Russo v. Seligman, 2015 ONSC 3019
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: BENITO RUSSO, by his Litigation Guardian, FRANK RUSSO (Plaintiff/Moving Party)
AND:
DR. JAMES SELIGMAN, Defendant
BEFORE: MOLLOY J.
COUNSEL: Joel McCoy, for the Plaintiff
HEARD: In writing
ENDORSEMENT: RE monies in court
1This is a motion for approval of a settlement. Approval is required because the plaintiff apparently has dementia. The plaintiff initially retained counsel himself in relation to a malpractice claim arising from surgery on his shoulder. The surgery was in 2004, when the plaintiff was 74 years old. According to counsel for the plaintiff, the plaintiff retained counsel in 2008, when he was 77, and the statement of claim was issued in September 2008. By order dated March 22, 2012, the plaintiff’s son, Frank Russo, was appointed Litigation Guardian.
2The motion record for approval of the settlement of this claim was filed with this Court on June 9, 2014 by McCarthy Tetrault, the solicitors for the defendant. It included an affidavit of the litigation guardian and an affidavit of plaintiff’s counsel, Mr. McCoy.
3Remarkably, the motion was brought for approval of the settlement and dismissal of the action, but the actual order sought was simply that the action be dismissed without costs. The amount of the settlement was not mentioned, nor was there any information about the disbursement of any funds payable. There was a dearth of information as to the merits of the claim. The only medical information provided was the Plaintiff’s medical records from Humber River Hospital from 2004 and early 2005, relating to his care under the defendant Dr. Seligman. I issued a hand-written endorsement dated July 23, 2014 requiring the following information be provided by plaintiff’s counsel:
(1) The action was commenced in 2008 by statement of claim. What happened to the action after that?
(2) When was the litigation guardian appointed? What evidence is before the court as to the plaintiff’s dementia and, in particular, its onset?
(3) Has there been any independent medical assessment of the plaintiff’s case. Was an expert retained by plaintiff’s counsel? Was the plaintiff seen by doctors other than the defendant and his associates? What is his current medical status?
(4) The affidavits are worded very ambiguously. Are any monies being paid to anybody as part of this overall settlement? If so, I want to know particulars.
(5) What is the liability of the plaintiff to his own counsel for costs?
4On February 17, 2015, counsel for the plaintiff filed a supplementary affidavit of Mr. McCoy purporting to answer the questions asked. The following information was provided:
(1) On consent, the time for filing of a statement of defence was extended. It was not filed until September, 2009, over one year late. It would appear that nothing further happened until a Status Notice was issued and the parties agreed to a timetable. The plaintiff delivered an affidavit of documents in September 2010. Discoveries were scheduled on at least three separate dates, but cancelled when the defendant claimed to be no longer available. On February, 2012, although the defendant failed to appear for examination for discovery as agreed, the discovery of the plaintiff did proceed. It was then that counsel first noticed a problem with the plaintiff’s mental status, as he appeared confused. There is considerable vagueness as to what happened in the action after that.
(2) The litigation guardian was appointed in March 2012. No medical information was provided as to the plaintiff’s status. All that was included in the material was a letter dated November 27, 2014 addressed to “To whom it may concern”, and signed by Mr. Peter Puitti, the administrator of a long term care residence named Chartwell Wenleigh. It states, in its entirety, “Benito Russo was admitted to The Wenleigh Long Term Care Home on January 17, 2013. He was admitted with a primary diagnosis of Alzheimer’s disease and is currently living on the Alzheimer’s unit.”
(3) There was no independent medical opinion obtained by plaintiff’s counsel with respect to the plaintiff’s claim against Dr. Seligman. In the supplementary affidavit, counsel attached a Report from the College of Physicians and Surgeons of Ontario dated June 2007, following a complaint to the College by the plaintiff in May 2005. The College retained two experts to provide opinions. Both found that the care provided by Dr. Seligman was below the standard required. Based on its investigation, the College concluded that there were concerns about the quality of care Dr. Seligman provided to Mr. Russo. The College also noted there were other complaints about Dr. Seligman. In the result, the College referred the case to its Quality Assurance Committee. I have been given no information as to what happened after that.
(4) The supplementary affidavit advised that the settlement was for $52,500 all inclusive, of which $1800 was to go to the Ministry of Health for its subrogated claim. The Minutes of Settlement were not provided, nor was any of the correspondence indicating the basis upon which the figure was reached.
(5) According to the supplementary affidavit, the plaintiff entered into a contingency fee retainer agreement with Bermanis, Preya at the time he first retained the firm. The plaintiff was delivered a bill for services for $22,950.00. The statement of account to the client, dated August 12, 1013, was produced. It shows the settlement proceeds being broken down as $45,250 for damages and $7000 for party and party costs. The law firm’s fee is set out as $11,315.46, plus party and party costs of $7000, plus disbursements and taxes for a total of $22,950.00. After payment of the OHIP claim, the balance showing under the heading “Remit to Client” is $27,500. The settlement includes the statement at the end, “I agree to the settlement proposed herein: Benito Russo” and is signed “per Frank Russo.”
5On March 2, 2015, I issued a further written endorsement requiring production of the retainer agreement and an explanation for why the statement of account allocates $7000 to the law firm for party and party costs in addition to its fees, whereas the affidavit says that the settlement was for $52,500, all inclusive.
6In response to that endorsement, counsel for the plaintiff filed a further supplementary affidavit (“the third affidavit”), sworn by Joel McCoy on March 3 and filed on March 4. The retainer agreement and dockets are attached as exhibits.
7The retainer agreement is dated on the 15th day of an illegible month in 2007. It provides that the fee will include (1) the amount of party and party costs contributed by the defendant; (2) disbursements; (3) fees which will not exceed 30% of the gross amount received for damages and interest, over and above party and party costs.
8Although specifically requested by me, no satisfactory explanation has been provided for deducting $7000 from the global settlement as party and party costs. The only explanation in the affidavit as to how $7000 came to be the figure for party and party costs with respect to a settlement otherwise described as being $52,500 all inclusive, is as follows:
I am advised and I verily believe that the account states that the $7,000.00 was allocated as party and party costs in accordance with the prior retainer agreement.
9That begs the question. I note that the amount of the fees charged exceeds 30% of the gross settlement proceeds, thereby violating the retainer agreement, unless the $7000 figure is deducted from the settlement amount. Who decided that $7000 of the settlement proceeds would be allocated to costs? If it was the solicitor, there is a clear conflict of interest.
10The Minutes of Settlement were never filed as part of an affidavit. However, a document entitled “Minutes of Settlement” was separately placed in the court file at some point in time. It is dated July 15, 2014, and so could not have been originally filed with the motion record for approval of the settlement, as it was filed on June 9, 2014. This Minutes of Settlement document was signed by a lawyer at McCarthy Tetrault on behalf of both himself and Mr. McCoy. The Minutes state only that the action shall be dismissed without costs subject to Court approval. There is no mention of any payment to the plaintiff. Indeed, none of the original documentation filed with the court made any mention of a payment to the plaintiff. I only obtained that information by asking for it.
11One of the reasons advanced by plaintiff’s counsel for accepting the proposed settlement is a concern about a possible limitation period problem. Mr. McCoy deposed that his firm was not retained until four years after the plaintiff’s surgery and immediately issued a statement of claim. However, in his third affidavit, Mr. McCoy discloses, for the first time, that Mr. Russo originally retained Diamond & Diamond as counsel and was subsequently referred to Bergmanis, Preya by Diamond & Diamond. The material does not disclose when the plaintiff first consulted Diamond & Diamond, or whether he did so within the limitation period. If so, there may be a claim against the previous solicitors. I do not have sufficient information to assess that possibility.
12Although counsel stated in his second affidavit that his firm was retained in 2008 and issued the statement of claim immediately thereafter, there are some discrepancies in the material that trouble me. The retainer agreement is dated 2007. The first entry on the electronic docket is included in the third affidavit is dated August 15, 2007 and states “Meeting with client, review documents (not retained yet). There are then a number of other entries in August and October, including drafting a statement of claim. The next entry is on July 7, 2008 and states, “Meeting with client agreement to retain our firm confirmed.”
13Under the Solicitor’s Act and Regulations there are specific requirements for what must be in a valid contingency fee agreement. I have serious concerns that the contingency fee agreement in this case is not compliant with the legislation, and may be invalid.
14Finally, the proposed settlement involves payment of a sum of money to the plaintiff who is said to be mentally incapable. There is no provision for how that money is to be used and who will have control over it. That is not acceptable.
15I have endorsed on the motion record that the settlement is approved and that an order dismissing the action without costs may be obtained by counsel for the defendant after payment of the settlement funds into court to the credit of the action, less $1800.00 to be paid directly to OHIP for its subrogated claim, for a total payment of $50,700.00.
16Given the manner in which the matter has proceeded, and the lack of clear answers I have received, I am concerned that the best interests of the incapable plaintiff may not be protected in this situation. It is not my role to investigate. Accordingly, I am forwarding a copy of this endorsement to the Public Guardian and Trustee, and a copy to the Law Society of Upper Canada. Counsel for the plaintiff is directed to obtain an appointment for a motion for directions returnable before me in open court, on notice to the Public Guardian and Trustee, at a mutually agreeable date to be obtained through my secretary, Aggie Gomez, at 416-327-5295.
MOLLOY J.
Date: May 12, 2015