Schuringa v. Trent Lakes (Municipality), 2016 ONSC 7882

Court File No.: CV-15-520423 Date: 2016-12-14

Ontario Superior Court of Justice

Between:

Jennifer Schuringa by her litigation guardian Janette Schuringa, Janette Schuringa, Harold Schuringa, Erik Schuringa and Whitney Schuringa Plaintiffs

– and –

The Municipality of Trent Lakes, The City of Peterborough, General Motors of Canada Limited, General Motors Company and Attorney General of Canada Defendants

Counsel: Jeffrey Wm. Strype, for the Plaintiffs Robert L. Love, for the Defendants, General Motors of Canada Company and General Motors Company, as well as the intervenor, General Motors LLC

Heard: 31 October 2016, at Toronto

Before: Mew J.

Reasons for Decision

(Motion for Approval of Settlement Pursuant to Rule 7.08)

[1] A calamitous single vehicle car accident occurred on the afternoon of 19 May 2013 on Buckhorn Narrows Road in the Municipality of Trent Lakes.

[2] The driver of the car, a 2007 Saturn ION, was Jennifer Schuringa, 24.

[3] Exactly what happened is not known. Subsequent engineering investigation suggests that Ms. Schuringa may have attempted to brake and turn her vehicle, resulting in the vehicle’s ignition turning off, which caused all the car’s systems, including the engine, steering, braking and air bags to become inoperable. The car sped out of control and violently smashed into a tree. Jennifer Schuringa was catastrophically injured.

[4] It is alleged that the plaintiff’s vehicle had a flawed ignition which could accidently switch off while being driven, causing the driver to lose control and disabling safety features such as power steering, anti-lock brakes and air bags.

[5] Tragically, Jennifer Schuringa was not the only person injured or killed as a result of the General Motors ignition switch defect. General Motors received 4,343 reports of injuries or fatalities arising from accidents alleged caused by faulty ignition switches.

[6] Ignition switch defect issues resulted in multiple recalls of GM vehicles, a $35,000,000 fine from the National Highway Traffic Safety Administration in the United States, criminal proceedings in the United States and a large number of law suits in the United States and Canada, including at least two class actions.

[7] In 2014, General Motors retained Kenneth Feinberg, an American lawyer, to “develop and design a protocol for the submission, evaluation and settlement of death and personal injury claims” allegedly resulting from a defect in the ignition switch of certain GM vehicles. This became known as the General Motors Ignition Switch Claims Resolution Facility (the “Facility”).

[8] A Final Protocol for the Facility was established on 30 June 2014. The Facility began accepting claims on 1 August 2014 and has now completed its mandate. Under the Protocol, Mr. Feinberg had the sole responsibility to process and evaluate claims submitted to the Facility to determine:

a. whether the submitted claims met the Facility’s eligibility requirements; and

b. the compensation to be paid for eligible claims as defined in the Protocol.

[9] In the end, the General Motors Group offered over US$594,500,000 in 399 cases that were deemed to be eligible for compensation, including 124 deaths. 9.2% of applicants to the Facility received a monetary offer. Acceptance of a payment from the Facility waived an individual’s right to sue General Motors.

[10] In June 2013, Jennifer Schuringa’s parents, Janette and Harold Schuringa, retained Strype Barristers LLP (“SBL”) to provide advice concerning compensation and legal representation. A contingency fee agreement was entered into with respect to both the pursuit of accident benefits and damages.

[11] An action was commenced on 23 January 2015 by Jennifer Schuringa and members of her family asserting Family Law Act claims. In addition to naming General Motors of Canada Limited and General Motors Company, the Municipality of Trent Lakes and the City of Peterborough, the municipal authorities said to be responsible for the roadway on which the accident occurred, were named as defendants. So was the Attorney General of Canada, representing Transport Canada, as the government department responsible for the safe manufacturing of motor vehicles for use in Canada.

[12] In the meantime, given the magnitude of Jennifer Schuringa’s disability, an order was obtained from Madam Justice Conway on 9 January 2015 appointing Harold Schuringa and Janette Schuringa, jointly, as the guardians of property and person of Jennifer Schuringa.

[13] SBL investigated the possibility that the accident might have been caused by a mechanical defect that compromised the steering, braking and air bag deployment of her vehicle. SBL was aware that General Motors had issued a recall of thousands of motor vehicles because of a defect in the ignition system and learned that the vehicle being operated by Jennifer Schuringa on the date of the loss was subject to that recall. As a result of further inquiries, SBL became aware of the establishment of the Facility.

[14] SBL knew that General Motors employed very stringent engineering investigations to determine if the ignition switch could have been a contributing factor to the accident. However, the precise requirements for establishing a successful claim to the Facility were unknown.

[15] SBL therefore retained engineers to conduct an investigation of the Schuringa vehicle in order to determine if Jennifer Schuringa was eligible for compensation through the “Facility”. They undertook a painstaking analysis of the physical evidence. In due course, SBL submitted a claim to the Facility on Jennifer Schuringa’s behalf. The engineering workup that had been done was evidently sufficient. The claim was accepted.

[16] Once accepted, SBL then assembled comprehensive information relating to Jennifer Schuringa’s medical condition, her current and future needs, and her economic losses. Negotiations then followed.

[17] General Motors employed a negotiating team of 6-8 people. They initially took the position that Jennifer Schuringa’s injuries were so extensive that she required only institutional observational care for the balance of her life.

[18] Jennifer Schuringa’s medical status is succinctly summarised by her father in an affidavit sworn on 18 March 2016:

…Jennifer sustained severe, lasting and permanent injuries, rendering her profoundly brain damaged and in a consistent vegetative state. At present, Jennifer is able to indicate “yes” and “no” by using hand gestures. She cannot speak or usefully use her arms or legs. She has lost most of her vision. She is fed intravenously through a G tube, as she has limited ability to swallow. She is confined to a wheelchair, but she is not able to control its movement.

[19] Notwithstanding the foregoing, Jennifer Schuringa was accepted into the Hamilton McMaster Brain Injury Program even though she was deemed insufficiently capable of participating in the physical treatment provided by that programme. In the words of her lawyer, Jeffrey Strype:

The result was that she not only participated in the program, but with the assistance of specialized caregivers, was able to weight bear in a specialized apparatus, which was subsequently purchased by the legal guardians.

[20] SBL also assembled evidence to counteract the position taken on behalf of General Motors that Jennifer Schuringa’s life would be substantially shortened due to the medical issues arising from being bedridden. Eventually, it was agreed that Jennifer Schuringa’s life expectancy would be approximately 66 years of age (40.5 years from her then current age).

[21] Ultimately, the advocacy deployed on Jennifer Schuringa’s behalf led to the Facility making a substantial offer to settle Jennifer Schuringa’s claim.

[22] One of the conditions of settlement was that there would be no disclosure of the amount of the settlement to any person or entity at any time and in any fashion whatsoever, except as necessary to comply with a court order, government inquiry or applicable laws or regulations, or as necessary, for legal, tax or financial planning purposes. The requirement mandating non-disclosure of the settlement amount would extend to the agents, beneficiaries, legal representatives, executives, successors and administrators of Jennifer Schuringa.

[23] The plaintiffs decided to accept the offer made through the Facility, subject to the approval of this court.

[24] SBL, on behalf of Jennifer Schuringa and the other parties in the action which she had commenced, thereafter initiated the process for court approval.

[25] SBL recognised from the outset that a tailored approval process would be needed to address the particular circumstances of the settlement. The Facility would not release any funds without (a) a release which incorporated the requirement of confidentially; and (b) court approval, if required by local law.

[26] The plaintiffs therefore brought a motion for an interim order pending final court approval of the settlement. Counsel for the plaintiffs appeared before me on 31 August 2015. The relief requested and the rationale for it was reflected in my endorsement of that date, the salient part of which was as follows:

The plaintiffs have negotiated a settlement of this claim for damages for personal injury with the defendant General Motors of Canada Limited and General Motors Company. The plaintiff Jennifer Schuringa is a party under a disability within the meaning of Rule 7 of the Rules of Civil Procedure and, as such, court approval of the settlement is required. If the settlement is approved, the action will be dismissed against all defendants.

The plaintiffs move today for an interim order that will give approval to the total amount of the settlement so that the settlement funds, which are denominated in United States dollars, can be released to the plaintiffs, converted into Canadian dollars and invested in an interest bearing account or security pending final court approval of the deployment of the settlement funds.

Jennifer Schuringa suffered a catastrophic brain injury as a result of a motor vehicle accident on 19 May 2013 and will remain totally dependent on extensive medical care and round the clock attendant care for the rest of her life. Counsel for the plaintiffs has undertaken an extensive investigation of a range of arrangements that could be made for the settlement funds, including structured settlements and a managed investment portfolio. He has concluded that it may take 60-90 days for an appropriate management guardianship plan to be submitted to the Public Guardian and Trustee and thereafter to the court for approval. In the meantime, however, without an interim order from the court approving the amount of the settlement, the funds cannot be released to the plaintiffs’ lawyers, with the attendant risks presented by exchange rate fluctuations and the inability to earn more than a notional amount of interest (0.5%) on the settlement funds in the interim. I am advised that the General Motors defendants consent to the interim relief sought.

The parties have also requested that the materials filed in connection with this motion are sealed in order to preserve the confidentiality of the settlement amount.

I have reviewed the affidavits of counsel and of the plaintiff Harold Schuringa and have reviewed correspondence from the GM Ignition Compensation Claims Resolution Facility dated 21 July 2015 setting out the terms of the General Motion defendants’ final settlement offer (“Final Offer”), which includes the amounts allocated for economic loss, non-economic loss and long term life care plan costs. I am further advised that separate arrangements are in place to resolve the subrogated interest of the Ontario Health Insurance Plan.

I am entirely satisfied that the total amount to be recovered by the plaintiffs under the terms of the Final Offer is reasonable. Although final approval of the settlement arrangements cannot be given until a management guardianship plan has been submitted, it would in my view be in the plaintiffs’ best interests for the settlement funds to be released by the General Motors defendants at this time and for the action to be dismissed as and when final court approval of the settlement is given.

Pending further order of the court, the materials filed in support of this motion should be sealed in order to preserve the confidentiality of the settlement details and any materials filed in the future in connection with final court approval which contain information on the amount of the settlement can be filed under seal.

[27] Following that interim order being made, there were a number of attendances, in chambers, or by way of teleconference, involving lawyers for the plaintiffs, General Motors and, on occasion, the Public Guardian and Trustee.

[28] The Office of the Public Guardian and Trustee provided its written comments on the interim management of tort and accident benefits settlement funds, the retaining of a guardianship lawyer, the appointment of an institutional guardian of property, the suitability of setting up a proposed Jennifer Schuringa Trust, and certain aspects of the personal injury litigation, including whether the sealing order should be maintained.

[29] Subsequently, by further endorsement of 8 June 2016, I requested a report from the Public Guardian and Trustee pursuant to Rule 7.08(5) of the Rules of Civil Procedure, stating any objection to the proposed legal fees of SBL and making recommendations in connection therewith.

[30] The motion for court approval of the settlement, together with a companion application for court approval of the settlement of Jennifer Schuringa’s accident benefits claim, was listed for hearing in open court on 31 October 2016.

[31] After hearing from counsel, and taking into account a substantial record, I approved the settlements, with reasons to follow.

[32] These, then, are my reasons.

Issues

[33] Having already approved the total amount of the settlement with the Facility (as well as a settlement with the accident benefits insurer which provided that those settlement funds would be pooled with the funds received from the Facility), the issues addressed in these reasons are:

1. Should the amount of the settlement and related information, including parts of the court file, remain confidential?

2. Should the fees of SBL be approved?

3. What provisions should be made for future guardianship applications?

4. How should the settlement funds be invested?

Confidentiality of Settlement

[34] As already indicated, it was a term of settling the General Motors claim that the amount of the settlement remain confidential. General Motors has not offered any particular rationale for its insistence on confidentiality. That said, confidentiality clauses in releases executed as part of the settlement of personal injury claims are not unusual.

[35] In this case, the release executed on behalf of Jennifer Schuringa contemplates certain exceptions to the requirement of confidentiality, namely compliance with a court order, government inquiry or applicable laws or regulations, or as necessary for legal, tax or financial planning purposes.

[36] Significantly, aside and apart from any contractual requirement to do so, Harold Schuringa asks that the settlement amounts remain confidential. He does not feel that his family needs to be further exposed to unwanted attention.

[37] The Public Guardian and Trustee has expressed the view that it is not appropriate to redact or seal the quantum of the settlement funds flowing to an incapable person, given that the court must supervise Jennifer Schuringa’s guardians of property on future passing of accounts of their management of Jennifer Schuringa’s settlement funds. A sealing order on the quantum would make it impossible for the guardians of property and the court to ensure an accurate review of the financial management of Jennifer Schuringa’s personal injury settlement funds over the course of the guardianship.

[38] Furthermore, the Public Guardian and Trustee submits that sealing all or part of the motion record and settlement details is disproportionate to the privacy issues in question.

[39] The starting point in any analysis of this kind is the so called “open courts” principle enunciated in section 137 of the Courts of Justice Act, R.S.O. 1990, c.C.43. The default position is that a person is entitled to see any document filed in a civil proceeding in a court unless the court makes an order to the contrary.

[40] The applicable legal test is laid down by the Supreme Court of Canada in Sierra Club of Canada v. Canada (Ministry of Finance), 2002 SCC 41, [2002] 2 S.C.R. 522 at para.53:

A confidentiality order … should only be granted when:

(a) such an order is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonably alternative measures will not prevent the risk; and

(b) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings.

[41] The open courts principle needs to be balanced against the public policy favouring the settlement of litigation. In (Re) Hollinger Inc. (2011), 2011 ONCA 579, 107 OR (3d) 1 (C.A.) at para. 16, the Court stated:

It is well established that in order to foster the public policy favouring the settlement of

litigation, the law will protect from disclosure communications made where;

1. there is a litigious dispute;

2. the communication has been made "with the express or implied intention it would not be disclosed in a legal proceeding in the event negotiations failed;" and

3. the purpose of the communication is to attempt to effect a settlement: see Bryant, Lederman & Fuerst, The Law of Evidence in Canada, 3d ed. (Markham: LexisNexis, 2009) at p. 1033, s. 14.322); Inter-Leasing Inc. v. Ontario (Minister of Finance) (2009), 2009 ONSC 63595 (Div. Ct.), 256 O.A.C. 83.

[42] The Court of Appeal in (Re) Hollinger went on to note that the sealing order in question protected litigation settlement privilege and thereby, fostered not only the strong public interest in settlement of disputes, but, also, the avoidance of litigation, citing the pronouncement by Callaghan A.C.J.H.C. in Sparling v. Southam Inc. (1988), 1988 ONSC 4694, 66 O.R. (2d) 225 (H.C.J.) that:

This policy promotes the interests of litigants generally by saving them the expense of trial of disputed issues, and it reduces the strain upon an already overburdened provincial court system.

[43] In Leitch v. McNaughton, [2014] O.J. No. 6623 (ONSC), Grace J. was faced with a request to seal the entire file relating to a request for court approval of a personal injury settlement. Noting that the minutes of settlement did not contain a confidentiality clause, and questioning the utility of such a request when information pertaining to the settlement had already been filed with the court in the normal course, Grace J. could see no reason why the court file should be sealed.

[44] Grace J. emphasised that the issue of sealing is factually and legally complex and that, although the court has discretion to make a sealing order, it is an exceptional order to make. He observed that personal injury litigation is bound to result in the disclosure of personal information. Had the matter proceeded to trial, the result, including the amount of any judgment, would have been known.

[45] There are a number of unique features in the present case which distinguish it from Leitch v. McNaughton.

[46] For a start, although the motion for court approval is brought in the context of the Ontario action started by the Schuringas, which never proceeded beyond the pleadings stage, it is, in fact, a motion of approval of the settlement offered by the Facility, which provided an alternative to dispute resolution process for the adjudication of ignition switch defect claims.

[47] Next, the Facility was a no-fault, non-adversarial compensation programme designed to settle eligible claims. Any arguments or defences that General Motors might have presented in court, such a contributory negligence, negligence of joint tortfeasors, or that the intervening bankruptcy of General Motors Corporation barred recovery, were irrelevant to the Facility’s determinations. Claimants in the Facility did not engage in typical litigation activities such as discovery, motions or trials. Eligible claims were typically paid within 90 – 180 days from the date a submitted claim was deemed “substantially complete” by Kenneth Feinberg.

[48] In contrast to Leitch, settlement was conditional upon the execution of a release which required confidentiality.

[49] The Schuringas did not, of course, have to settle with the Facility. Indeed, many of the claims against General Motors arising from ignition switch defect claims have not been resolved through the Facility, either because the claims did not need the Facility’s criteria or because the claimant did not accept the Facility’s offer. There are hundreds of ongoing cases in the United States and Canada, including a claim by the passenger in Jennifer Schuringa’s vehicle.

[50] The Schuringas elected not to take that risk.

[51] Finally, the material filed on this motion for approval, although discussed in open cout, was subject to a sealing order form the outset.

[52] I accept that the public has an interest in knowing that General Motors has been sued and can see no reason why the fact that Ms. Schuringa’s claim has been settled should not also be in the public domain (no submission has been made to the contrary). However, to the extent that there is a public interest in knowing the amount of the settlement, it is very modest. It is something that would not even be in the public domain, where it not for the need for court approval of a settlement involving a party under a disability. Such public interest as there is in disclosure of this information is more than outweighed by the benefits of a confidentiality order which is to secure the settlement entered into between the parties.

[53] In Re Shelest, Case No. 15CEPR00806, a proceeding brought in the Superior Court of the State of California (County of Fresno), the court was asked to seal and/or redact certain portions of the court record relating to the settlement of a General Motors ignition switch claim. The court, in an order dated 12 May 2016, found that there was an overriding interest in the financial privacy of the settlement and the contractual confidentiality provision contained in the settlement agreement, which overcame the right of public access to the documents and information relating to the monetary amounts involved.

[54] In my view, taking into account the foregoing, the appropriate order to make in this case is to seal those documents that were filed with me which directly or indirectly disclose the settlement amount and to seal an unredacted version of the judgment granting court approval. Copies of the unredacted order should, however, be provided to General Motors and the Office of the Public Guardian and Trustee.

[55] A version of that judgment redacting the amount of the settlement and the amount of the contingency fee (which, as discussed below, is based on a percentage of the settlement amount) should, however, be part of the public record. If there is a need to refer to the judgment in future proceedings (for example relating to the passing of accounts), and subject to any order of the court to the contrary, the redacted version should be used in any filing, with the unredacted version being made available for review, if required by the court.

[56] Any party seeking to vary this aspect of the judgment approving the settlement shall be at liberty to apply to the court to do so. I do not seize myself in respect of any such applications.

[57] In this latter respect, the Court of Appeal in Re Hollinger Inc. evidently drew some comfort from the fact that there was a “comeback” clause in the sealing order allowing any party to return to court for a reassessment of the need for the sealing order. A similar approach is warranted in this case.

Legal Fees

[58] When SBL was originally retained, the firm entered into a contingent fee agreement with Janette and Harold Schuringa which provided that the fee on the tort claim would be based upon a percentage of recovery, at 20%, plus the costs and disbursements recovered. Because costs were included in the retainer as being payable to SBL, the retainer agreement included reference to Ontario Regulation 195/04 and section 28.1(8) of the Solicitors Act, R.S.O. 1990, c.S.15, which requires an application to be made to the court to have costs included in the fees payable to the solicitors.

[59] Separate contingency fee agreements were entered into with respect to the accident benefits claim and a long-term disability claim. The contingent fee in the accident benefits claim (which forms part of the settlement now approved by the court) was 25%, plus disbursements and H.S.T.

[60] Certain disability payments are ongoing. SBL hopes, in due course, to be able to negotiate a lump sum settlement of the disability claim with the disability insurer.

[61] SBL’s retainer agreement referred to and incorporated a “Summary of Litigation Procedures”. Suffice it to say that this document provides a comprehensive and intelligible description of the services provided by SBL and whether such services are covered by the contingency fee.

[62] When the prospect of filing a claim with the Facility emerged, and having regard to the fact that costs, as that term is understood pursuant to Ontario practice, are not generally recoverable in the United States, an amended retainer was entered into with the Schuringas, which specified a fee percentage of 27.7% in consideration of the settlement negotiations with the Facility.

[63] The revised retainer agreement also provided that no fees would be charged to the Schuringas in relation to the OHIP subrogated claim, the settlement of the accident benefits claim or the long term disability claim.

[64] In assessing the appropriateness of a contingency fee, regard should be had to the factors identified in Rule 2.08(3) of the Law Society of Upper Canada’s Rules of Professional Conduct as well as to the valid social objective of ensuring that access to justice is maintained for injured plaintiffs. As well, the court must consider the following factors:

a. The financial risk assumed by the lawyer (including the likelihood of success, the nature and complexity of the claim and the expense and risk of pursuing it):

b. The results achieved and the amount recovered;

c. The expectations of the party; and

d. Who is to receive an award of costs.

See generally, Re Cogan (2007), 2007 ONSC 50281, 88 O.R. (3d) 38 at paras. 40-42.

[65] At my request, the Public Guardian and Trustee provided comments on the reasonableness of the legal fees sought by SBL pursuant to its contingency fee agreement with the Schuringas.

[66] A number of observations were made by the PGT concerning apparent non-compliance with the requirements of the Solicitors Act and Regulation 195/04. In part, these comments appear to have been the consequence of a failure on the part of SBL to provide the PGT’s lawyer with a complete copy of the contingency fee agreement, including the Summary of Litigation Procedures which, Mr. Strype assures me, were, in fact, provided to the Schuringas. Aside and apart from the compliance issues raised by the PGT, a number of observations were made with respect to the reasonableness of the fees claimed. These observations can be summarised as follows:

a. The amount of legal fees sought is significantly disproportionate to the amount of time expended, having regard to the size of the award, the short time horizon between the initial retainer, the time the claim was submitted to the Facility and the early settlement, in total, a period of just over two years.

b. There was not a high level of legal complexity involved in the claim, once the Facility had accepted the claim.

c. Although the result achieved was significant, the effect is to inflate the proposed legal fee due to the large settlement amount. This results in a fee which is unreasonable. In a case with a high award, a contingency fee agreement with a lower percentage, perhaps a cascading calculation for the percentage, could have produced a more reasonable fee.

d. Despite the assertion by the solicitor that the settlement, after payment of the proposed solicitor’s fees are approved, will be sufficient to fund Jennifer Schuringa’s future care, that cannot be said with certainty. Furthermore, significant fees may be incurred going forward with respect to guardianship, including transitions in who is the guardian and questions arising during the guardianship requiring court involvement. There will also need to be passing of accounts every two years.

e. There does not appear to have been any great level of uncertainty as to the potential for success of the claim. There is no suggestion that this was a “bet the firm” kind of case with the solicitors assuming the lion’s share of the risk by fronting the cost of expert opinions to make out the claim without any guarantee of success. This is corroborated by the fact that the disbursements incurred by SBL were $39,924.75.

[67] SBL reviewed the PGT’s letter of 31 August 2016 with the legal guardians.

[68] Notwithstanding the PGT’s expressed concerns, the Schuringas are reported to continue to express their approval of the fee agreement.

[69] Having regard to the requirements of the Solicitors Act and the regulation, it would, in fact, appear that the necessary formalities were, in fact, attended to, in that:

a. The contingency fee agreement is dated;

b. The clients’ signatures are verified;

c. It contains the mandatory statement concerning the retaining of a solicitor other than by way of a contingent fee agreement;

d. It contains a statement that the contingent fee agreement is always subject to review by the court;

e. It contains an example of how the contingent fees are calculated;

f. It contains a statement that the client can ask the Superior Court of Justice to review and approve the solicitor’s bill within 6 months of receiving the original bill;

g. It describes how the client or the solicitor may terminate the contingent fee agreement, and the consequences of doing so, including the manner in which the fees would then be determined;

h. It includes a statement that the lawyer shall not recover more in fees than the client recovers in damages, or receives by way of settlement;

i. It contains an extensive explanation of costs and the awarding of costs; and

j. It contains an explicit paragraph of dealing with Rule 7.08 and the requirement of court approval.

[70] Mr. Strype has pointed out that if one factors in the fees that would otherwise have been separately charged for work on the accident benefit claim, the OHIP recovery and the anticipated long term disability settlement, the “real rate” charged by SBL as a percentage of the anticipated total recovery would be 23.3%. Coupled with an undertaking by SBL that SBL will cover the cost of all future court applications for approval, including the passing of accounts and any costs associated with a change of guardianship, SBL submits that its fee is far less disproportionate than the PGT has suggested.

[71] I will briefly address the PGT’s concerns as listed above.

Time Spent Relative to Amount Charged

[72] In Henricks-Hunter v. 814888 Ontario Inc., 2012 ONSC 4564, the court held that the time spent by solicitors on a file, while a relevant factor in determining the reasonableness of a contingency fee, is just that: the court should not determine the issue based solely on an “hourly rate plus premium” approach.

[73] SBL has described in some detail the work that was done, however, I have not been provided with any dockets or time records. Although the action settled without the need for any examinations for discovery or hearings (other than for appointment of the guardians of property and court approval of the settlement), it is nevertheless clear that a great deal of work has been done which involved the deployment of considerable skill and expertise and which resulted in a very favourable settlement.

[74] It would run contrary to the interests of justice if the lawyer who achieves a good outcome, by skillfully negotiating a settlement without having to expend significant time and resources prosecuting a claim through the courts, was to effectively be penalised by then having his or her contingency fee reduced as a result.

[75] In Cannon v. Funds for Canada Foundation, 2013 ONSC 7686, a case involving a request for approval of the contingency-based fees of counsel in a class action, Belobaba J. said, at para.5:

Why should it matter how much time was actually spent by class counsel? What if the settlement was achieved as a result of “one imaginative, brilliant hour” rather than “one thousand plodding hours”.

[76] Finally, on this point, as any lawyer undertaking contingency fee work knows, for every case in which a settlement is achieved without a lot of time being spent, there is another one in which countless hours are spent resulting in an effective hourly rate that would be well below a market rate.

Lack of Complexity

[77] Jennifer Schuringa’s eligibility for compensation by the Facility turned on SBL being able to marshal evidence that would bring her claim within the strict criteria established by the GM Protocol. A claim would be deemed ineligible if there was any airbag deployment or deployment of seatbelt pretensioners during the accident. It was also critical to establish that the ignition switch was in an “off” position at the time of the accident and to dispel any suggestion that the police or ambulance personnel may have turned off the ignition in an effort to extricate the victims.

[78] SBL had a limited time to find and then obtain an opinion from suitably qualified engineers. Part of that process included the review and analysis of transcripts from US Senate hearings on the ignition switch problems. Ultimately SBL, with the assistance of the professional engineers it engaged, was able to meet the stringent requirements imposed by GM.

[79] Having got the claim into the Facility, it was then necessary for SBL to do a full work-up of all of Jennifer Schuringa’s medical issues and the cost of care to look after her on a day-to-day basis and to provide a basis for evaluating the cost of potential remediation of her injuries. As Mr. Strype explained:

The medical team from [the Facility] challenged all of the Canadian cost of care reports, and suggested that the injuries were so extensive that the plaintiff required only institutional observational care for the balance of her life. Our work was directly towards the goal of putting Jennifer Schuringa back into her life to the extent that medical care was capable of remediating her problems. To this end, our medical cost of care analysis suggested far more extensive medical treatment across a broad spectrum of medical specialties.

[80] Mr. Strype was also faced with an argument that Ms. Schuringa’s life span would be significantly shortened. He evaluated numerous clinical studies and found that the most current medical literature was to the effect that life span could be optimised with excellent medical care. Again, in Mr. Strype’s words:

… in our negotiations with the GM facility’s representatives, of which there were 5 to 7 experts at each meeting, including actuaries, doctors and lawyers, the various issues were argued with GM taking the position that her life would be substantially shortened due to the medical issues that arise from being bedridden, such as infection, bed sores, j-tube feeding blockages, choking to death and congested heart failure. Our medical research indicated that the more supervision and better medical care; that is more highly trained medical personnel, could overcome the medical issues raised by the GM facility. Eventually, we came to an agreement that she would live until she was approximately 66 years old.

[81] As will be discussed, considerable work has subsequently gone into establishing a plan to obtain optimal benefit from the financial recovery that was achieved. This has involved working with, and understanding, sophisticated financial, tax and investment information. It was necessary to take advice on trust and guardianship law and to implement that advice with a plan that would pass muster with the court.

[82] While none of these things, in and of themselves, could be described as highly complex, they are by no means straightforward either. The cumulative effect of SBL’s actions resulted in not just an excellent financial recovery but, also, arrangements which optimise the benefit of that recovery and should secure Jennifer Schuringa’s future.

The Contingency Fee is Disproportionate

[83] In another General Motors Facility claim, the United States District Court held that a 40% contingency fee was unreasonable and, hence, unenforceable: Jennifer Clark v General Motors LLC, No. 6:14-CV-03413-DGK, United States District Court for the Western District of Missouri, Southern Division, order of Kays C.J. dated 9 December 2015. Applying the factors enumerated in the Missouri Rule of Professional Conduct 4-1.5(a), Chief Judge Kays reduced the fee from $1,527,728 (the contingency amount) to $945,000 on a quantum meruit basis.

[84] Suffice it to say that a fee that is obviously disproportionate having regard to the factors enumerated above will be unreasonable.

[85] The PGT suggests that, instead of a straight line fixed percentage, a cascading percentage could have been implemented.

[86] While I would not take issue with the suggestion that the type of arrangement postulated by the PGT would be appropriate, that does not necessarily render the arrangement in this case inappropriate.

[87] At the risk of repeating what I have already said, contingency fees are seen as playing an important role in access to justice. In this particular case, the contingency fee generated is, by any standards, very high. However, the effective rate – 23% if one factors in various ongoing responsibilities that SBL has assumed – is not especially high.

Need for Provision for Sufficient Funds to Pay for Future Care and Other Future Expenses

[88] Evidence has been provided that satisfies me that the reasonably foreseeable care expenses and related medical and rehabilitation needs of Jennifer Schuringa can be more than adequately met by the anticipated return on the investment of the settlement proceeds.

[89] SBL obtained an opinion from Ian Hull, a Certified Specialist in Estates and Trusts Law estimating that the future legal costs associated with the guardianship of Jennifer Schuringa’s property is $566,000.00, including passing of accounts, applications for directions, continuing legal advice and amendments to the management plan. As I will discuss more fully below, the partners of SBL have undertaken to bear these expenses. Mr. Strype emphasised that this responsibility was an undertaking assumed not only by him, but also by the other partners of SBL.

[90] Although I have no reason to doubt the good faith of Mr. Strype and his partners, an obvious concern is that, at some point in the future, there may be no one practising law who remains bound by the undertaking. Of all of the submissions that were made in support of the proposed settlement arrangements, this was the one that does cause me some concern. I think that if I were to consider a similar proposal in the future, I would have asked for a more tangible plan, perhaps involving the purchase of an annuity or requiring some of the amount paid in fees to be held in escrow, so as to better secure the funding of these future expenses. Regrettably I did not think of it at the time that I heard argument or before I signed the judgment. Accordingly I can only now, through these reasons, suggest such an arrangement.

[91] Ultimately, the amount of the settlement is such that, even if my worst fears about what might happen in the future with respect to guardianship and related expenses were to occur, there should be more than enough resources available to cover such expenses.

SBL did not assume great risk

[92] According to Mr. Strype, at the time of the initial retainer, liability was a major question. There was a substantial possibility that there would be no tort recovery from any potential defendant. This was, after all, a single vehicle accident in which the plaintiff had seemingly lost control of her vehicle and crashed into a tree. Jennifer Schuringa was so badly injured that even assuming she has some memory of what happened, she will never be able to articulate it.

[93] The establishment of the Facility did, of course, provide an avenue of redress that would not ordinarily have been open. It was possible for the litigation risk to be eliminated once SBL had managed to bring the claim within the stringent criteria imposed by the GM protocol.

[94] When considering what sort of risk was assumed, it is appropriate to look at the case as it was originally presented to SBL. At that time, a success was far from guaranteed. Although, from the perspective of getting the case resolved, everything turned out well in the end, the implication of the OPG’s concern is that if, after the initial risk of taking on a case has been assumed, there are developments which reduce or eliminate that risk, the fee should be reduced. I would not agree with that as a statement of general principle.

[95] I sympathise with the following comment by Belobaba J. in Cannon, at para.6:

But I don’t understand how a judge, post-hoc and in hindsight, confronted with untested, self-serving assertions about the many risks incurred, can measure or assess those risks in any meaningful fashion and then purport to use this assessment as a principled measure in approving class counsel’s legal fees.

[96] However, s. 28.1(7) of the Solicitors Act required the court to consider the nature and complexity of the proceeding and the expense or risk involved in it, as well as other factors the court considers relevant.

[97] It is, of course, of paramount concern that all reasonably foreseeable expenses and needs of Jennifer Schuringa and her family will be covered by the settlement. That is the approach which the court took in Cogan and it is a factor which I, too, have placed a great deal of weight on in determining whether the contingency fee is reasonable.

[98] To conclude, on the issue of the reasonableness of the contingency fee arrangement, while each of the concerns expressed by the PGT are appropriately raised, I do not find the majority of those concerns to be borne out when the circumstances of this case are considered.

[99] I am satisfied that the contingency fee retainer agreement was fully understood and agreed to by Schuringas. The percentage contingency fee is not excessive and indeed is well in line with the percentages that are typically charged in a personal injury arena. The amount that SBL will receive is neither unseemly nor inherently unreasonable in all of the circumstances. And, most importantly, it is not incompatible with the objective of ensuring that all reasonably foreseeable expenses and needs of Jennifer Schuringa and her family will be met.

Provisions for Future Guardianship Applications

[100] The PGT made two specific recommendations with respect to guardianship namely,

a. That the guardians should immediately engage a guardianship lawyer and an institutional guardian of property in order to arrive at an appropriate proposal for the management of Jennifer’s personal injury settlement funds; and

b. That the guardians bring a motion to the court in the guardianship proceeding to vary the property guardianship of Jennifer Schuringa to appoint an institutional guardian of property, seek approval of the new guardian’s plan of management of Jennifer’s funds, and provide directions on the passing of accounts of Harold and Janette Schuringa.

[101] As already referenced, SBL engaged Ian Hull, an appropriately qualified specialist, to advise on some, but not all, of the areas identified by the PGT.

[102] The PGT’s recommendation for an institutional guardian is articulated in these terms:

The parents, as personal care guardians, have indicated their intention to fulfill the significant case management responsibilities in managing Jennifer’s intensive daily care needs. Given Jennifer’s life expectancy and the parents’ age, it is reasonable to assume that she will out-live her parents. In our experience, it is often not reasonable to expect adult siblings of an incapable person will assume the significant responsibilities and liability associated with becoming their siblings’ guardian of property once the parents are elderly or deceased. Accordingly, it is appropriate in this case for an institutional guardian to be appointed by the Court as Jennifer Schuringa’s guardian of property.

[103] The PGT’s submission goes on to note that an institutional guardian of property would have the obligation under the Substitute Decisions Act to consult with Jennifer’s supportive family and to work closely with her guardians of personal care.

[104] Jennifer Schuringa’s parents are 56 and 55 respectively (or at least were in March 2016 when Mr. Schuringa swore an affidavit). Mr. Schuringa works for an international business consulting, technology consulting and out-sourcing services company. He is a sophisticated investor.

[105] Perhaps anticipating the subsequent comments of the PGT, Mr. Schuringa states that he and his wife have discussed with their other adult children what might have if the parents die or no longer able to act as the guardians for property. The siblings have said that they would take over from the parents. However, Mr. Schuringa also states in his affidavit that in the event that his other children could not act as guardians and trustees, he and his wife would wish to appoint the Royal Trust Company to act as the institutional guardian.

[106] It is likely that there will come a time when the appointment of an institutional guardian is necessary. In the judgment of Mr. and Mrs. Schuringa, who appear to have managed extremely well to date, assisted by advice from experienced and appropriately qualified professionals, is that that time has not yet come.

[107] Mr. Hull’s opinion anticipates replacement of guardianship applications in the future. He observed that although it is possible for a trust company and/or professional advisor alone to remain a property guardian, it is uncommon for such a party to do so where there are other family members who would be involved in Jennifer’s life, as is presently the case.

[108] Mr. Hull’s opinion estimates the likely costs of future guardianship applications caused not only by replacement of guardians but, also, in the event of significant changes in Jennifer’s finances or abilities. He also anticipates the need for the property guardians to pass their accounts every two or three years, applications for directions, continuing legal advice from the guardianship lawyer and amendments to the management plan.

[109] As indicated in my discussion of SBL’s legal fees, the total anticipated cost of these various processes is $566,000, which will be borne by SBL.

[110] I am satisfied that the spirit, if not the letter, of the PGT’s concerns has been addressed and that the arrangements that have, or will be, made, appear adequate at the present time.

[111] The obvious qualification with respect to all of the foregoing comments is, of course, that the guardianship arrangements are currently set out in the order of Madam Justice Conway and to the Amended Management Plan approved by me, which approval is subject to such further order as the Estates Court may make as and when required.

Investment of the Settlement Funds

[112] The Schuringas retained a firm of chartered accountants to advise them on options for investing the settlement funds. Two options were considered:

a. Purchase of a structured settlement annuity; or

b. Split the settlement proceeds equally between two separate investment firms with one custodian of the funds, the Royal Bank of Canada.

[113] The guardians prefer the second of these options. Notwithstanding the tax efficiencies of a structured settlement, the advice of the accountants, who undertook an extensive review of investment options and the tax implications of those options, was that the second option was more likely to provide a better return than the first.

[114] The evidence provided in support of the recommendations concerning investment funds was substantial. The experience of this judge has been that even in these days of low interest rates, a structured settlement will usually meet the needs of an injured claimant. However, each case will turn on its own facts and circumstances. Having considered the professional advice given to the guardians and the proposed arrangements for the investment of the funds, I am satisfied that Jennifer Schuringa’s needs and interests have been met and, barring unforeseen circumstances, that the capital and return on investment will be more than sufficient to meet her interests and needs for the rest of her life.

[115] For these reasons, the Amended Management plan, which is appended to the formal judgment in this matter as Schedule A, is approved.

Conclusion

[116] I am gratefully to all counsel, including Ms. Sidney Peters, acting for the PGT, for their thoughtful and helpful contributions in relation to this tragic and challenging case. It is appropriate that I also recognise the extraordinary dedication of Jennifer Schuringa’s family and, in particular, her parents.

Graeme Mew J.

Released: 14 December 2016

Citation: Schuringa v. Trent Lakes (Municipality), 2016 ONSC 7882 Court File No.: CV-15-520423 Date: 2016-12-14

Ontario Superior Court of Justice

Between:

Jennifer Schuringa by her litigation guardian Janette Schuringa, Janette Schuringa, Harold Schuringa, Erik Schuringa and Whitney Schuringa Plaintiffs

– and –

The Municipality of Trent Lakes, The City of Peterborough, General Motors of Canada Limited, General Motors Company and Attorney General of Canada Defendants

Reasons for Decision (Motion for Approval of Settlement Pursuant to Rule 7.08)

Mew J.

Released: 14 December 2016