

[ 17 ] Solicitor J. Gardner Hodder complains about a previous adverse ruling on fairness and reasonableness by me. How he comes to this conclusion is difficult to understand, since the Court of Appeal sent the matter back because I did not make rulings on the issues of fairness and reasonableness, but rather left the matter with the statement that it was "not binding" on Ms. Henricks-Hunter. The core rationale for returning the matter for a further hearing was that the issue of reasonableness had not been decided and that counsel had not been given an opportunity to make submissions, the Court of Appeal having decided fairness.

[ 18 ] Solicitor J. Gardner Hodder proceeds to further advise the Court as to the test on a motion for recusal, which he argues is

…on the basis of bias is whether an informed, reasonable and right-minded person, viewing the material realistically and practically, and having thought the matter through, would concluded that the judge, whether consciously or unconsciously, would not decide the matter fairly.

In our view, there is an appearance of bias sufficient to overcome the presumption of judicial impartiality established by the caselaw.

Further, Your Honour's two recent endorsements were made without notice to the parties affected by it, which constitutes grounds for setting them aside under Rule 37.14(4).

Should Your Honour fail to recuse yourself and vacate your two endorsements made ex proprio motu , a motion before Your Honour shall be arranged. The PG&T advises it will support the motion.

[ 19 ] The submission made by J. Gardner Hodder in his correspondence is, of course, made from one side of the coin. Ms. Henricks-Hunter, not having been represented at any time during this appeal and not having a litigation guardian whose interests are not averse to hers, but rather a litigation guardian who stepped aside and allowed her interests to be dealt with as a person under a disability incapable of managing her own affairs without counsel and without a litigation guardian acting pursuant to Rule 7.05(2), I have a great deal of difficulty in understanding just exactly how Solicitor J. Gardner Hodder can conclude bias on the part of the Court.

[ 20 ] One of the Court's responsibilities is to see to it that matters that come forward on behalf of unrepresented people get a proper and fair hearing. This involves the Judges involving themselves more in the detail of the matter than they might otherwise choose and, to some, it may appear as if they have done things or said things that might be capable of being construed as favoring one side or another. However, these are the very difficulties that the Court is confronted with, with a pro se litigant, unrepresented and in particular one who does not have the mental capacity to manage her affairs in sufficient extremis that she is kept in an institution in a foreign jurisdiction and cannot even attend the court.

[ 21 ] The endorsements released were by way of directions to assist in the conduct of the return of the motion to deal with the issue of reasonableness of the CFA. The process, management, orders and directions of the Court with respect to how the Court wants issues to be argued or which issues should be added to the list of those to be argued do not, in my view, constitute the kind of order contemplated by Rule 37.14(4), but rather a form of case management direction in order that all the issues that the Court wants to hear can be canvassed rather than requiring counsel to retire and make submissions in writing at a later date on issues they fail to canvass.

[ 22 ] The entire flavor of the correspondence issued by J. Gardner Hodder is to the effect that I am demonstrating a bias against the solicitor under circumstances in which no submission is made on behalf of the client and no representation was made available to the Plaintiff under a disability whose money will be required to pay the solicitor their contingency fee should they succeed in getting an Enforcement Order.

[ 23 ] The material before me made it clear that liability of one of the Defendants with an insurance policy of the value of $2 million was straightforward. That Defendant settled on the basis of the payment of $2,050,000. The solicitor's affidavit made it quite clear that that payment represented approximately 15% of the value of the Plaintiff's case. The submissions in the Court of Appeal and before me made it clear that that recovery was straightforward and available.

[ 24 ] The solicitor's contingency fee agreement seeks a recovery of $516,000, or 100% of his contingency fee, in a circumstance in which the Plaintiff is recovering approximately 15% of the value of her case and of the settlement funds, $50,000 is not properly identified as to whether it is costs or interest or gratuitous payment, and the co-Defendant landlord is requested to be let out of the action on a without costs basis.

[ 25 ] In the absence of representation and given the obvious conflict of interest that the PG&T has, having drafted the CFA and having supported it against Ms. Henricks-Hunter, all sorts of other issues are clearly put into play, and those issues should properly be canvassed before the Motions Judge determining the question of reasonableness.

[ 26 ] In the ordinary circumstance, reasonableness has a certain series of steps to be reviewed as established by the Court of Appeal. In the case at bar, there are so many other factors in play that involve a great deal broader interpretation and a much wider view on the part of the Court in order to ensure that in the overall picture, there is justice not just for the solicitor who wants to recover 100% of his fees under circumstances where the client recovers 15% of the value of her injury, but for the client as well. It is not just a question as to whether or not, in the cold legal analysis of a relationship between the solicitor and the disabled client, somehow one can pick out reasonableness. In the big picture, and having regard to the lack of representation and in particular the failure of the PG&T to arrange for submissions to be made in respect of the interests of Ms. Henricks-Hunter, the fact that the solicitor would take a payment in total of $516,000 and the disabled person have a lifetime available fund of $1,529,020.80 in satisfaction of all claims is the sort of juxtaposition that ought to be looked at by solicitor J. Gardner Hodder's "reasonable and right-minded person viewing the material realistically and practically and having thought the matter through."

[ 27 ] The two endorsements released "without notice" were directions to ensure that these forms of argument and submission were made properly and that there should be proper and appropriate representation of the financial interests of Stephanie Henricks-Hunter, and not just one-sided argument supporting a position that a solicitor should be entitled to recover the funds the solicitor was seeking to have enforced in the original motion.

[ 28 ] Under ordinary circumstances, I would require solicitor J. Gardner Hodder to attend and argue the motion to recuse. The foundation of his complaints and the correspondence sent to me are all founded on the assumption that this matter relates only to the solicitor's issues and that the issues touching on the rights and entitlements of the disabled plaintiff need not be considered and that the Court should disregard a parens patriae jurisdiction through the absence of evidence.

[ 29 ] The CFA sought to be enforced against the lady under a disability was presented in the Court of Appeal as being important to the justice system and access to justice. Needless to say, no evidence was ever presented in this matter to show that the contingency fee in issue in any way, shape or form contributed to Ms. Henricks-Hunter's access to justice or how the justice system was benefited by the solicitor's recovery of a contingency fee, or how Ms. Henricks-Hunter was in any way, shape or form advanced in her claims by reason of that agreement.

[ 30 ] In the endorsement set aside by the Court of Appeal, a fund of $325,000 including taxes was made available to pay the solicitor's fees, plus the disbursements incurred, which disbursements, on a closer view, disclosed a significant number of office expenses and items such as "drinks" and "finding a Tim Hortons restaurant." Nonetheless, these disbursements were allowed. The fee rate at which the solicitor docketed time had no relationship to the contingency fee agreement, which established hourly rates in the event of termination of $375 for lawyers of 10 years or more, $250 for lawyers of 6-10 years, $200 for lawyers of 3-6 years, $150 for lawyers up to 3 years in practice, $100 for law students and $80 for clerks. Fees allowed on the dockets provided which reflected during the litigation Mr. Howie charging at the hourly rate of $855, rising to $975; Mr. Sacks charging $630, rising to $720; Ms Temple, a clerk, docketed time at $135 rising to $220 through the litigation. Megan Hull docketed at an hourly rate of $250 rising to $300, Michael Hawryluk docketed at $110 and Cory Sacks docketed at $200 rising to $275.

[ 31 ] Similarly, the allowing of fees approximately $90,000 greater than the docketed time at the highest rates seems also to be interpreted as bias.

[ 32 ] The variation between the CFA's established fees and the fees being sought on the motion before me in the hourly dockets were never explained and these are items which in my view should come before the Court on the return of the motion to argue the issue of reasonableness.

[ 33 ] In his correspondence, the solicitor considers it biased that this Court was concerned that the disabled Plaintiff had no one argue on her behalf because the person who had sworn to uphold her interests chose to support the contract she had drafted without arranging for a substitute guardian ad litum. The solicitor considers it biased that the Court was acting as it must for a self-represented litigant.

[ 34 ] All of these sorts of things are things that require counsel to be present to argue and make submissions on behalf of Ms. Henricks-Hunter. For some reason, the solicitor and J. Gardner Hodder seem to be of the view that Ms. Henricks-Hunter does not require independent and separate representation and that the fact that I perceive there to be a conflict and that her interests are being seriously impaired in the absence of her ability to look after herself, constitutes bias.

[ 35 ] After much thought and consideration of this matter, I have concluded that although I very strongly am of the view that I am not and have not exuded any sense of bias or unfairness but rather have attempted to go down the middle between the conflicting rights and the absence of concern for the disabled Plaintiff and her rights, which is the very role that an impartial judge ought to play when confronted with problems such as this. Notwithstanding the above, however, and having regard to the fact that these are matters of great concern and that it is a matter of very grave concern to Ms. Henricks-Hunter and because I would perceive that should I retain the motion in this matter, it would not matter what ruling I delivered, the litigation would be unending.

[ 36 ] To bring all of these arguments to a close and to require that all of these matters be properly argued before a different judge, seems to me to be the best solution for Ms. Henricks-Hunter. The solicitors can look after themselves. Ms. Henricks-Hunter cannot. Time is not necessarily important to the solicitor. Time is important to Ms. Henricks-Hunter.

[ 37 ] Given all the circumstances I will recuse myself from hearing the motion; however, I decline to withdraw my directions as to the information and arguments that ought properly to be placed before the Motions Judge.

[ 38 ] All of the endorsements issued by me, including this one, shall be placed before the Motions Judge and counsel may make submissions to that Judge on any and all of the items which they feel are inappropriate. This would include my direction that independent counsel should be present. The Motions Judge shall have a totally free hand to disregard any endorsements as he or she may choose. However, the option to have all sides available to be argued if so desired should be extant.

[ 39 ] Under all the circumstances I will withdraw from this motion, and it will be returned to be heard by another judge on the understanding that my directions will be enforced and that proper counsel will be present before that Judge, representing the interests of Ms. Henricks-Hunter and that a proper litigation guardian independent of the PG&T will represent as the Respondent on that motion, following which that Judge may act as he or she sees fit. A Motions Judge with experience with Rule 7 motions should hear this matter.

J.C. WILKINS J.

Released: