COURT FILE NO.: 52595

DATE: 20131209

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

C.T. and others

Barbara Legate and Sue Noorloos, for the Plaintiffs

Plaintiffs

- and -

K.J. and others

Defendants not participating

Defendants

HEARD: In Writing

Grace J.

[1] What should have been an uneventful [redacted] in downtown [redacted], Ontario for [redacted] year old [redacted] and [redacted] turned into an unspeakable tragedy. For reasons that no longer matter, a [redacted] swerved, [redacted] and struck [redacted] causing serious and permanent injuries and exacting an unmeasurable toll on all who love [redacted].

[2] Shortly after the accident the family retained Legate & Associates LLP (the “firm”). Several actions were commenced: one in relation to attendant care benefits, another in relation to accident benefits and this one, the tort action.

[3] Each has now been settled. As required in the case of a minor, the settlements have been approved by the court.

[4] The motion for approval of the proposed settlement of the tort action on behalf of [redacted] was brought in writing. In a June 5, 2013 endorsement, I requested the assistance of the Children’s Lawyer (“OCL”) as contemplated by rule 7.08 (5) of the Rules of Civil Procedure and invited the firm to resubmit the motion once the OCL’s report was in hand.

[5] After receiving the OCL’s September 27, 2013 report (the “OCL Report”) and some additional material, the requested approval was given.[^1]

[6] The motion also requested approval of a fee of [redacted] plus applicable taxes in the tort action (the “proposed tort action fee”) representing one-third of the settlement amount approved in that action.[^2]

[7] Further, the firm sought approval of fees, disbursements and applicable taxes relating to the attendant care action. Morissette J. had approved settlement of that proceeding by order dated October 24, 2012. The aggregate amount claimed by the firm is [redacted] based on an aggregate settlement amount of [redacted] (the “proposed attendant care action fee”).[^3]

[8] To date I have declined to approve the payments the firm has requested. At paragraph 44 of my October 15, 2013 endorsement I wrote:

In summary, while I am prepared to approve the proposed settlement on behalf of [redacted] and [redacted] now, I am not in a position to grant the relief sought in subparagraph (e) of the June 4, 2013 notice of motion at this time. I will, of course, consider that item further once an affidavit is or affidavits are in hand addressing the issue of fairness of the CFA and reasonableness of the claimed fees. I do not doubt that a significant fee is due both in respect of the tort and attendant care actions. However, whether the requested amount is fair and reasonable remain to be determined.

[9] Recently I received further, extensive material from the firm. On October 21, 2013 and at the firm’s request, I approved an interim payment on account of fees and disbursements of [redacted]. At issue is the amount of any additional payments due.

The Procedural History

[10] Insofar as fees are concerned, the notice of motion dated June 4, 2013 requested:

An order approving payment of the fees and disbursements of counsel for the plaintiffs in accordance with the Order…made December 5, 2011.

[11] The solicitor’s affidavit filed in support of the motion simply indicated that the fees charged in respect of the tort action were determined “in accordance with the approved contingency fee agreement (33.33%)”.[^4] Subsequent affidavits established that the claimed amount represents 21.16% of the settlement amount after application of contributions made by the defendants on account of costs.[^5]

[12] The fee claimed in relation to the attendant care action represents almost one-third of the settlement amount.[^6] Although settlement of that action was approved in October, 2012, the firm did not seek the court’s determination of the fee issue then. After applying the contribution made by the defendant in that action on account of costs, the firm seeks payment of the all-inclusive sum of [redacted].[^7]

[13] As noted, I requested the assistance of the OCL as contemplated by rule 7.08 (5) of the Rules of Civil Procedure to assist me in deciding the motion for settlement and fee approval.

[14] In due course I received the OCL Report.[^8]

[15] Additional information from the firm and OCL followed by letter and e-mail on October 3, 8, 9 and 10, 2013.

[16] On October 15, 2013, I approved the proposed settlement of the tort action but deferred the request for fee approval pending receipt of additional information.

[17] On October 18, 2013, I agreed to allow the firm to apply amounts paid on account of costs by the defendants in the tort action to fees and disbursements claimed to be due.

[18] Thereafter I received further affidavits from [redacted] sworn October 24, 2013 and a two-volume supplementary affidavit of the solicitor sworn November 14, 2013. I also received a “Compendium” containing approximately 55 unnumbered pages of argument and a book of authorities. I am now, at last, in a position to deal with the remaining aspects of the motion filed in early June.

Motions for Approval of Settlements and Fees

[19] The court’s involvement in matters involving a party under disability is mandated by rule 7.08 (1) and (2) of the Rules of Civil Procedure. They provide:

(1) No settlement of a claim made by or against a person under disability, whether or not a proceeding has been commenced in respect of the claim, is binding on the person without the approval of a judge.

(2) Judgment may not be obtained on consent in favour of or against a party under disability without the approval of a judge.

[20] A minor is a person under disability for the purposes of rule 7.08.[^9]

[21] Requests for approval of settlements on behalf of a party under disability are regularly made in writing because they are “unopposed” by any other party to the litigation.[^10]

[22] Rule 7.08 (4) sets forth an itemized list of materials to be filed. By necessity, the record is almost always voluminous and often involved.[^11]

[23] The rationale for judicial involvement in the process was explained by the Court of Appeal in Wu Estate v. Zurich Insurance Co. (“Wu Estate”) in these terms:

The requirement for court approval of settlements made on behalf of parties under disability is derived from the court’s parens patriae jurisdiction. The parens patriae jurisdiction is of ancient origin and is “founded on necessity, namely the need to act for the protection of those who cannot care for themselves…to be exercised in the ‘best interest’ of the protected person…for his or her ‘benefit or ‘welfare’”: Re Eve, 1986 36 (SCC), [1986] 2 S.C.R. 388 at para. 73. The jurisdiction is “essentially protective” and “neither creates substantive rights nor changes the means by which claims are determined”: Tsaoussis (Litigation Guardian of) v. Baetz (1998), 1998 5454 (ON CA), 41 O.R. (3d) 257 at 268 (C.A.). The duty of the court is to examine the settlement and ensure that it is in the best interests of the party under disability: Poulin v. Nadon, 1950 121 (ON CA), [1950] O.R. 219 (C.A.). The purpose of court approval is plainly to protect the party under disability and to ensure that his or her legal rights are not compromised or surrendered without proper compensation.[^12]

[24] The court’s obligation exists even where, as here, [redacted] parents have had direct, continuing and meaningful involvement in the proceedings. In fact, rule 7.08 “is designed to protect the party under disability from mistakes of the litigation guardian.”[^13]

[25] That does not mean that the views of a litigation guardian are to be ignored. To the contrary. An affidavit of the litigation guardian “setting out the material facts and the reasons supporting the proposed settlement and the position of the litigation guardian on the settlement” is one of the items that must be filed when approval is sought.[^14]

[26] The role of the court is not limited to the terms of the settlement entered into by the parties. It extends to the fees the lawyer retained on behalf of a minor proposes to charge.

[27] In this case, the firm relies on a Contingency Fee Agreement dated March 4, 2011 executed by, among others, [redacted] mother in [redacted][redacted] capacity as litigation guardian (the “2011 CFA”).

[28] Once again, however, the court plays a role. The regulation under the Solicitors Act requires that a contingency fee agreement entered into on behalf of a party under disability include these terms:

a. a statement that the contingency fee agreement either must be reviewed by a judge before the agreement is finalized or must be reviewed as part of the motion or application for approval of a settlement or a consent judgment under rule 7.08 of the Rules of Civil Procedure;

b. a statement that the amount of the legal fees, costs, taxes and disbursements are subject to the approval of a judge when the judge reviews a settlement agreement or consent judgment under rule 7.08 of the Rules of Civil Procedure; and

c. a statement that any money payable to a person under disability under an order or settlement shall be paid into court unless a judge orders otherwise under rule 7.09 of the Rules of Civil Procedure.[^15]

[29] A contingency fee agreement entered into on behalf of a party under disability requires court approval. Such an agreement may be enforced in Ontario if it is “in all respects fair and reasonable between the parties”.[^16]

[30] As occurred here, a request for approval of fees is often made in tandem with the motion for approval of a settlement proposed on behalf of a party under disability.

[31] Like settlement approval, the fees issue is usually determined on a written record and in a non-adversarial setting. Albeit in the context of class proceedings, Juriansz J.A. addressed the problems that can arise in those instances. He wrote:

Our system of justice is based on the basic tenet that the court will be able to reach the most informed, considered and impartial and wise decision after presiding over the confrontation between opposing parties, in which each side can identify issues, lead evidence, cite law, discuss policy considerations, and seek to undermine the position of the other. Motions for approval of settlements and class counsel fees in class proceeding (sic) depart from this basic tenet as a matter of routine.[^17]

[32] That same dynamic – or lack of it – exists in motions of this kind. The court exercises a supervisory role over the litigation guardian. Vigilance and care are required but the record provided to the court is compiled by the persons seeking approval.

[33] It is for that reason that persons seeking approval of settlements on behalf of a party under disability must treat the proceeding as if it was one brought without notice. They must, therefore, make full and frank disclosure of all material facts relevant to the issues the court is asked to determine.[^18] They must also make every effort to follow the mandated procedural and substantive rules that apply.

[34] Fulfilment of that duty allows the reviewing judge to make an initial determination: is the material sufficient to permit disposition or should the decision be postponed pending receipt of further material from the moving party or assistance from the OCL. It should be self-evident that complete, accurate and understandable information is required for that initial – and ultimate - determination to be made.

[35] I pause here to address the role of the OCL. That office may but does not necessarily become involved. In a case involving a minor, rule 7.08 (5) of the Rules of Civil Procedure allows a judge to:

…direct the Children’s Lawyer…to make an oral or written report stating any objections he or she has to the proposed settlement and making recommendations, with reasons, in connection with the proposed settlement.

[36] The OCL does not become involved in the request for settlement approval unless that direction is given. Rule 7.08 (5) does not affect a solicitor’s duty to make full and frank disclosure.

[37] Invocation of that sub-rule is rarely, if ever, requested by the moving party. In fact, usually material filed pursuant to rule 7.08 either makes no mention of the OCL or asks that service be dispensed with.

[38] The approach in this case was different than the norm. That involvement of the OCL might be directed was anticipated by the firm. In paragraph 101 of her initial May 10, 2013 affidavit, the solicitor addressed that possibility in these terms:

If this Court requires review by the Children’s Lawyer, and if the Children’s Lawyer does not respond within three months of service, we request that review by the Children’s Lawyer be dispensed with. It is my experience that there is significant delay caused by reviews by the Office of the Children’s Lawyer. It is expected that the Children’s Lawyer will be able to deal expeditiously with this matter since that office is familiar with the facts and background of the case.

[39] As mentioned, I gave the direction rule 7.08 (5) contemplates. The OCL is an important and often necessary resource. However, even if involved in the process, that office does not act as an adversary but as a useful observer and commentator. As noted, if involved, the OCL is to prepare a report “stating any objections…to…and recommendations, with reasons, in connection with the proposed settlement.”

[40] A lawyer’s obligation to make full and frank disclosure in relation to a settlement recommended on behalf of a party under disability extends to fees. Unless the minor is over the age of sixteen years, the court does not hear from that party directly.[^19] As mentioned, the court oversees the actions of the litigation guardian. It considers but does not blindly – or even necessarily – endorse a litigation guardian’s actions or wishes.

[41] If a contingency fee agreement is involved, s. 24 of the Solicitors Act and the principles articulated by the Court of Appeal in Raphael Partners v. Lam (“Raphael Partners”)[^20] and Henricks-Hunter (Litigation guardian of) v. 814888 Ontario Inc.[^21] should be borne firmly in mind. In the latter case, the Court of Appeal outlined the two-step process to be followed.

First, the fairness of the agreement is assessed as of the date it was entered into. Second, the reasonableness of the agreement is assessed as of the date of the hearing. A contingency fee agreement can only be declared void, or cancelled and disregarded, where the court determines that it is either unfair or unreasonable.[^22]

[42] Unless approved by the court before finalization, the affidavits required by rule 7.08 (4) should address the fairness issue. The circumstances surrounding the creation and execution of the contingency fee agreement should be outlined in detail with documentary support. They should also address the reasonableness of the contingency fee agreement. A non-exhaustive list of four factors is helpfully set out in Raphael Partners: the time expended by the solicitor, the legal complexity of the matter at issue, the results achieved and the risk assumed by the lawyer.

[43] Some of those factors will have already been addressed in the context of the proposed settlement but when addressing fees, the question is whether the contingency fee agreement, as opposed to the proposed settlement, is fair and reasonable. The focus of the inquiry is different and the presiding justice should not have to wonder whether the required level of factual, procedural and legal disclosure has been made.

[44] I turn my attention to the fairness and reasonableness of the 2011 CFA which is in issue here.

The Fairness Issue

[45] The firm submitted that I should not concern myself with the fairness analysis.[^23] It relied on an “ex parte” order it obtained on December 5, 2011 (the “December, 2011 order”). Paragraph 1 of the December, 2011 order reads:

THIS COURT ORDERS that the Contingency Fee Retainer Agreement proposed on behalf of the Infant Plaintiffs as attached as Schedule “A” is hereby approved.

[46] The OCL Report addressed the fairness issue in these terms:

In this instance, [the firm] moved to have the terms of the CFA in relation to the tort action approved before it was finalized. On December 5, 2011, [the court] issued an Order granting the approval…and thereafter the plaintiffs entered into the CFA in March, 2011. As such, only the reasonableness test need (sic) to be applied when assessing the fees sought by [the firm] under its CFA with the plaintiffs.

[47] Section 5(1) of the regulation made under the Solicitors Act, R.S.O. 1990, c. S.15 provides as follows:

A solicitor for a person under disability represented by a litigation guardian with whom the solicitor is entering into a contingency fee agreement shall:

(a) apply to a judge for approval of the agreement before the agreement is finalized, or

(b) include the agreement as part of the motion…for approval of a settlement…under rule 7.08 of the Rules of Civil Procedure.[^24]

[48] The 2011 CFA was executed on March 4, 2011. The approval order was granted nine months later. In fact, the December, 2011 order did not comply with the regulation. It was for that reason that I indicated that the December, 2011 order was “problematic” in my October 15, 2013 endorsement.

[49] In the Compendium it filed subsequently, the firm submitted that:

a. The issue is res judicata;

b. I have no authority to “reconsider” the issue; and

c. In any event, the requirements of fairness are met.

[50] I disagree with the first two submissions.

[51] Failure to obtain an order approving a contingency fee agreement prior to finalization leaves a lawyer with one alternative: approval of the contingency fee agreement must be sought at the same time as approval of the proposed settlement.[^25]

[52] In its written argument, the firm maintained that the 2011 CFA “provides that Court approval was required before it was binding”. Paragraph 22 of the 2011 CFA was cited in support. The relevant portion of that paragraph reads:

As of the date of this agreement, one or more of you are persons under disability as defined in the Rules of Civil Procedure, and are represented by a litigation guardian. This agreement must be reviewed by a judge either before the agreement is finalized or as part of a motion or application for approval of a settlement or consent judgment in respect of a person under disability under rule 7.08 of the Rules of Civil Procedure. The amount of legal fees, costs, taxes and disbursements payable pursuant to this agreement are subject to the approval o0f a judge when the judge reviews a settlement agreement or consent judgment under Rule 7.08 of the Rules of Civil Procedure.

[53] With respect, I am not assisted by the quoted paragraph. Rather than postponing the date the CFA “is finalized”, it simply paraphrases s. 5 (1) of the regulation. It adds nothing to the analysis.

[54] The firm submits that irrespective of the contractual language, a contingency fee agreement is not “finalized” until it is approved by the court. That is simply not so. The word “finalized” is used in s. 5 (1) as a temporal limitation. If court approval is not sought before that date, a request for approval must await a motion or application under rule 7.08 of the Rules of Civil Procedure. The regulation contemplates court approval of a contingency fee agreement either before the agreement is “finalized” or thereafter contemporaneously with the court’s review of a proposed settlement. Finalization and court approval of a contingency fee agreement never occur simultaneously. One event must precede the other.

[55] Where, as here, there is no evidence in the 2011 CFA or elsewhere to indicate a contrary intention, I am of the view a CFA is finalized when executed by the parties.[^26] That occurred in this case on March 4, 2011. The 2011 CFA was, at that point, binding to the same extent as a settlement that is subject to court approval. In Wu Estate, the Court of Appeal was asked to consider whether minutes of settlement executed on behalf of a person under disability had any effect before court approval. At para. 13 the court concluded:

…there was in law an agreement, which the respondents could not disavow, to settle [the person under disability’s] claim on the terms recorded in the minutes of settlement, but the operation of that agreement was suspended pending “necessary” court approval.[^27]

[56] The 2011 CFA stood in the same position. It was an agreement from which no party could resile once fully executed.[^28] However, its operation insofar as [redacted] is concerned was and continues to be suspended pending the court’s determination of the questions of fairness and reasonableness.

[57] A motion for approval of the 2011 CFA was brought in writing almost nine months after execution. It was brought with the consent of [redacted].[^29] From the materials filed at that time, it is clear that the motion for approval was initiated because of the stage of the litigation. A trial date was quickly approaching. The parties had agreed to mediate. The firm needed instructions. [redacted] wanted to know the fee that would be charged when making or assessing offers to settle.[^30]

[58] The motion material did not address the time limitation the regulation contains. The notice of motion contained a reference to s. 28.1 (8) of the Solicitors Act but not the regulation with which the firm “must comply”.[^31] Passing reference was made to s. 5(1) (a) in the solicitor’s November 30, 2011 affidavit but its terms were not put before the court. In short, the timing of the motion was not raised with or considered by the motion judge.[^32] The use of the word “proposed” in the quoted paragraph of the December, 2011 order does not change my conclusion that the 2011 CFA was finalized before the motion was filed.

[59] The fact that the motion was brought otherwise than permitted by the governing regulation is clear. In Henricks-Hunter (Litigation guardian of) v. 814888 Ontario Inc. (c.o.b. as Phoenix Concert Theatre) at paras. 16 and 17, the Court of Appeal wrote:

…the solicitor can choose to have the agreement approved by the court before it is finalized…If a contingency fee agreement is approved by the court before being finalized, the fairness of the agreement is no longer an issue.

Alternatively, the agreement can be finalized and presented on a motion or application for approval of a settlement under rule 7.08 of the Rules of Civil Procedure…Upon hearing a rule 7.08 motion or application, the judge cannot simply disregard a finalized contingency fee agreement. Rather, a motion judge must assess both the fairness and reasonableness of the agreement. If the agreement is fair and reasonable, the motion judge may give effect to it.

[60] I return to the firm’s submission that I am bound by the December, 2011 order “based on the principle of res judicata.” I do not understand how the principle applies. The fairness of the 2011 CFA is not being re-litigated. I have been asked to approve significant fees claimed pursuant to a CFA. While not addressed at first instance, the firm now recognizes that I must address the question of reasonableness.

[61] Unless approved before finalization, the fairness of a contingency fee agreement must be examined too.

[62] I recognize that I am not sitting as an appellate court. The simple issue, to my mind, is whether I am permitted – let alone compelled – to bypass the fairness issue because an order was granted at a time at a time the governing regulation did not contemplate. For the reasons given, I am of the view that the responsibility to consider the issue of fairness is borne by the judge who hears the matter under rule 7.08.[^33]

[63] The consequence of that finding is simply this: I must assess the fairness of the 2011 CFA at this stage.

[64] In Raphael Partners, Cronk J.A. described the scope of the fairness inquiry in these terms:

The fairness requirement of s. 24 of the Solicitors Act is concerned with the circumstances surrounding the making of the agreement and whether the client fully understands and appreciates the nature of the agreement that he or she executed; Best v. Yegendorf, Brazeau, Seller, Prehogan & Wylie (1998), 1998 14646 (ON SC), 37 O.R. (3d) 633 (Gen. Div.).[^34]

[65] These are the circumstances leading up to and surrounding the execution of the 2011 CFA:

a) The firm had been retained shortly after the accident;

b) A document entitled “Contingent Fee Agreement” was prepared and signed by [redacted] alone on April 12, [redacted] (the “[redacted] agreement”). Two calculations were to be made: the first based on hourly rates and the second based on a percentage of the amount recovered plus the amount contributed by the opposite party on account of costs;

c) Some years later and after reviewing a communication from the Lawyers’ Professional Indemnity Company to the legal profession, the firm realized that the [redacted] agreement did not comply with the requirements of the Solicitors Act and the supporting regulation;[^35]

d) An associate lawyer was assigned to “establish an agreement…that would comply with the Solicitors Act and more appropriately reflect the real risks associated with pursuing” the tort action.[^36] The 2011 CFA was the firm’s response. By that time the firm had acted for the [redacted] family for almost five years and members of the firm had spent considerable time pursuing various proceedings including the tort action;[^37]

e) I do not know what, if any, discussion occurred concerning the legal significance of the non-compliant [redacted] agreement. However, I am satisfied that the firm would have been entitled to compensation, on some basis, for the work it had performed. I should add [redacted] never would have suggested otherwise;

f) Unlike the terms of the earlier Contingent Fee Agreement, the terms of the 2011 CFA are clear and easily understandable;

g) Ms. Legate describes [redacted], as “intelligent and thoughtful individuals” who “have post-secondary education”.[^38] I have seen nothing that suggests otherwise;

h) [redacted] take no issue with the 2011 CFA. In fact, [redacted] support it and depose that its terms were fully explained and understood. Further, [redacted] had ready access to independent legal advice from lawyers with personal injury experience had [redacted] believed it was necessary;

i) [redacted] also deposed that [redacted] signed the 2011 CFA at a time when [redacted] believed there was ample insurance coverage and that no amendment was sought by the firm later when coverage became an issue and the prospect of a more limited recovery arose;

j) No concerns were expressed by the OCL about the fairness of the 2011 CFA even after the error in the OCL Report was acknowledged.

[66] Based on those circumstances, I am satisfied that the 2011 CFA meets the fairness requirement. I turn to the reasonableness issue.

The Reasonableness Issue

[67] As mentioned, the reasonableness of the 2011 CFA is to be determined as of the date of the inquiry. A non-exhaustive list of four factors was set forth by Cronk J.A. in Raphael Partners. The listed factors were:

a. The time expended by the solicitor;

b. The legal complexity of the matter at issue;

c. The result achieved;

d. The risk assumed by the solicitor.[^39]

[68] The OCL Report differentiated between the tort and attendant care actions. In respect of the tort action, the OCL wrote:

The time expended by [the firm] to litigate this action was substantial. This is reflected in the comprehensive affidavit of [the solicitor] sworn in support of the proposed settlement and the accompanying attachments, including the Pre-Trial Briefs and Mediation Briefs of the parties.

The issue of liability in this litigation was quite complex. It is also quite possibly a novel one…

Given the complexity of the issue of liability in this litigation, the result achieved for [redacted] by [the firm] in the tort action is an exceptional one.

In terms of risk assumed by [the firm], I note that the monies expended by them on disbursements reflect that they were willing to assume the risk of funding a costly form of litigation.

Based on the foregoing, I have no hesitation in recommending the [redacted] in fees sought by [the firm] for its work on the tort action.

[69] The OCL neither endorsed nor opposed the fee proposed in relation to the attendant care action. The OCL questioned whether the matter was as complex or risky as the tort action but acknowledged that the firm had spent substantial time in pursuing the matter.

[70] That spawned further submissions from the firm and the OCL to which I will return.

[71] I turn first to the factors listed in Raphael Partners.

The time expended by the solicitor

[72] While a relevant factor, it is clear that the number of hours expended is not determinative. To borrow again from Raphael Partners “the time spent by the solicitors…does not control the question of whether the solicitors were entitled to the maximum fees charged” pursuant to a contingency fee agreement.[^40]

[73] Nonetheless, the time expended in achieving a result provides some context for the claimed fee and is, at a minimum, a useful comparator.

[74] The firm did not maintain a complete record of the hours expended in this case. In her most recent affidavit the solicitor deposed:

…I have not been a very good time docketer. It has been and remains very much an afterthought for me. My assistant, if requested to do so, captures emails and letters, and major events that I may miss docketing. Likewise, I am advised that it appears to be an afterthought for the associate lawyers and law clerks who assist me.

[75] In its submission the firm went so far as to suggest that:

…where the solicitor’s dockets are incomplete, it is appropriate for the Court to roughly estimate the solicitor’s actual time spent on tasks like discovery and mediation and working up the case, including dealing with clients and experts.

[76] I do not agree that the court bears that responsibility.[^41] Despite the fact that a contingency fee agreement is in place there are many reasons why lawyers and law clerks should docket their time. That time is listed by the Court of Appeal as a factor to be considered in the reasonableness analysis should be reason enough. As between parties to an action, “hours spent” is specifically mentioned in rule 57.01 (0.a) and time is inevitably a consideration when other sub-rules are applied.

[77] In this case, the firm was retained because a [redacted] was seriously injured. It has known from the very first day that court approval of any settlement, including legal fees, would be required. The importance of docketing should have been appreciated then and should not need comment now.

[78] Unfortunately, it was only in the most recent affidavit that the issue of time was addressed in any detail.

[79] I have been told that [redacted] in time has been docketed in respect of the tort and attendant care actions.[^42]

[80] I was given a [redacted] page computer printout of docketed hours and disbursements incurred. I was not given any breakdown by timekeeper, by matter or by stage of either proceeding. The dockets include the time spent in dealing with the issue of the approval of fees. I question the appropriateness of their inclusion.

[81] Surprisingly, the dockets include entries in November, 2013 for “trial preparation” despite the fact that both actions settled long beforehand. Some of the entries bear dates that postdate the creation of the printout.

[82] If the printout was intended to demonstrate that members of the firm spent a lot of time in dealing with actions involving [redacted], it hit the mark. However, it did not, as I had hoped, give me a helpful overview of the time expended at the various stages of each proceeding.

[83] Ms. Legate estimated that the docketed time represented one-half to two-thirds of the time actually expended. However, the “listing of matters not docketed” was rather short and limited. Furthermore, I was given no estimate of the time involved in any of those unrecorded steps.

[84] I have now read the material filed in support of the motion that resulted in the December, 2011 order. In an April, 2011 affidavit, the solicitor deposed that the firm had docketed almost [redacted] hours to the file.[^43] I do not know how that number was calculated.

[85] Fortunately, I was given other, useful information. I received a trial preparation checklist which listed, helpfully and in detail, the progress of [redacted] of steps involved in preparing the tort action for trial.

[86] The solicitor’s narrative contained detailed information with respect to the progress of the tort action. [redacted] pieces of correspondence were exchanged. The firm obtained three liability and twenty-six damage reports. There were several motions and a motion for leave to appeal. One of them was the defendants’ opposed motion to adjourn the trial on the eve of it being called. The firm examined five people for discovery over a period of four days. The matter was pre-tried and three mediations were held.

[87] In summary, while the process of extraction of material was unnecessarily laborious and the quality of the information wide-ranging, the combination of dockets, solicitor’s narrative, updated checklists and related documents satisfy me that the firm expended significant time in pursuing the tort and attendant care actions.

[88] While impossible to say with precision, it appears that if billed at normal hourly rates the fee would have been approximately [redacted] of what is now being sought.

[89] That does not mean that the contingency fee agreement is unreasonable but it is, in my view, a factor to consider in the analysis. I cannot improve on the language used by the New Brunswick Court of Appeal in Mealey (Litigation Guardian of) v. Godin. At para. 22, the court wrote:

When a contingency fee agreement conforms with the prevailing regulatory legislation, the court should not derogate from its terms unless the legal fees generated under it are inordinately high and markedly disproportionate to the risks assumed, the effort furnished and the skill displayed by the lawyer.[^44]

The legal complexity of the matter at issue

[90] Superficially these cases may seem uncomplicated. A [redacted] was [redacted] when, through no fault of [redacted], a car veered, [redacted] and [redacted].

[91] However, it wasn’t so easy. Liability and damages were in issue.

[92] Two [redacted] played a role in the accident. Each defendant pointed a finger at another. An engineering opinion was procured.

[93] The [redacted] involved in the accident was operated under [redacted]. However, the car was not driven by an employee and the vehicle was owned by a third party. Recovery beyond [redacted] meant that the firm had to establish that the [redacted] company was vicariously liable. Given the extent of [redacted] injuries, the extent of coverage was of critical importance. That issue featured prominently at the pre-trial and mediation.

[94] The extent of [redacted] injuries, [redacted] prognosis and the short, medium and long-term effects were dissected by multidisciplinary teams retained by both sides. It was clear that [redacted] was seriously injured. However, opinions differed on the degree and economic consequences.

[95] The material filed satisfies me that the tort action was factually and legally complex. If not settled, the trial would have been long, hard fought and with an uncertain ending.

[96] The attendant care action was not particularly complex. The firm acknowledged that entitlement to the full amount available under the policy was not really in issue. I recognize the action proceeded through a pre-trial and that there were disputes along the way. However, the issues identified by the solicitor concerning resolution of this proceeding relate, primarily, to the result achieved. I turn to that factor now.

The result achieved

[97] The OCL considered the settlement of the tort action “to be an exceptional result”. It was a true compromise. If trial had occurred and the issue of vicarious liability been decided in favour of the [redacted] company, [redacted] recovery would have been far more modest. If decided favourably, recovery would have been even more significant.

[98] The settlement eliminated risk – on both sides. It involved payment of an amount of money which, to the extent money can, fairly compensated [redacted] and [redacted] for all that has been and will be endured.

[99] As evidenced by the fact that the proposed settlement was approved, I am satisfied that the result in the tort action was very good.

[100] With respect to the attendant care action, the OCL Report contained this comment:

In terms of the result achieved…it was more favourable to [redacted] than it was to [redacted], given the fact that [redacted]’s statutory entitlement to [redacted] was not in dispute and what was at issue was the rate at which [redacted] benefits would be expended.

[101] In her October 2, 2013 response, the solicitor challenged that assertion. She submitted that with the firm’s assistance the insurer paid amounts that allowed [redacted] “to be available to [redacted] whenever the need arose, and to coordinate classes and care with [redacted].”

[102] While conceding that entitlement to the [redacted] was assured, the solicitor submitted that accelerating payment over a shorter period was advantageous to [redacted] and disadvantageous to the insurer. She also submitted that the settlement of the attendant care action provided tactical advantages in negotiating a resolution of the tort action.

[103] I accept that the settlement of the attendant care action was advantageous to [redacted].

The risk assumed by the firm

[104] The tort action was one in which some recovery was assured. At paragraph 88 of her November 14, 2013 affidavit, the solicitor deposed:

I accept that there are low risks in this action with respect to the insurance limits available to both drivers totalling [redacted]. However, recognizing that such limits were insufficient, taking into account the deduction of fees, to satisfy [redacted] future care, I took significant risks in recommending that the litigation guardian not accept that amount and pushing the vicarious liability risk to the Defendants.

[105] I agree that the firm assumed risk in attempting to obtain more than [redacted]. Significant offers were received by the plaintiffs and rejected during and in the months following a failed mediation in November, 2012. Negotiations continued sporadically until the parties agreed in principle to settle the tort action on March 8, 2013.

[106] The firm prepared as if the matter would be tried. Success at trial beyond [redacted] was uncertain. If vicarious liability was not established, the firm’s recovery on a contingency fee basis would have been far less than the value of time that could and should have been docketed. Substantial disbursements had already been incurred by the firm. Those would have increased substantially.

[107] Until the settlement was negotiated, the firm was exposed to substantial risk.

[108] With respect to the attendant care action, the OCL Report suggested that:

…the financial risk assumed by [the firm] in terms of whether or not they would have been paid is not a significant one given that [redacted]’s statutory entitlement to [redacted] was not in dispute.

[109] I agree. I also recognize that the firm agreed to defer payment of the bulk of the fee sought in relation to that action in order to maximize the benefit for [redacted].

Other Considerations

[110] In its final batch of material, the firm included, without request, a number of letters and affidavits from senior practitioners in the personal injury bar.

[111] I had not anticipated that an invitation would be extended by the firm to selected members of the profession to comment on the firm’s motion.

[112] The firm has not retained outside counsel. No one has sought leave to intervene. I have not appointed amicus “to preserve the fairness of the proceedings before” the court.[^45] Had I considered doing so I would have advised the firm and asked for submissions.

[113] With respect, my October 15, 2013 endorsement neither invited nor contemplated a canvass of lawyers selected by anyone, let alone the firm seeking fee approval. Those testimonials played no role in my decision.

[114] I recognize that contingency fee agreements are important: they allow many people to obtain legal services they could not otherwise afford. Access to justice is a pressing issue. Such arrangements are part of the solution.

[115] I also recognize the reality for lawyers who enter into contingency fee arrangements: some are lucrative, others are not. That is the very reason that “the time spent by the solicitors…while a relevant factor, does not control the question of” reasonableness.[^46]

[116] It is the overall assessment after consideration of the various factors that will govern the determination of that issue.

[117] After considering all of the enumerated factors, I have concluded that the 2011 CFA is reasonable insofar as the tort action is concerned notwithstanding occasional concerns expressed along the way. While substantial, the net fee represents approximately twenty one percent of the recovery after deduction of the costs paid as part of the settlement and those paid as a term of an earlier adjournment of trial.[^47]

[118] I reach the opposite conclusion insofar as the attendant care action is concerned. A positive result was obtained. However, the matter was not complex and the firm assumed very little risk. Furthermore, the firm’s unsatisfactory docketing practices left me largely in the dark about the hours expended on this matter.

[119] In my view, an appropriate fee with respect to the attendant care action is [redacted] representing twenty percent of the amount recovered.[^48]

Summary

[120] For the reasons given, I have concluded that the 2011 CFA meets the fairness requirement. I have also concluded that it is reasonable insofar as the tort action is concerned but unreasonable insofar as the attendant care action is concerned. That finding resulted in an adjustment of the fee claimed in respect of the latter action from one-third to twenty percent of the amount recovered.[^49]

[121] If necessary, arrangements may be made through the trial coordinator to speak to me concerning the effect of the fee adjustment on [redacted] aggregate entitlement.

“Justice D. A. Grace”

Grace J.

Redacted version released: January 20, 2015

COURT FILE NO.: 52595

DATE: 20131209

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

C.T. and others

Plaintiffs

- and -

K.J. and

Defendants

Reasons for Judgment

Grace J.

Redacted version released: January 20, 2015

[^1]: The additional material is summarized in paragraphs 3 and 4 of my October 15, 2013 endorsement.

[^2]: The settlement also involved a payment of [redacted] on account of costs. The contingency fee arrangement does not apply to that amount. The firm also seeks payment of [redacted] on account of disbursements inclusive of applicable taxes.

[^3]: Slightly different amounts appeared in paragraphs 85 and 88 of the solicitor’s May 10, 2013 affidavit. In paragraph 21 of the solicitor’s September 23, 2013 affidavit and in an October 9, 2013 e-mail, I was advised that the firm is actually claiming [redacted] representing approximately one-third of the recovery, plus disbursements and applicable taxes, less the contribution made by the defendant in the attendant care action.

[^4]: The excerpt is drawn from paragraph 83 of the solicitor’s May 10, 2013 affidavit.

[^5]: The calculation is set forth at paragraph 25 of the solicitor’s November 14, 2013 affidavit.

[^6]: The amount recovered was said to be [redacted] in the aggregate. At paragraph 19 of her September 23, 2013 affidavit, the solicitor deposed that the firm agreed to reduce its fee to the stated amount of [redacted].

[^7]: The original explanation appears at paragraphs 26 and 27 of the solicitor’s April 28, 2011 affidavit. An update appears at paragraph 21 of the solicitor’s September 23, 2013 affidavit. [redacted] was received from the defendants and applied on account. Originally the aggregate amount claimed for fees, disbursements and applicable taxes was [redacted].

[^8]: The OCL Report referred to a supplementary affidavit of the solicitor sworn September 23, 2013 which I had not seen previously. It arrived soon afterward. It explained how the amounts claimed in respect of the two actions had been calculated. In the tort action, Tausendfreund J. had adjourned a trial date at the request of the defendants on terms. One of those terms required a [redacted] payment on account of costs. In the attendant care benefits action, amounts claimed on account of fees, disbursements and applicable taxes were detailed and credit was given for the amount paid on account of costs upon completion of the settlement.

[^9]: Rules of Civil Procedure, rule 1.03 (1).

[^10]: That observation extends to motions and applications.

[^11]: Rivera v. LeBlond (2007), 44 C.P.C. (6th) 180 (S.C.J.) at para. 35 outlines, from a practical perspective, what the rule requires.

[^12]: (2006), 2006 16344 (ON CA), 268 D.L.R. (4th) 670 (Ont. C.A.) at para. 10

[^13]: Ibid. at para. 12, citing with approval Garry D. Watson & Craig Perkins, Holmested and Watson: Ontario Civil Procedure, looseleaf (Toronto: Carswell, 1984) vol. 2 at 7-33.

[^14]: Rule 7.08(4) (a) of the Rules of Civil Procedure.

[^15]: O. Reg. 195/04, s. 3.

[^16]: Solicitors Act, R.S.O. 1990, c. S.15, s. 24.

[^17]: Smith Estate v. National Money Mart Company, 2011 ONCA 233 at para. 15.

[^18]: Ibid. at para 16; McCarthy v. Canadian Red Cross Society (2001), 8 C.P.C. (5th) 349 (Ont. S.C.J.).

[^19]: The written consent of a minor who is over the age of sixteen years is required unless the court dispenses with it: rule 7.08 (4) (c).

[^20]: (2002), 2002 45078 (ON CA), 61 O.R. (3d) 417 (C.A.) at paras. 37 and 50.

[^21]: 2012 ONCA 496, [2012] O.J. No. 3207 (C.A.) at paras. 13, 20 and 22.

[^22]: Ibid. at para. 13. Interestingly, at para. 17 the Court of Appeal wrote:

If the agreement is fair and reasonable, the motion judge may give effect to it.

[^23]: The firm filed a “Compendium of the Plaintiffs”. An ever useful tool – a Table of Contents – was initially unusable because the pages of the volume were unnumbered. Manually numbering the pages revealed that the volume contained fewer pages than the 58 shown in the Table of Contents.

[^24]: O’Reg. 195/04

[^25]: Supra note 21 at paras. 13 - 18.

[^26]: In addition to the materials filed in response to my endorsements, I reviewed those on which the December 5, 2011 order was based. While a request for approval of the CFA was undoubtedly intended, the operative paragraph of the notice of motion was incomplete and didn’t actually seek it.

[^27]: Supra note 12.

[^28]: At paragraph 15 of their October 24, 2013 affidavits, [redacted] confirmed the CFA was executed on March 4, 2011 as appears at the top of the first page. Karen Hulan signed the 2011 CFA on behalf of the firm. Given the fact Ms. Hulan was the person who “met with the [redacted] to establish an agreement with [redacted] that would comply with the Solicitors Act” according to Ms. Legate’s November 14, 2013 affidavit and the date of execution by Ms. Hulan was not set forth, I conclude she also executed the 2011 CFA on March 4, 2011.

[^29]: The CFA is dated March 4, 2011 as noted earlier.

[^30]: After executing the 2011 CFA, Ms. Legate learned that there was a significant insurance coverage issue.

[^31]: Henricks-Hunter, supra note 21 at para. 15.

[^32]: In fact, I was unable to locate an endorsement.

[^33]: David Polowin Real Estate Ltd. v. Dominion of Canada General Insurance Co. (2005), 2005 21093 (ON CA), 76 O.R. (3d) 161 (C.A.) at para. 111. Nor, with respect, am I bound by any similar order made in the past including my own of February 7, 2013 to which Ms. Legate has made mention.

[^34]: Supra note 20 at para. 37.

[^35]: For a discussion of the possible consequences that follow see Laushway Law Office v. Simpson (2011), 2011 ONSC 4155, 336 D.L.R. (4th) 632 (Ont. S.C.J.).

[^36]: The quoted passage is drawn from paragraph 8 of Ms. Legate’s November 14, 2013 affidavit.

[^37]: According to paragraph 37 of Ms. Legate’s November 30, 2011 affidavit almost [redacted] hours had been expended by that time.

[^38]: Those passages are drawn from paragraph 9 of Ms. Legate’s November 14, 2013 affidavit.

[^39]: In Re Cogan (2007), 2007 50281 (ON SC), 88 O.R. (3d) 38 (S.C.J.), R. Smith J. added another. He wrote at para. 59:

…I find that it is an important factor to ensure that injured children have access to the courts to recover damages for injuries suffered, which were caused by some other person’s negligence.

[^40]: Supra, note 20 at para 54. See, too, Henricks-Hunter, supra note 21 at para. 14.

[^41]: Smith Estate v. National Money Mart Company, supra note 17 at para. 36.

[^42]: Paragraph 34 (a) of the November 14, 2013 affidavit referred to the time summary using these words “PCLaw print out of time docketed in matter, including accident benefits…”

[^43]: That statement was made at paragraph 37 of the solicitor’s November 30, 2011 affidavit.

[^44]: (1999), 1999 20761 (NB CA), 179 D.L.R. (4th) 231 (N.B.C.A.).

[^45]: Smith Estate v. National Money Mart Company, supra note 17 at para. 23. Rule 13.02 of the Rules of Civil Procedure.

[^46]: Raphael Partners v. Lam, supra note 20 at para. 54.

[^47]: The actual percentage is 21.16 % according to paragraph 25 of the solicitor’s November 14, 2013 affidavit.

[^48]: According to paragraph 26 of the solicitor’s first affidavit sworn April 28, 2011, the total amount recovered in the attendant care action was [redacted]

[^49]: The disbursements are approved as claimed.