ONTARIO

SUPERIOR COURT OF JUSTICE

OSHAWA COURT FILE NO.: 60593/09

DATE: 2015-11-26

BETWEEN:

STEFAN MARKUS, a minor by his Litigation Guardian, NATALIE NICHOLAS

Plaintiff

– and –

NON-MARINE UNDERWRITERS, MEMBERS OF LLOYD’S

Defendant

Daniel J. Balena, for the Plaintiff

No one appearing, for the Defendant

HEARD: Ex-parte

Justice J.B. Shaughnessy

reasons for judgment

[1] Counsel for the plaintiff has brought an ex-parte application for court approval of the proposed accident benefit settlement in this proceeding. Following a capacity assessment, the plaintiff Stefan Markus was found to have reduced executive functioning and he demonstrates significant cognitive impairment that affects his decision making. He has been found to be catastrophically impaired under the criteria of the Insurance Act. He requires a guardian of both person and property. However, no application has been commenced to date to appoint a guardian. It is proposed that Natalie Nicholas, the mother of Stefan Markus, will make an application after court approval of this settlement.

[2] Stefan Markus’ date of birth is February 3, 1996. He was 18 months old when he was injured in the motor vehicle accident of August 31, 1997. He was a rear seat passenger in a motor vehicle operated by his father. His father lost control of his vehicle and the infant plaintiff sustained major head trauma including a parietal skull fracture.

[3] In the last medical report of October 13, 2011, Dr. Duane McGregor, a neurologist, at the Hospital for Sick Children, opined that Stefan Markus has sustained “an acute brain injury at the time of this incident and continues to demonstrate evidence for acquired traumatic brain injury which has frontal and temporal localization.”

[4] Dr. Cancelliere, a psychologist who has assessed Stefan Markus many times and authored six medical reports provides in a report dated February 3, 2014, the following opinions:

• “He continues to demonstrate marked and very disabling symptoms as a result of the MVA and traumatic brain injury.”

• “His level of disability currently is severe. He has grown into a greater level of disability than was the case of the previous report (October 19, 2011).”

• He is unable to cope with his intellectual and cognitive impairments “in combination with his socioemotional and personality/behavioral difficulties.”

• Whereas it was previously prognosticated “that Stefan would be capable of part-time competitive employment at a basic level” now, based on current findings, “competitive employment of any sort is unlikely in the future.”

• His current status should be considered permanent.

• He requires a comprehensive treatment and rehabilitation program as detailed in this report.

• He requires attendant care “to ensure generalization and follow through in all areas.”

• There are substance abuse issues; “he is using marijuana daily and although this is medical marijuana there was no independent report citing the prescribed parameters of use available to the writer.”

• He is defiant, quit school, and is in conflict with his mother.

[5] Dr. Cancelliere apparently provided a further medical report dated August 13, 2014, which was not included in the material on this application. I would like this report to be produced.

[6] There is a future care cost assessment relating to future care prepared by Beverlee Melamed, O/T, dated April 22, 2010. Presumably this was prepared for the tort action. This report is dated and while it provides an Appendix B for catastrophic needs, the report does not have reference to medical reports, including Dr. Cancelliere’s reports after 2010. Further, there is no economist report. The future care report is quite dated. Suffice to say the costs for future care far exceed the amount suggested to be allocated to the future rehabilitation and attendant care of the plaintiff under the proposed settlement.

[7] In 2012, Mr. Balena brought an application before me to approve the settlement of both the tort and accident benefit claims. I refused to approve either of the proposed settlements. I referred the matter to the Office of the Children’s Lawyer for a report on issues that I outlined. After several months, a report dated February 7, 2013 was received, wherein issues were raised and outlined concerning the proposed settlement. Changes were made to the proposed settlement and only the tort action was brought back before me for approval. On April 21, 2015, I granted judgment in terms of the amended Minutes of Settlement in the tort action. I also amended the judgment to require that the accident benefit claim be brought back before me with respect to court approval for any proposed settlement of the accident benefits.

[8] The materials filed in relation to the tort settlement are not before me.

The Tort Settlement

[9] The judgment of April 21, 2015 in relation to the tort proceeding provided (para . 2 and 3) as follows:

(1) The defendant Lofranco was to pay $ 50,000 in satisfaction of all claims as against him as the owner and operator of a car involved in the collision. This sum of money was paid into the trust account of Mr. Balena. (emphasis added) (Lofranco was an operator of another vehicle that the plaintiff’s father impacted in the course of the collision.)

(2) The remaining tort defendants, who include the father of the infant plaintiff, were to pay $287,316.07 to plaintiff’s counsel, Mr. Balena on account of fees and HST.

(3) The tort defendants were to pay to Mr. Balena on account of disbursements, the sum of $107, 951.95.

(4) The sum of $25,000 was to be paid to Natalie Nicholas, on account of her claim under the Family Law Act.

(5) The sum of $204,731.98 was to be paid to Mr. Balena and to be held in trust. (emphasis added)

(6) The balance of $500,000 was placed into a structured settlement, with payments commencing August 1, 2015. The structure is for life with a guaranteed period of 40 years with a 2% yearly increase compounded.

The Proposed Accident Benefits Settlement

[10] The plaintiff’s medical reports were reviewed by a neurologist, Dr. Richard Gladstone. In a report dated March 12, 2015, Dr. Gladstone opined that the plaintiff suffered a traumatic brain injury that resulted in a Glasgow Coma Scale score of 9 or less and therefore had sustained a catastrophic impairment. The defendants retained Dr. Ben Meikle, physiatrist and Dr. Gary Moddel, a neurologist to review Dr. Gladstone’s report. They agreed with the catastrophic impairment designation.

[11] On December 19, 2011, the accident benefit carrier offered the sum of $225,000 inclusive of all claims including interest and costs. I refused to approve this proposed settlement. In my opinion, based on the information I had at that time (2011), the accident benefit claim was undervalued and I was not satisfied that all reports were available, including an assessment to determine whether the minor plaintiff was catastrophically impaired. I remained sufficiently concerned, that on my own initiative, I added to the tort judgment that I wanted any settlement of the accident benefit claim to be brought back to me for court approval. I have the advantage of being involved in this matter for more than three years.

[12] Counsel now presents to the court Minutes of Settlement, whereby the plaintiff’s accident benefit claim is to be settled for the sum of $ 650,000 for all future accident benefits and inclusive of interest, costs and disbursements.

[13] Counsel for the plaintiff recommends this settlement on the basis that to leave the accident benefit claim open at this time could result in the defendants refusing claims in the future related to attendant care, medical and rehabilitation services. Such a future denial would result in further applications to FSCO. Then, depending on the result, further litigation by way of commencement of an action.

[14] The mother, Natalie Nicholas and the insurer in a Settlement Disclosure Notice (page 2), detail the proposed settlement as follows:

(a) Medical benefits $ 100,000
(b) Rehabilitation benefits $ 300,000
(c) Attendant care $ 250,000

$ 650,000

[15] Counsel for the plaintiff states that the proposed settlement is to be paid out as follows:

Proposed accident Benefit Settlement $ 650,000.00

Less Counsel fees at 25% $ 162,500.00

Less HST $ 21,125.00

Less Disbursements $ 70, 048.04

Net Amount $ 396,326.96

[16] Counsel for the plaintiff then proposes to bring into the equation the amount of $ 204,731.98 as outlined at paragraph 9 (5) above, which are funds from the tort settlement held in trust by Mr. Balena. Notably, there is no reference or accounting for the sum of $ 50,000 referenced in paragraph 9(1) above, also apparently held in Mr. Balena’s trust account.

[17] Counsel proposes that the combined total of the net amount of accident benefits ($396, 326.96) para 15, plus the sum of the tort claim funds held in trust ($204,731.98), would provide $601,058.94. However, from that amount there is to be deducted the sum of $10,000 for fees, plus HST and estimated disbursements of $1,000 for a total of $12,300 for a future application for an appointment of a guardian of both the person and property of the plaintiff.

[18] It is proposed that, of the remaining balance of tort and accident benefit funds ( $588,758.94), the amount of $400,000 be placed in a structured settlement for life with a guarantee for 40 years with interest at 2% per year compounded with payments commencing November 1, 2015. (Note: I received the material for court approval on November 10, 2015.)

[19] It is proposed that the balance of funds in the amount of $188,758.94 ($588,758.94 less structure $400,000), should be put into the hands of Natalie Nicholas to be invested to meet her son’s requirements in the future. It is proposed that Natalie Nicholas will make the application for guardian of the property and person of her son Stefan.

Analysis

[20] I am not prepared to approve this proposed settlement. I propose to detail my concerns so that a further application can be made. I remain seized with this matter. Further, I direct that any application for appointing a guardian of the person or property of Stefan Markus is also to be brought before me, as that application has relevance to the funds related to this accident benefit claim.

[21] There is no information provided as to the amount of the remaining accident benefits available for the future. Mr. Markus is catastrophically impaired. I have no information of what benefits have been accessed and in what amount or the amount of the benefits available for medical, rehabilitation and attendant care. All of this information (in affidavit form) is required to assess the proposed settlement.

[22] In Mr. Balena’s affidavit sworn November 5, 2015 (para.42), it is stated that the mother, Natalie Nicholas, “will be providing attendant care for her son indefinitely.” In her affidavit sworn November 5, 2015, Natalie Nicholas states that “as indicated in Mr. Balena’s affidavit, Stefan requires a significant amount of attendant care.” She then states that she “provides care both in the morning prior to my going to work, in the evening when I come home and on weekends. He requires constant prompting and cueing. In addition, it is anticipated that there will be certain capital costs for Stefan in the years ahead which would include computers, other assistive devices.” She states that she “may retain the services of other professionals….” Finally Ms. Nicholas states that “Mr. Balena has explained to me that I am entitled to be paid some attendant care for the services I am performing for my son.” These statements cause me to question whether Stefan Markus is receiving now, and will in the future, the quality of care, including attendant care that has been recommended. Dr. Cancelliere’s report dated February 3 2014, states that Stefan’s “adaptation has been very poor” over the past four years. Further, he suffers from Crohn’s disease, which was not previously foreseen. While Stefan was to be working toward his academic goal, he has not done so in a “convincing/effective manner.” As indicated previously, Dr. Cancelliere opines that it is highly unlikely that the plaintiff will have any form of competitive employment in the future. Dr. Cancelliere states that “Stefan requires a comprehensive treatment and rehabilitation program addressing all of his current difficulties”. The report goes on to list that the plaintiff requires speech therapy, occupational therapy, cognitive rehabilitation and individual and family therapy. Finally, he requires attendant care which, based on a neuropsychological assessment and his history over a four year period, is now at a “higher level” than was originally anticipated.

[23] My concerns are further heightened by other information in Dr. Cancelliere’s report of February 3, 2014. It states that Ms. Nicholas reported that she had a mental breakdown and as of January 27, 2014 had only recently returned to work. She had been off work since November 2011 as a result of this breakdown (undergoing extensive therapy). She reported that for six to seven months she was of no use to anyone, including her son “and this was not an easy time for him.” Further, she reported “that even now she has to be very careful with respect to the stress/responsibility and frustration which she takes on and/or is experiencing.” In this report it indicates that Ms. Nicholas advised that Stefan had stopped going to school; that he was “more high tempered.” He was living with his grandparents due to housing issues and has demonstrated “extreme defiance” towards his grandmother. Ms. Nicholas reported that she was experiencing financial difficulties due to funding expenses for her son, including his medical marijuana.

[24] Dr. Cancelliere, in the last report produced, indicates that Stefan Markus performed much worse in approximately 33% of the psychological testing repeated in 2014. There has been a deterioration of attention/working memory and “it is possible that his regular marijuana usage has caused further deterioration of attention/working memory.” In addition, Stefan has a lisp which will “likely be a tremendous hurdle to wider social integration and vocational success as a young adult.” Currently he lives with diarrhea and stomach aches. He is ill-prepared to deal with the potentially life threatening Crohn’s disease. He has reported “very high anxiety and stress.” He has substance abuse issues. His level of disability, Dr. Cancelliere states, “is currently severe.”

[25] I have only highlighted some of my concerns relating to the settlement and the current needs of Stefan Markus. The suggestion that Ms. Nicholas can provide adequate care and indeed provide the care “indefinitely” is flawed and certainly not in the interest of the plaintiff who is now 19 years of age. His psychological status has declined over the past four years while in the care of his mother. He has debilitating physical issues which, if not adequately monitored and attended to, can be life threatening. I am not satisfied with the proposed plan for care and the lack of adequate ongoing treatment as recommended. Further, while Dr. Cancelliere also provided a report dated August 13, 2014, the same has not been produced to the court. As stated, I would like to have that report made available to me.

[26] I also have difficulty understanding where the $50, 000 (para 9 (1) above) in the tort judgment has been accounted for. Further, the retainer agreement has not been produced. On its face the settlement proposal states that it is inclusive of all costs and disbursements. However, plaintiff’s counsel is seeking 25% as costs on the entire settlement. I will have to review the retainer agreement to consider the reasonableness of the proposal.

[27] I am not satisfied with the list of disbursements produced at Tab O of the application. In particular, I would seek clarification of whom and what the disbursement was incurred for as well as documentation in support of the following items:

(a) Beverlee Melamed ------Attendant care $ 1,730.36
-------Future Care Cost $ 3,616.64

(b) Karen Rucas & Associates------------------$ 519.58

(c) BCM Actuarial Consulting--------------- $ 3,222.36

(d) Pain and Disability Assessment Centre--$ 1,950.00 + $ 700.00

(e) Dr. Waisman---------------------------------$ 3,390.00

(f) Clerk’s time----------------------------------$ 3,110.45

[28] In addition, there is a disbursement shown of $37,548.04 for “1 Equal Part of the shared AB and Tort costs”. Since counsel claimed $107,951.95 in disbursements in the tort proceeding, I would like to see a full accounting related to all the disbursements as well as a reconciliation of how there is now a further claim of $37,584.04 for “1 part of the shared AB and tort costs”.

[29] In the list of disbursements for the accident benefits as outlined in Para. [27] above, there is reference to BCM Actuarial Accounting in the amount of $3,222.36. I conclude that there must be an economist report costing the future care needs, including attendant care for Stefan Markus. No report has been produced. I require that the BCM Accounting report be provided to me, as well as any other economist report that deals with the claim for future medical rehabilitation and attendant care.

[30] I have serious reservations about the reasonableness of the proposal whereby Ms. Nicholas would be entrusted with $188,758.94 of the settlement funds. Further, I have serious reservations about Ms. Nicholas being the guardian of the person or property of Stefan Markus or providing adequate attendant care for him.

[31] I acknowledge that plaintiff’s counsel has referenced the defense neuropsychological report of a Dr. Robyn Stephens dated June 8, 2011, which states that Stefan Markus did not demonstrate evidence of a neuropsychological profile supportive of a closed head injury. Mr. Balena states that Dr. Stephens “concluded that the current test results strongly suggest that Stefan is progressing without exception at an average to above average rate, and there are no findings to suggest that he is at any risk for not continuing to do so through to normal maturity.” However, the response to this opinion is found in the medical report of Dr. MacGregor dated October 13, 2011, wherein he was asked to comment on Dr. Stephens’ report and stated:

It is somewhat puzzling that the report of Dr. Stephens is completely different from that of several prior neuropsychological and psychological assessments. As my experience is in neurology and not neuropsychology I will only note that my attention is usually drawn to results that are consistent over time rather than findings of a single assessment.

[32] I do not find that Dr. Stephens’s single assessment in 2011 constitutes any basis for concern or would affect the accident benefit claim, in light of the many assessments by Dr. Cancelliere, as well as the specialists for both sides on the catastrophic impairment designation.

[33] Therefore, I reiterate that this proposal for settlement of the accident benefits is not approved. I remain seized with the matter. I direct that further and better material is to be filed in affidavit form which addresses the issues outlined in these reasons, together with the other reports and documents that I have requested. I further direct that any application for guardian of the person and property of Stefan Markus is to be brought before me.

Justice J.B. Shaughnessy

Released: November 26, 2015