SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-09-387174
DATE: 20121023

RE: KASSANDRA WILSON, a minor under the age of eighteen years by her Litigation Guardian, Karen Wilson, et al., Plaintiffs

AND:

MARY THERESA LYNCH, Litigation Administrator of the Estate of Rosemary Davies, et al., Defendants

BEFORE: JUSTICE SPIES

COUNSEL:
Michael J. Henry , for the Plaintiffs

Kerri Kamra , for the Defendant, Estate of Rosemary Davies

HEARD: In Writing

ENDORSEMENT

[ 1 ] The plaintiffs have brought a motion, with the consent of the defendants, seeking court approval of an infant settlement pursuant to Rule 7.08 of the Rules of Civil Procedure . A motion record was filed in support of the motion. In addition, as the supporting materials were inadequate with respect to the claim for fees, requests were made of counsel for the plaintiffs for more information.

[ 2 ] The settlement of the claim of the minor plaintiff is in respect of loss of care, companionship and guidance as a result of the death of her father in a motor vehicle accident. The minor plaintiff was born in November 1998 and was nine years old at the time of the accident. Her parents were separated and her father had custody of her. She was spending two nights per week and every other weekend with her mother. As a result of the accident, she is now living with her mother full-time.

[ 3 ] The statement of claim was issued in September 2009 and amended in October 2011. The statement of defence was delivered in November 2011. Based on the dockets I was able to ascertain that the firm was retained in February 2009, that affidavits of documents were exchanged and examinations for discovery of the plaintiffs were conducted in both Mississauga and Barrie.

[ 4 ] Mediation of the claim was held on December 20, 2011. By the time of the mediation, liability of the Estate of Rosemary Davies limited to the policy limits of $1,000,000 had been admitted and the other defendants released and the only remaining issue was damages. The matter was resolved at the time of the mediation with the help of the mediator. The affidavit of Mr. Henry, counsel for the minor plaintiff, states that the extent of damages for the minor plaintiff was hotly contested. This is puzzling since the plaintiffs’ mediation brief only requested damages for the minor plaintiff for loss of care, guidance and companionship. Once Mr. Henry provided the Loss of Dependency reports that were attached to the brief, I saw that there was a claim for counselling and childcare costs. The brief of the defendants does refer to a claim by the minor plaintiff for counselling services and a claim by the minor plaintiff’s mother for the expenses that she had to incur because she now has to take care of her daughter herself. The defendant’s brief explained why the mother had no claim as she was no longer a spouse of the deceased and then added a reference to a case in support of their position that the minor plaintiff did not have a dependency claim either because she was entitled to support from her mother. The defendant’s position in law is correct. I believe that this is the claim that was being referred to as being “hotly contested”.

[ 5 ] Mr. Henry’s affidavit stated that at the mediation all claims were settled for the total sum of $397,583.50. Of this amount, $337,906 was allocated to claims and $59,677 was allocated to costs and disbursements inclusive of taxes. The minutes of settlement provided in the motion record state that the apportioned share of the settlement allocated to the minor plaintiff is $206,875 inclusive of interest but exclusive of costs. In his affidavit, Mr. Henry added that the amount of $206,875 was in addition to costs of $23,306.25 inclusive of taxes, plus disbursements which are covered by the costs payment. He did not explain how this allocation of costs to the minor plaintiff was arrived at and only by doing a calculation could I determine that this costs amount was part of the $59,677 paid by the defendant, allocated to costs. Presumably $36,371 was being allocated to the other plaintiffs for costs although this was not set out in the affidavit.

[ 6 ] The supporting affidavit of Mr. Henry also stated that Howie, Sacks & Henry LLP intended to render a solicitor-client account exclusive of disbursements in the amount of $40,680 to the minor plaintiff such that $189,501.25 be paid into court for her benefit. Although the affidavit did not expressly state this, I presume that the firm intended to allocate the $23,306 from the costs received from the defendant to this account resulting in a net payment owing of $17,374.

[ 7 ] The dockets for the firm were included in the original motion material. The draft account shows that six lawyers worked on the file. The total fee based on solicitor-client hourly rates is $57,066 plus GST. Most of the time is Mr. Henry’s at the rate of $725 per hour. The other time spent on the file ranges from a high of $1,000 per hour to $235 per hour. There is no reference to any work being done by any law clerks although as a result of subsequent correspondence with Ms. Hartwick, I was able to determine that she is, in fact, a law clerk. She put in almost as much time as Mr. Henry into the file. In other words, five lawyers and one law clerk worked on the file. No explanation is provided for why so many people were needed to work on what appears to have been a very straightforward file. This raises concerns about a duplication of effort and unnecessary fees.

[ 8 ] When the motion material was originally reviewed by this Court, an endorsement was prepared setting out additional information required, particularly with respect to fees. It is unfortunate that experienced counsel are not following the guidelines that have been repeatedly set out by the court as to what is required insofar as solicitor’s fees are concerned, in numerous cases dating back to at least 2007. See, for example, Marcoccia v. Gill , [2007] O.J. No. 12 and Lau v. Bloomfield , 2007 34443 at paragraph 32 . In addition, when further material was provided, both by Mr. Henry and later Ms. Hartwick, the numbers breaking down the entire settlement and fees to be rendered by the firm were irreconcilable. The most significant difference is that, in correspondence from Mr. Henry, there was no mention of any portion of the settlement going to Tabitha Wilson, the adopted daughter of the deceased, and yet in the email from Ms. Hartwick, she is receiving $31,500 less fees. Furthermore, based on the information provided by Ms Hartwick, only $159,320 would be paid into court on behalf of the minor plaintiff. That is not what was proposed in the motion material and so I will rely on the number proposed to be paid to the minor plaintiff set out in the motion record. There were also less significant differences in the information I received as to the firm’s fees being charged to the other plaintiffs.

[ 9 ] I am also troubled by the fact that the minutes of settlement included in the motion material set out only the monetary amounts with respect to the claim of the minor plaintiff. This document is not reflective of the actual minutes of settlement signed at the time of the mediation, provided to me later by Mr. Henry. The minutes in the original motion material appear to be something more akin to a consent to the form of the judgment executed by counsel for the defendant. The original minutes should have been provided to the Court from the outset.

[ 10 ] Before turning to the decision I must render on this motion, it should be noted that the failure of counsel to provide full disclosure of the information necessary to properly decide this motion resulted in a great deal of additional time being spent by the Court. This was compounded by the confusion of the responses from Mr. Henry and Ms. Hartwick. This resulted in a waste of the Court’s time and unnecessary delay in dealing with this motion. If these motions are to be dealt with expeditiously by the court, counsel need to provide full disclosure of all relevant information in the original motion material. The court should not have to try to decipher what, in fact, is happening with all of the settlement money and/or follow up for more information from counsel, particularly when that counsel is experienced in personal injury.

[ 11 ] Turning then to the merits of the motion, considering first of all the reasonableness of the amount proposed for settlement of the minor plaintiff’s claim, namely $206,875, that in my view is a reasonable settlement for her claim for loss of care, guidance and companionship. There is no explanation for what happened to the claim for counselling save that in the defendant’s mediation brief it is stated that the minor plaintiff received counselling for two years, paid for by her father’s employment and that her mother does not feel she needs further counselling. Given the amount of the settlement, I am satisfied that if further counselling is required, the court could release some funds for that purpose. On that basis I find that this settlement is an excellent result, particularly in light of awards upheld by the Ontario Court of Appeal in recent cases for FLA claims. I, therefore, approve this amount.

[ 12 ] That leaves the reasonableness of the firm’s proposal with respect to fees insofar as the minor plaintiff is concerned, which the firm proposes to deduct from the amount for damages after crediting the minor plaintiff with $23,306.25; the amount allocated to her from the amount for costs paid by the defendants for costs.

[ 13 ] Mr. Henry advised me that the firm’s dockets provided in support of the motion reflect all of the firm’s dockets with respect to this matter on behalf of all of the plaintiffs. In his affidavit he deposed that the majority of the time expended on the file related to the minor plaintiff because her claim included a dependency income loss and loss of services claim which was contentious and required workup. As I have already said, that claim was described in the defendant’s mediation material as a claim by the mother and in any event appears to have been abandoned by Mr. Henry before the mediation as it is not mentioned anywhere in his brief. In any event, all of the time spent on this claim is in the firm’s dockets.

[ 14 ] Although I have sent requests for information and made it clear that I required a complete understanding of how the settlement money has been apportioned and how much the firm will receive from all sources, the information I have received in response is confusing and contradictory. This falls far short from the kind of full disclosure about fees that the court expects to adequately assess these matters. This is totally unacceptable. Although Ms. Hartwick offered to answer any further questions I might have, given the failure of the firm to answer the questions I had already asked, I decided to proceed on what I understand is being proposed, using the most favourable view as far as the minor plaintiff is concerned. It is not fair to her that this approval process be prolonged any further.

[ 15 ] Both Mr. Henry and Ms. Hartwick advised me in subsequent correspondence that the percentage allocation of fees to the minor plaintiff was only 18%. Mr. Henry provided no explanation for how he determined this percentage until a later email when he sated that “we had agreed to a fee % over costs of between 15 to 25%, so felt that at this stage the 18% was fair as did the Mediator”. On this basis he stated the minor plaintiff’s fee over party/party costs is $40,680 inclusive of HST. No explanation for how this amount was calculated using 18% was provided despite my earlier request. Presumably the reference to “we” was a reference to the other plaintiffs and the minor plaintiff’s mother who acted as her Litigation Guardian. Any such agreement is not binding on the minor plaintiff or this Court.

[ 16 ] Based on information received from Ms. Hartwick, Mr. Henry was proposing a premium of 18% over the firm’s solicitor-client costs to be paid by the minor plaintiff. In her email the 18% relates to the total amount of the settlement inclusive of costs paid by the defendants after deduction of $65,726.11 which is stated to be for fees only, not including disbursements. On that basis then, the firm is proposing to receive not only its solicitor-client costs in full (in an amount that is several thousand dollars higher than the firm’s account for fees in the motion record) but also a premium. Based on the information from Ms. Hartwick, it appears that the other plaintiffs have paid premiums in the range of 20 to 25% totalling $23,204.

[ 17 ] In my view if, in fact, the firm is proposing to charge the minor plaintiff a premium of 18% over its solicitor client fees, as set out in the information from Ms. Hartwick, that is unreasonable given the premiums charged to the other plaintiffs. The firm may have undertaken some risk in that the legal fees were not paid on an ongoing basis, but the nature of any risk undertaken by the firm is not explained in the supporting affidavit material. The firm specializes in personal injury. This case settled after the first attempt at mediation. The firm has recovered the full amount of its solicitor-client costs and the hourly rates charged are more than generous, particularly as I will not reduce any of the time claimed, despite my concern about duplication. They have been more than adequately paid for the time spent and disbursements incurred. Although the result for the minor plaintiff is excellent, in my view a premium for the firm beyond the premium that they have obtained from the other plaintiffs, cannot be justified, certainly not without proper disclosure of the premium and some attempt to justify it in the material provided to the court. Full payment of the firm’s account in addition to premiums charged to the other plaintiffs is more than reasonable to compensate the firm for their efforts in this matter.

[ 18 ] Even if I presume instead that the firm intends to charge the minor plaintiff 18% over and above the costs obtained in the settlement from the defendant, and that the other plaintiffs have paid in the range of 20 to 25% over those costs, in my view the firm has been adequately compensated for its fees insofar as the minor plaintiff is concerned with respect to the amount already paid for costs. The firm’s solicitor client account in the motion record for fees only totalled, with GST, about $60,000. The amount received for fees from the defendant totalled $47,177.50 inclusive of taxes. That leaves a difference owing to the firm, based on their account of $12,823. They have received an additional $23,204 from the other plaintiffs. In my view, even if the premium to the firm is only in the range of $10,000 it is more than ample given the rates charged and the fact that all time has been recovered. Certainly, on the material before me, which as I have explained is inadequate and irreconcilable, anything further from the minor plaintiff apart from the costs allocated to her that have been paid by the defendant is not warranted.

[ 19 ] Accordingly, the settlement in favour of the minor plaintiff is approved on the basis that of the sum of $206,875 be paid into court for the benefit of the minor plaintiff. No further amount may be deducted for fees or disbursements for the minor plaintiff in this action.

[ 20 ] I have signed and amended the judgment to this effect. If the firm would prefer a clean copy to be signed, I will do so once it’s provided to me.

SPIES J.

Date: October 23, 2012