ONTARIO SUPERIOR COURT OF JUSTICE

Oshawa COURT FILE NO.: 68099/10 DATE: 2017-02-01

BETWEEN:

WESLEY MAURICE JORISCH and BRITTNEY JORISCH, minors by their Litigation Guardian GEORGE JORISCH, GEORGE JORISCH personally, SUZANNE JORISCH and CONSTANCE MEZOFENTI Plaintiffs

-and-

TORONTO CATHOLIC DISTRICT SCHOOL BOARD, MARSHALL McLUHAN CATHOLIC SECONDARY SCHOOL, POPE JOHN PAUL II CATHOLIC SECONDARY SCHOOL, LINDA ROY, ROB BUFALINI, LUIGI MAZZUCCO, TORONTO DISTRICT COLLEGES ATHELETIC ASSOCIATION, PAUL SOLARSKY, EVA ROSER, and ROBERT BROHAM, STEFAN NAYDENOV ZLATANOY and PANNO THERAPEUTIC INC. Defendants

REASONS ON MOTION FOR APPROVAL OF SETTLEMENT

[1] The plaintiff, Wesley Jorisch, was enrolled in Marshall McLuhan Catholic Secondary School. On April 29, 2010, at age 16 years, he was playing an interschool rugby match when he was tackled while carrying the ball. He suffered a cardiac arrest from the tackle which led to an anoxic brain injury. This motion is to approve the tentative settlement of this action.

Background Circumstances

[2] At the present time, Wesley Jorisch is 22 years of age. When he sustained the injury he was taken by ambulance to Sunnybrook Health Sciences Centre and subsequently admitted to Holland Bloorview Kids Rehabilitation Centre, where he remains. He is completely dependent for all activities of daily living. He is fed through a G-tube, has no bowel control and is incapable of speech.

[3] This action was commenced in 2010 against the Toronto Catholic School Board and other defendants. The other plaintiffs in this action include Wesley’s parents, George and Suzanne Jorisch, his sister Brittney Jorisch, and his grandmother Constance Mezofenyi as Family Law Act (“FLA”) claimants.

Procedural History

[4] On January 5, 2016, Regional Senior Judge Michelle Fuerst referred this case to me for case management. The trial date had been previously set for November 7, 2016, at Oshawa, Ontario for what was estimated to be a six week jury trial.

[5] On May 10, 2016, a case management meeting was held at the courthouse in Oshawa. Pre-trial memorandums were filed. The discussions at that meeting involved the further reports required and some preliminary views relating to the liability issues. A further case management meeting was tentatively arranged for June 24, 2016. However the parties agreed to adjourn any pre-trial conference and instead arranged for a mediation which was held late August and early September 2016. A proposed settlement was achieved on September 16, 2016, in the amount of $12,500,000.00 all-inclusive, subject to court approval.

[6] This application for court approval was brought before me on September 30, 2016. After reviewing the application and supporting material, I released an endorsement dated October 5, 2016. In this endorsement I detailed the history of appointing Suzanne Jorisch as Guardian of Property pursuant to the Order of Justice Lack dated May 13, 2014, as well as the requirements for filing an Amended Management Plan.

[7] In the endorsement of October 5, 2016, I indicated that I had no issues with Wesley Jorisch being brought home for care and that I was satisfied with the renovations to the home as set forth in an expert’s report. I also indicated that I had no reservations about Suzanne Jorisch’s ability to handle and invest a significant portion of the settlement funds. Therefore, I was satisfied with the objective of the proposed settlement. However, I also recognized that my first and foremost responsibility was to ensure that that the proposed settlement is in the best interest of Wesley Jorisch, and to make inquiries and be satisfied that the proposed settlement will reasonably meet all the needs of the Plaintiff in the future. Therefore, after reviewing the 3 volumes of material filed by Plaintiff’s counsel, I directed that the Application be served on the Public Guardian and Trustee and requested a report pursuant to Rule 7.08(5) of the Rules of Civil Procedure.

The Proposed Settlement

[8] The proposed settlement reached at the mediation on September 16, 2016, of $12,500,000.00 is to be funded by the Ontario School Boards’ Insurance Exchange and is broken down as follows:

(1) The sum of $4,000,000.00 is to be placed in a structured settlement for Wesley Jorisch’s benefit.

(2) The sum of $500,000.00 is to be used to modify Suzanne Jorisch’s home so that Wesley can be brought home and cared for in a hospital-like setting.

(3) The sum of $2,500,000.00 is to be privately invested by Suzanne Jorisch for Wesley’s benefit.

(4) There will be a payment of $1,000,000.00 in satisfaction of OHIP’s subrogated claim.

(5) The partial indemnity costs are in the sum of $1,100,000.00 (inclusive of disbursements in the amount of $275,000.00).

(6) The balance of the settlement is in the amount of $3,400,000.00 and which inter alia is to be used to pay the further claims for legal fees, and other claims of the plaintiffs and which will be the subject of further comment herein.

[9] The legal fees and disbursements claimed by Plaintiff’s counsel are summarized as follows:

(1) The partial indemnity costs of $1,100,000.00 (inclusive of disbursements in the amount of $275,000.00)

(2) Net Legal Fees (inclusive of HST) in the amount of $3,864,600.00

[10] The settlement is based on the plan that Wesley Jorisch will be relocated to Suzanne Jorisch’s home which is owned by both parents, although only Suzanne Jorisch will be providing Wesley with care together with Personal Support Workers and nurses.

[11] As detailed above, the sum of $500,000.00 will be used to renovate the home to accommodate Wesley’s care needs. Any residual funds after the renovations are complete will be added to the sum of $2,500,000.00 which is to be invested by Suzanne Jorisch for Wesley’s benefit.

[12] The proposed settlement provides that when Wesley Jorisch dies, and in the event that there are any funds left from the $2,500,000.00 private invested funds and any balance remaining from renovations, then the funds left over will revert to the Ontario School Boards’ Insurance Exchange.

[13] In the endorsement of October 5, 2016, I outlined that the requested report from the Public Guardian and Trustee should review and address the following:

(a) The investment proposal by TD Waterhouse put forward by Suzanne Jorisch relating to the private invested funds.

(b) The terms of the proposed structure of $4,000,000.00.

(c) The disbursements of the solicitor.

(d) The contingency fee retainer agreement.

[14] In the endorsement of October 5, 2016, I also asked Plaintiff’s counsel for further documentation and clarification on some issues including:

(a) an Amended Management Plan;

(b) clarity on what funds are being paid for the solicitor’s fees, FLA claimants, case managers and anyone else.

[15] In the supplementary affidavit sworn October 11, 2016, Mr. Balena advised that the legal fees being claimed are in the amount of $3,864,600.00, plus disbursements of $275,000.00 for a total of $4,139,600.00. The defendants are contributing $1,100,000.00 in partial indemnity costs (inclusive of disbursements) which leaves a balance owing of $3,039,600.00 in legal fees. It was proposed that this sum be paid from the $3,400,000.00 balance of the settlement, leaving a net balance of $360,400.00. Out of this sum of $360,400.00 it was proposed that $25,000.00 will be paid to Brittany Jorisch who is Wesley’s sister and $335,400.00 will be paid Suzanne Jorisch for her FLA claim and a partial payment of her lost income while caring for her son. Suzanne Jorisch has been off work on a disability benefit claim since her son’s injury. George Jorisch, the father of Wesley, has forfeited his claim to any of these proceeds. The materials are silent on any allocation of settlement funds to the grandmother, Constance Mezofenyi and accordingly I am treating any FLA claim on her behalf as abandoned.

[16] I am approving the FLA claim of Brittany Jorisch and Suzanne Jorisch as detailed above. There is extensive material filed detailing the ongoing almost daily attendances of Suzanne Jorisch to care for her son at Bloorview. She left her employment which paid her an income of $150,000.00 a year and went on a disability insurance plan so that she could care for Wesley. It is her stated intention to continue to provide constant care to her son upon his relocation to his home.

Public Guardian and Trustee Report

[17] The Public Guardian and Trustee (“PGT”) did a very thorough review of the material filed and did a considerable amount of work including many enquiries and then provided a report to the court, dated December 23, 2016. Mr Balena also received a copy of the report.

Reply Affidavit and Brief Filed by Mr. Balena

[18] Mr. Balena requested the opportunity to reply to the Public Guardian and Trustee Report and he delivered on January 18, 2017 a further lengthy supplementary affidavit sworn January 16, 2017, together with a binder of further material to which I will be referring in these Reasons. It is noted however, that Mr. Balena proceeded to obtain letters from a case manager and investment advisor in January 2017, after receiving the report of the PGT. Accordingly, the PGT has been unable to respond to the new information advanced by Mr. Balena which in substance suggests that the PGT report is in error in several material respects. I will be referencing this supplementary affidavit and the material attached throughout these Reasons.

Needs of Wesley Jorisch and Monthly Care Costs

[19] In the materials filed on the Application is an affidavit of Mr. Balena sworn September 19, 2016, and attached is the Future Care Costs Report prepared by Occupational Therapist Beverlee Melamed, dated June 15, 2016. The report was prepared on the premise that Wesley Jorisch’s care would be provided in a home setting. The assumptions underlying the report are:

(a) that Wesley will not contribute to his residence; and,

(b) that Suzanne Jorisch will continue to reside at the home and she will provide around-the-clock attendant care for Wesley and that she will manage the treatment providers.

[20] In her report (page 83) Ms. Melamed opines that in relation to Wesley’s care at home would require total fixed costs of $256,132.10, and total annual costs of $499,302.99. The application of simple math to the fixed costs of $256,132.10 and the total annual costs of $499,302.99 works out to monthly expenses of $41,608.58. The largest amount of this cost is attributed to live-in Personal Support Workers and nursing support. However, in his first affidavit dated September 19, 2016, Mr. Balena states that Rosemary Whyte, a case manager with whom he has consulted, has advised that she can provide two live-in PSWs and nursing support at a cost of approximately $25,000 per month. The balance of the recurring costs identified in Ms. Melamed’s report amount to $5,450.00 per month. Therefore, it is Mr. Balena’s position in the September 19, 2016 affidavit that Wesley’s recurring monthly expense is approximately $30,000.00.

[21] As the PGT points out in their report of December 23, 2016, the difficulty in accepting Mr. Balena’s estimate of $30,000.00 as the recurring monthly expense is that it does not take into account all of Wesley’s future expected expenses including the total fixed costs (estimated at $256,132.10 by Beverlee Melamed), the living expenses at the home, food, and the attendant care provided by Suzanne Jorisch.

[22] In the report of December 23, 2016, the PGT includes a letter dated November 9, 2016, from Mr. Balena. In this correspondence Mr. Balena states that Suzanne Jorisch does not intend to claim compensation as guardian of property. His correspondence also states that Suzanne Jorisch would only pay herself attendant care fees if there is money left over from Wesley’s income in any given month.

[23] In reviewing this application I have particularly noted Mr. Balena’s first Supplementary Affidavit, sworn October 11, 2016. Several important statements are contained in that affidavit which have a bearing in relation to a later second Supplementary Affidavit sworn January 16, 2017, filed in response to the PGT report dated December 23, 2016.

[24] In the Affidavit of October 11, 2016, Mr. Balena states that Wesley’s monthly expenses will be approximately $40,000.00, of which “87% is made up of two items, namely, personal support workers and nursing support.” He references the Future Care Cost report of Beverlee Melamed, dated June 15, 2016, which he filed in support of this application.

[25] Further in this affidavit of October 11, 2016, (para. 11) Mr. Balena states that Wesley is currently a resident at Holland Bloorview Kids Rehabilitation Hospital and:

He is currently receiving 24-hour per day services from two personal support workers. He is also receiving 13.33 hours per day of nursing support from a registered nurse. OHIP has indicated that costs being paid by them to Holland Bloorview Kids Rehabilitation Hospital total in excess of $40,000.00 per month. This sum is almost identical to the monthly burn rate identified by Beverlee Melamed.

[26] In the original affidavit of September 19, 2016, and the supplementary affidavit of October 11, 2016, the structured settlement proposed on behalf of the plaintiff ($4,000,000.00) will provide $15,012.00 per month for the first year of the structure, indexed at 2% annually. Under the updated private investment proposal ($2,500,000.00) TD Waterhouse projects that Wesley would receive $276,000.00 a year, or $23,000.00 monthly, for 25 years. Therefore adding the initial income of the structured settlement, and the withdrawal from the updated investment proposal, yields a monthly income of $38,012.00.

[27] As the correspondence of Mr. Balena dated November 9, 2016, (attached as Schedule “A” to the PGT report) states there are a number of uncertainties related to the monthly care costs. In the PGT report, it is recommended that it is reasonable to assume that Wesley’s monthly expenses will be approximately $40,000.00. I do have concerns with some of the cost estimates being understated, including the cost of PSWs and nursing needs and as well there remains the issue of the fixed costs estimated at $256,132.01. Other expenses which create uncertainties and difficulties would include Wesley’s food, clothing, and his share of the household utilities. Further, the concept of Suzanne Jorisch only claiming attendant care fees, when those funds are available, is not reasonable or fair. She will have to be paid at least a modest sum for her services in order to make the entire arrangement viable over the long term. There are other added expenses associated with Wesley’s guardianship such as legal fees associated with passing of accounts, preparing Amended Management Plans and new guardianship applications, if Wesley outlives his mother as well as guardianship compensation thereafter. Finally, it must be remembered that income from the private investment is taxable and that Wesley’s expenses are subject to inflation and will increase over time. One can only guess at what the amount of tax liability will be based on the material filed.

[25] In the further Supplementary Affidavit of Mr. Balena, sworn January 16, 2017, he states that in relation to pg.81 of Beverlee Melamed’s report, the plaintiff requires personal support worker care for 24 hours a day and nursing support care for 13.33 hours a day. The total monthly cost for the PSW care and nursing care is $36,159.00 in accordance with Ms. Melamed’s expert opinion and report. There are of course other costs related to Wesley’s care over and above this amount. Mr. Balena next references his Affidavit of September 19, 2016, wherein he stated that a case manager, Rosemary Whyte, stated that she could obtain the “recommended PSW and nursing care” at an approximate cost of $25,000.00 per month. Mr. Balena in his affidavit of January 16, 2017, states that he contacted Rosemary Whyte in January 2017 after receipt of the PGT report and she has advised him that she has been able “to retain two personal support workers at a total monthly cost of $6,450.00” and a weekend support worker for 48 hours at the rate of “$20.00 an hour for a total of $4,128.00 per month.” Therefore Mr. Balena says the “total cost for PSW and nursing services will be $10,578.00” (emphasis added).

[26] I have reviewed the letter of Rosemary Whyte dated January 10, 2017, attached as an exhibit to Mr. Balena’s Supplementary Response Affidavit of January 16, 2017. I find that there are glaring deficiencies in this letter of Ms. Whyte and I reject her analysis and cost cutting measures as outlined in the letter. I will in summary manner state my reasons for rejecting her opinion.

• Beverlee Melamed is a well-recognized expert in the area of delineating the needs and associated costs related to persons suffering a disability. I have reviewed a great number of expert opinion reports of Beverlee Melamed over the years and indeed many of those reports were provided at the request of Mr. Balena.
• Ms. Whyte is the current case manager, and according to her letterhead operates a business “Rosemary Whyte Rehab Consulting Services”. Wesley Jorisch is not at home. He remains in the Holland Bloorview Kids Rehabilitation Centre pending the placement of the settlement and investment funds. I prefer and accept the opinion of Ms. Melamed over the correspondence of Ms. Whyte. Ms. Melamed’s expertise is detailed in her report. There is no basis to accept Ms. Whyte’s statements over the well-reasoned report of Ms. Melamed.
• Ms. Whyte states in her letter that the rate for PSWs in the Greater Toronto Area is from $20.00 per hour to $32.00 per hour. She acknowledges that the rate of $27.98 per hour by Ms. Melamed falls within the range.
• Ms. Whyte then states without supporting reasons that “personal support workers are available for a lesser cost.” She then states that the current cost of two live-in PSWs would be $750.00 each or $1,500 a week for Monday to Friday at a total monthly cost of $6,450.00. The cost of a PSW for 48 hours over the weekend at the rate of $20.00 an hour would be $960.00 a weekend, or $4,128.00 per month. She then states that on the weekend there will have to be assistance provided by community care workers for “six one hour care periods over the weekend.” It is apparent to me that Ms. Whyte was asked to find the lowest cost attendant care. It is an old maxim, “that you only get what you pay for”. Wesley Jorisch and his family should be provided with reasonable health care. Beverlee Melamed’s costing of PSW care at $27.98 an hour in 2016 dollars more approximates the quality of health care that Wesley needs.
• Beverlee Melamed in her report (pg. 42) made specific recommendations related to the personal support workers and nursing care that Wesley will require at home. These are the personal support and nursing services that he presently receives in the hospital. The same personal support and nursing services will be required for Wesley at home. Ms. Whyte specifically proposes in her letter that matters related to the nursing services can be taught to the PSWs to do, as well as the services recommended by Beverlee Melamed including physiotherapy and occupational therapy. Therefore Ms. Whyte recommends that Wesley be seen for two hours a week by a registered nurse to oversee his overall health and “to provide ongoing educational support to the personal support workers.” These proposed cost cutting measures are unacceptable. I accept the level of treatment as outlined in Ms. Melamed’s report.
• Ms. Whyte also proposes that other recommendations made in Beverlee Melamed’s report of June 15, 2016, including aquatherapy, be reduced from 5 times a week to once a week, as well as eliminating Wesley’s attendances in programs such as C.H.I.R.S. and C.O.T.A. which relate to sensory stimulation. She states that programs can be developed by others and done by the PSWs and the Jorisch family. Again, I state that these suggestions are rejected. Beverlee Melamed gave the basis for her recommendations and they are made on what is in the best interest of Wesley’s future care. Cost cutting measures in relation to these recommendations are completely unacceptable.
• As detailed in Mr. Balena’s affidavit of October 11, 2016, outlined above, the cost of two personal support workers 24 hour care and daily nursing care combined with other fixed costs amounts to $40,000.00 per month. I find that $40,000.00 is what is required from the structure and the private investment to provide Wesley with at least the level of care that he is presently receiving at Holland Bloorview Kids Rehabilitation Hospital. I reject the cost cutting measures advanced in Mr. Balena’s affidavit of January 16, 2017.

[27] Notwithstanding the inability to factor in all the uncertainties outlined above, I find, based on the information provided in the various affidavits, correspondence and reports filed and the Report of PGT dated December 23, 2016, that an estimate of the monthly expenses for the purpose of evaluating the viability of the settlement is $40,000.00. However, this is premised on the representation made by Mr. Balena (referenced above) that Suzanne Jorisch will not charge compensation or a care and management fee as Wesley’s guardian of property, subject to a further Court Order. The Judgment of this Court must have this specific provision inserted.

Life Expectancy of Wesley Jorisch

[28] There were two expert opinion reports relating to Wesley Jorisch’s life expectancy that I reviewed and are exhibits to this Application. Dr. Strauss, who was retained by the defence, provided a report estimating that Wesley’s life expectancy is another 17.5 years to age 39.5. Dr. Empringham, retained by the plaintiffs, produced a report estimating Wesley’s life expectancy as an additional 25-30 years, to age 47-52. Mr. Balena in his affidavit of September 19, 2016, advises that if this matter proceeded to trial, Dr. Empringham would have to concede that 17.5 years is a correct estimate and is consistent with studies relating to life expectancy. Further, and quite surprisingly, that Dr. Empringham would have to testify that his opinion of a life expectancy of 25-30 years is based only on his medical opinion and is not supported by statistics or other data, including any studies to date.

[29] With an established life expectancy of an additional 17.5 years, I find that the reasonable range for assessing the viability of this settlement is a life expectancy of 17.5 to 28 years and a minimum monthly expense of $40,000.00 (excluding compensation to Suzanne Jorisch as outlined above). I then turn first, to the proposed structured settlement, and secondly, to the investment of funds with TD Waterhouse to determine the adequacy of the amounts generated as income to meet the projected monthly expense of $40,000.00.

Proposed Structured Settlement

[30] Mr. Balena proposes a structured settlement as found in Exhibit ll of his affidavit sworn September 19, 2016. The sum to be vested in the structure is $4,000,000.00 indexed at 2% annually with monthly payments starting at $15,012.00. After 25 years the payments would decrease to $9,324.50, indexed at 2% for life.

[31] The PGT, on their own initiative, contacted McKellar Structures to discuss other options of structuring the settlement. The PGT received a quote that will provide Wesley Jorisch with a non-indexed monthly income of $16,974.74 for 25 years which will then be reduced to $7,641.04 per month for life. This quote is found at Schedule “B” of the PGT report.

[32] From the Court’s perspective the quote obtained by the PGT is appealing as it provides Wesley Jorisch with almost $2,000.00 more per month from the outset of the payout and will help to meet the deficit. As the PGT report points out, it would take almost 17 years for the monthly payments in Mr. Balena’s proposed structure to exceed that of the structure obtained by the PGT. The difference of course relates to indexing. However, I agree with the analysis and recommendation of the PGT that indexing the structure deprives Wesley Jorisch of funds up front at the expense of future benefit that he may not live to receive, based on the available life expectancy estimates. If Wesley outlives his life expectancy the proposed structure of the PGT provides him with an income although at a reduced rate.

[33] Therefore taking into account Wesley Jorisch’s immediate need for funds I am directing that the structure of $4,000,000.00 be placed in the PGT quoted option non-indexed as outlined above and which is found at Schedule “B” of the PGT report of December 23, 2016.

[34] I have noted that pursuant to the terms of settlement, the Ontario School Board Insurance Exchange has the right to purchase a reversion for the structure, and further, that they also have a right to approve the final form of the structure. Counsel may arrange an appointment with me if there is any issue relating to the proposed structure which the Court approves.

[35] In the reply Supplementary Affidavit of January 16, 2017, Mr. Balena disagrees with the PGT structured option on the basis that indexing will offset any future inflationary costs and that “the reality is that Wesley does not need the additional $2,000.00 per month in year one.” This latter statement is premised on the argument advanced that the implementation of cost cutting measures in personal care workers nursing and rehabilitation care is acceptable. I have rejected that premise on the analysis as outlined above. Further, my findings in relation to other aspects of the proposed settlement below including increased funding for the private investment pool alleviate my concerns related to inflationary factors.

Investment Proposal

[36] In the Application for the Plaintiff is a proposal from TD Waterhouse for the settlement funds that do not form part of the structured settlement and which will not be used to modify the residence that Wesley Jorisch is returning to live.

[37] The TD Waterhouse investment proposal assumes a starting market value of $2,000,000.00 to be invested into what is called the “Fidelity Balanced Private Pool.” However, in his Supplementary Affidavit dated October 11, 2016, Mr. Balena confirms that the amount to be invested is $2,500,000.00, plus any funds left over from the funds used for renovation of the home. However, I note, in correspondence sent by Mr. Balena to the PGT dated November 9, 2016 that “Suzanne Jorisch has already indicated in her Affidavit that she anticipates spending the full $500,000.00 on home renovations. In fact she already has a contractor already (sic) retained.”

[38] The PGT asked Mr. Balena to provide an updated investment plan for the sum of $2,500,000.00 which was forwarded on November 14, 2016, and is attached as Schedule “D” to the PGT report. The updated investment plan suggested that $2,618,466.00 will yield an annual yearly income of $276,000.00 or $23,000.00 a month for 25 years.

[39] As the PGT report indicates their office reviewed the updated investment plan and it was their view that this proposal was not a realistic projection of how the investment is likely to perform. It was noted in their report that there is a risk that the proposed investment pool of $2,500,000.00 will not be sufficient to fund Wesley Jorisch’s care for the remainder of his life. The deficiencies outlined by the PGT in the proposed plan were:

• the proposal used takes a mix of indexes and shows historically how they have performed over 25 years;
• the investment pool used was created in November 2009 just as the stock market crashed;
• the projected rate of return is over 10%;
• the investment pool used has enjoyed a surge in markets since 2009 and has generated an 8% return;
• this return does not include advisor fees which have not been shown in the proposal;
• generally advisor fees on a $2,500,000.00 portfolio are approximately 1%, which would give the fund a 7% return before taxes.

[40] In short, the PGT report reflects their view that the historical performance of this proposed portfolio, which has benefited from specific market conditions, does not accurately predict its future returns.

[41] I do find that the proposal put forth on behalf of the plaintiff for a blended settlement including a structured and a private investment is in the best interest of the plaintiff. I accept that investing a portion of the settlement funds in the market would provide greater withdrawal flexibility and potentially higher returns than a total structured investment. Further, structuring all the funds available would not produce the $40,000.00 per month required to meet projected expenses.

[42] In order to evaluate the proposed settlement, reasonable projections on the rate of returns of a private investment must be made. The PGT report suggests that one way of estimating a reasonable rate of return is by using the Financial Planning Standards Council’s Projection Assumption Guidelines for 2016. This Guideline, using a balanced portfolio with a diversified investment similar to the Fidelity Private Balanced Pool, used in the plaintiff’s investment proposal, provides a gross return of 5.19%. Assuming advisor fees at 1%, the projected return is approximately 4.19%. Also assuming that the monthly expenses are as calculated above at $40,000.00 per month and assuming the structured settlement (as proposed in the PGT report) realizes approximately $17,000.00 per month, then the private investment would have to provide $23,000.00 a month to make up for the monthly shortfall. Therefore, assuming an investment of $2,500,000.00 at a return of 4.19% and that $23,000.00 is withdrawn per month, the private investment fund would be exhausted after roughly 11 years which is far below Wesley Jorisch’s estimated life expectancy.

[43] It goes without saying that if higher returns are achieved, the funds would last longer. However, I agree with the analysis provided in the PGT report that “it would take a significant deviation from our estimated rate of return [4.19%] to make the funds last for Wesley’s expected lifetime. For example, if a 7% return is achieved on a $2,500,000.00 investment, the funds would last 14 years, if $23,000.00 is withdrawn monthly. Only if a net rate of return of 9% is achieved would the funds last 18 years, which is more in line with Wesley’s life expectancy.” The reality is that there is a recognized uncertainty in the market and as such it is also possible that the investment fund could have lower net returns than 4.19% in which case the funds would be depleted sooner than projected.

[44] Therefore, after considering all of the factors, I find that an investment pool of $2,500,000.00 is not sufficient in order for this court to be reasonably satisfied that the funds would generate sufficient income to meet Wesley Jorisch’s needs for the rest of his life.

[45] While I approve of a well-balanced investment fund that has the potential to generate long term returns, working in concert with a structured settlement, nevertheless the proposed private investment is not sufficient to meet the needs of Wesley Jorisch for his lifetime. I find that that the projected rate of return as proposed on behalf of the plaintiff is unrealistically high. I accept that the reasonable rate of return is 4.19% per annum.

[46] Mr. Balena in his Supplementary Affidavit of January 16, 2017, states that he forwarded the PGT’s report of December 23, 2016 to a Mr. Elio Riccio of TD Wealth. Attached to the Affidavit is a letter from Mr. Riccio dated January 10, 2016. Mr. Riccio is an “Investment Advisor.” As his letter indicates their projected rate of return of 10% per annum is based on a benchmark of an Andex chart. He states “the Projected Assumption Guidelines provided by the Financial Planning Standards Council uses a different asset allocation that (sic) the Balanced Portfolio on the Andex chart.” The Andex chart illustrates how a Balanced Portfolio of 60% equity and 40% fixed income has performed since 1950. The return of 10% is gross of fees. He then recommends an F-class fund in a fee based account which over the past 5 years has had a net return of 9.1%. The fees, he states, are tax deductible. His letter concludes as follows:

We cannot guarantee that the investment will last the entire 25 years, however the evidence speaks for itself. That using myself as an advisor, Fidelity as a company and the Balanced Private Pool gives you the highest probability of achieving your goal.

[47] If we all could predict what the stock market will do over the next 20-25 years, we would all be able to retire as millionaires. The stock market, while riding high in February 2017, could equally tumble and remain low for a number of years which was witnessed in 2008, and the years that followed. To the extent that this Court must approve a settlement which is in the best interest of Wesley Jorisch, I choose to exercise my discretion on the side of caution and being very conservative in projecting future income from a private investment of part of the settlement funds. Therefore, I prefer and accept the analysis contained in the PGT report of December 23, 2016, and that the reasonable expectation of return will be 4.19% per annum over the required term.

Legal Fees and Disbursements

[48] The disbursements in this action amount to $275,000.00. The highest disbursements are for invoices rendered by a Dr. Maron, for three medical expert reports and consultations in the total amount of $105,000.00, as well as the sum of $93,000.00 paid to AiTechnologies for accident reports and investigations. Copies of the disbursement lists were produced and reviewed by the office of the PGT.

[49] Dr. Maron is an American cardiologist and he is an expert in commotio cordis. I read the medical reports of Dr. Maron. This action centered around the inter-school rugby game that the plaintiff Wesley Jorisch was participating in on April 29, 2010. His chest fell heavily onto the rugby ball while being tackled by an opposing player. The plaintiff’s claim as against the defendants was inter alia that they failed to act promptly and appropriately when the injury occurred and that they failed to provide an Automated External Defibrillator (AED) at the site. The defendants denied liability in their pleadings. Therefore the Plaintiff’s case was highly dependent on counsel being able to establish that the condition of commotio cordis was caused by the impact of the tackle and that the condition was treatable with prompt medical attention by a paramedic with an AED, and further, that a large percentage of commotio cordis victims recover with little to no neurologic damage. Suffice to say that Dr. Maron’s opinion was extremely helpful in establishing these crucial facts. Similarly, the investigative reports, researching and locating experts were significant in assisting Plaintiff’s counsel to prepare the case.

[50] I am satisfied that the invoices of Dr. Maron and AiTechnologies are reasonable as are the other disbursements on the list provided by counsel.

Contingency Fee Agreement

[51] The parents of Wesley Jorisch entered into a contingency fee agreement with Mr. Balena dated May 19, 2010. The Agreement provides that the clients would pay to Mr. Balena “fees of thirty percent (30%) of any and all amounts received from the tortfeasor and/or insurer or any other party with respect to this matter, whether caused by settlement or award at any legal proceeding……..” The Agreement states that the clients are responsible for the payment of disbursements in addition to legal fees. The Agreement also provides that the clients are entitled to any costs awarded.

[52] Contingency fee agreements are governed by the Solicitors Act, R.S.O. 1990, c. S.15. A contingency fee agreement is not binding on a party under disability until it receives approval of the Court under section 5 of the Solicitors Act which provides:

5. (1) 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 or application for approval of the settlement or a consent order under Rule 7.08 of the Rules of Civil Procedure, O. Reg. 195/04, s. 5(1).

(2) In this section,

“person under disability” means a person under a disability for the purpose of the Rules of Civil Procedure. O. Reg. 195/04, s. 5 (2).

[45] Since this legal fee agreement was not approved before it was finalized, pursuant to section 5(1)(a) of the Solicitors Act it must now be reviewed by the Court as part of the court approval under section 5(1)(b) of the Act.

[46] A contingency fee agreement will only be enforceable if it appears to the Court that the agreement is in all respects fair and reasonable between the parties. Under section 24 of the Solicitors Act,

……if it appears to the court that the agreement is in all respects fair and reasonable between the parties, it may be enforced by the court by order in such manner and subject to such conditions as to the costs of the application as the court thinks fit, but if the terms of the agreement are deemed by the court not to be fair and reasonable, the agreement may be declared void, and the court may order it to be cancelled and may direct the costs, fees, charges and disbursements incurred or chargeable in respect of the matters included therein to be assessed in the ordinary manner. R.S.O. 1990, c.S.15, s.24.

[47] The Court of Appeal in Raphael v Lam, 2002 CanLII 45078 (ON CA), [2002] O.J. No. 3605 at para.37 has held that the onus is on the solicitor seeking to enforce the contingency agreement to prove that the agreement was fair at the time it was made and the fees were reasonable under the circumstances assessed at the date of the settlement.

[48] The case law establishes that contingency fee agreements are the subject of careful scrutiny by the court. Only the court is entitled to determine whether a contingency fee agreement is “in all respects fair and reasonable between the parties” (Cookish v. Paul Lee Associates Professional Corp., 2013 ONCA 278, [2013] O.J. No. 1947.) Further, as stated in Cookish v. Paul Lee Professional Corp, (supra at para.43) referencing Henricks-Hunter v. 814888 Ontario Inc., 2012 ONCA 496 (CA):

Contingency fee agreements may only be enforced if they are fair and reasonable, as these qualities form the heart of their legitimacy. Only where such an agreement is not fair and reasonable may it be declared void or be cancelled or disregarded.

[49] Plaintiff’s counsel has calculated the fees owing to him in the amount of $3,864,600.00, inclusive of HST. Counsel states that net of disbursements and partial indemnity costs, the settlement is $11,400,000.00. The fees are then calculated at 30% of $11,400,000.00, which equals $3,420,000.00. Adding the HST amounts to a total of $3,864,600.00 for fees. The Contingency Fee Agreement (at page 4) provides that “the net amount on which fees is calculated is to exclude any amount awarded to or agreed to be in respect of costs and disbursements.” The settlement, net of disbursements and partial indemnity costs is $11,400,000.00. This calculation is summarized as follows:

Total settlement amount = $12,500,000.00 LESS Costs portion of settlement (including disbursements)= $ 1,100,000.00

$11,400,000.00

Applying this calculation, the fees claimed by Plaintiff’s counsel would be 30% of $11,400,000.00 which equals $3,420,000.00 and with HST added equals $3,864,600.00. (Reference paragraph 39 of the Affidavit of Mr. Balena sworn October 11, 2016.)

Subrogated Claim of OHIP

[50] The settlement amount of $12,500,000.00 includes a claim of $1,000,000.00 to OHIP for its statutory subrogated claim. The Contingency Fee Retainer Agreement states that the fees of 30% is payable on any amount received from the tortfeasor. The Agreement does not specify whom the funds must be received by in order to be subject to costs. The issue then are the costs to be calculated on the funds receivable by the plaintiffs or are the costs to be calculated on funds receivable by anyone, including the subrogated claim of OHIP? I am not satisfied that the contingency fee retainer agreement is clear whether the funds payable for a subrogated claim are captured under the clause “any amount received from the tortfeasor.” Therefore, given this ambiguity and considering what is equitable, I find that the Plaintiff should not be charged a 30% fee on recovery of the OHIP subrogated claim of $1,000,000.00. In coming to this decision I have reviewed and considered the decision in Tri-Level Claims Consultants Ltd. v Fryer [2003] O.J. No. 5261 at paras 18-21 wherein Justice Trafford found that a contingency fee was not payable on the portion of the settlement that was payable toward a subrogated claim. In that case the contingency fee retainer agreement was also found to be ambiguous on the issue of whether a contingency fee was payable on the portion of the settlement payable toward a subrogated claim. Justice Trafford applied the doctrine of contra proferentem in deciding the matter. While the Tri-Level Claims Consultants v Fryer case was dealing with a different type of subrogated interest than OHIP, nevertheless the reasoning is persuasive in relation to the present issue to be decided. I find that the contingency fee retainer agreement fee is not payable by the Plaintiff. Therefore, the total amount that the fees to which the agreement could apply ($11,400,000.00 minus $1,000,000.00) is $10,400,000.00.

[51] As an aside to the analysis in the previous paragraph, I find that it would be grossly unfair for the Plaintiff to be charged a fee of 30% (or $300,000.00) for a recovery by OHIP on a subrogated interest of $1,000,000.00. OHIP, upon request sends a summary report of its costs incurred to date. This requires very little work by Plaintiff’s counsel either at discovery or at trial.

Reasonableness of the Fee

[52] The Court of Appeal in Raphael v. Lam (2002) 2002 CanLII 45078 (ON CA), 61 O.R. 417 has stated that the factors to be considered in assessing the reasonableness of a fee are:

a) the time expended; b) the legal complexity of the matter; c) the results achieved; and d) the risk assumed by the solicitor.

[53] The PGT, as requested, obtained the dockets from Mr. Balena on November 14, 2016, which is attached as Schedule “E” to the PGT report. In his accompanying letters, Mr. Balena states that his total hours were 1,527.60 hours which he bills out at the rate of $675.00 an hour. This amounts to the sum of $1,031,130.00 for Mr. Balena’s fees. He then advises that another lawyer in his office, Howard Smith, docketed 326 hours at a rate of $600.00 an hour. Mr. Smith’s bill would then be $195,600.00. The total bill based on the stated docketed hours is calculated at $1,226,730.00. The fees being claimed ($3,420,000.00 plus HST) results in a premium of $2,193,270.00.

[54] In Hendricks-Hunter v. 814888 Ontario Inc.2012 ONCA 496, the Court of Appeal held that the time spent by solicitors on a file is a relevant factor. Nevertheless it does not dictate whether a solicitor is entitled to fees charged through enforcement of a contingency fee agreement. Therefore the dockets are but one factor to determine if the retainer agreement is reasonable and should be provided when the solicitor is seeking to enforce the agreement.

[55] In considering the complexity of the case, I have the advantage of having read the various reports relating to liability and damages as well as the briefs submitted by counsel for the case conference. I became familiar with the injury suffered by the plaintiff known as commotio cordis as a result of the tackle in the rugby match. The lack of availability of an AED at the time of the injury as well as the timing between the tackle and the administration of CPR and the call to 911 was central to the case. The time of the tackle was in some dispute. The damages in the case were quite evident given the serious nature of the Plaintiff’s injury. While there was some dispute among the experts about the calculation of the life expectancy this was not overly complex. Causation was the most contested issue. I would assess the legal complexity as moderate to high.

[56] While the all-inclusive figure of $12,500,000.00 the settlement at first blush appears significant. The reality is that the sum of $7,000,000.00 or 56% of the total settlement is to be used for Wesley Jorisch’s benefit. As discussed above the private investment projections provided are overly optimistic and unrealistic. As presented, I find that there is a high risk that the funds allocated towards future care are not sufficient to meet Wesley Jorisch’s care for his entire life. Accordingly, the sustainability of the plan of providing Wesley with at-home care for life is unrealistic as presented on behalf of the plaintiff.

[57] I have also assessed the risk assumed by the solicitor. As noted Mr. Balena states that the combined legal work on this matter required 1,836 hours of work as between Mr. Smith and Mr. Balena. There were several days of discovery of the several defendants and the Regional Senior Judge granted the request made by counsel for the plaintiff for a fixed trial date set for November 2016. It is my opinion that while causation was very much a live issue at trial, I nevertheless, expressed my opinion at the case conference, with the usual reservations that it was my preliminary view, that it was unlikely that the defendant Toronto Catholic District School Board would escape liability at trial. Yet trials by their very nature are always accompanied by risk for the Plaintiff who has the burden of proof. Further, the extent and degree that counsel for the Plaintiff prepared the case including obtaining the medical expert report of Dr. Maron significantly reduced the risk.

[58] However, after reviewing all the factors which I have summarized, I am not prepared to approve the contingency fee retainer agreement. The fee proposed is not reasonable in all of the circumstances. I agree with the comment made by the PGT in their report that the reason the legal fee is so high is due to the large award. This produces an unreasonable legal fee.

[59] Under section 24 of the Solicitors Act, I am permitted to fix the fees in an amount which is just and reasonable in the circumstances. In determining a reasonable fee I have been referred by the PGT in its report to a number of cases which I have considered. Of course each of these cases turn on their own merits and were considered in their own context. The contingency fee allowed by the court range from approximately 8% to 18.5%.The cases provided by the PGT that I reviewed and considered are Marcoccia v. Ford Credit Canada Ltd., [2008] O.J. No. 2272 (SCJ); Sandu v. Wellington Place Apartments, as reported in Guisti v. Scarborough Hospital,[2008] O.J. No. 1899(SCJ) at para. 75; Raphael v Lam, (2002) 2002 CanLII 45078 (ON CA), 61 O.R. (3d) 417 (C.A.);

[60] Similarly, Mr. Balena in his responding Supplementary Affidavit sworn January 16, 2017, has referred me to cases which I have reviewed. Extensive references were made to the decision in Cogan (Re) (2007) 2007 CanLII 50281 (ON SC), 88 O.R. (3d) 38 (S.C.J.). This case involved the court approval of an infant settlement in a medical negligence case with a contingency fee agreement of 33 1/3%. The Children’s Lawyer approved the $1 million premium sought for fees. While the case does have a good review of the legal principles involved, it does little to assist me in deciding the amount of legal fees that are reasonable and fair in the present case. This is to be expected as much of what has to be decided is fact driven and peculiar to each case. I also reviewed the decision in Laushway Law Office v. Simpson 2011 ONSC 4155, [2011] O.J. No. 3184 (S.C.J.) in which a 30% contingency fee was approved.

[61] I find that the legal fee should be fixed at 20% of Wesley Jorisch’s recovery, excluding the OHIP subrogated claim. It is my finding that a contingency fee at 20% would be reasonable and fair having due consideration to the time expended, the complexity, results achieved and risk associated with this proceeding. It would also be fair having due regard to the degree of complexity, the result achieved and the work put into the matter.

[62] I further order and direct that the funds gained by the reduction of the fees are to be added to the funds to be invested privately for Wesley Jorisch’s future care.

[63] In his Supplementary Affidavit of January 16, 2017, Mr. Balena concedes that the contingency fee as calculated should exclude the OHIP claim. He then submits that any increase in the net balance of the settlement (after the FLA claim to the sister Brittany Jorisch) which he calculates at $674,400 should be paid to Suzanne Jorisch as compensation for her lost income in caring for her son Wesley. I reject this submission. I realize that Suzanne Jorisch is currently in receipt of long term disability benefits. I also recognize that in this action she was advancing a future loss of income from her employment of $2,407,000.00 from November 2016 to December 31, 2029 (age 65) without deduction for contingencies. However, the decision she made to settle this action on the basis presented was her choice to make. This Court has to allocate the settlement funds on the basis of what is in the best interest of the person under disability, Wesley Jorisch having regard to the funds coming in and his reasonable expenses now estimated at $40,000.00 per month. As noted previously, Suzanne Jorisch has indicated that her intention is to draw a monthly sum for her attendant care of Wesley when he is at home, if there is any money left after expenses. I have previously stated that it would be prudent for her to do so in order that the plan of care remains viable for all concerned.

[64] Therefore applying a 20% contingency fee on the figure as calculated at paragraph [50] above at $10,400,000.00 results in legal fees in the amount of $2,080,000 plus HST equals $2,350,000.00. The difference then is calculated as follows:

The legal fees claimed $3,864,600.00 The legal fees allowed $2,350,000.00

Difference $1,514,600.00

[65] I find that by reallocating the sum of $1,514,600.00 would create a private investment pool of approximately $4,014,600.00 which makes the settlement much more viable for Wesley Jorisch’s care. With a provision in the judgment of $4,014,600.00 of the settlement funds being allocated to the private investment pool of funds to be invested, the settlement is approved. I realize that there may be some small adjustment to this sum to reflect the costs that must be paid to the PGT in relation to this matter.

Amended Management Plan

[66] An Amended Management Plan (Schedule “F of the PGT report) dated October 11, 2016, was delivered by Plaintiff’s counsel. This Amended Management Plan does not reflect all the expenses going forward including costs identified in the report of Beverlee Melamed. In correspondence dated November 9, 2016, Mr. Balena stated his preference that another Amended Management Plan be submitted after the settlement is approved. This is a reasonable request in that Suzanne Jorisch will have to enter into contracts with care providers in order to establish the exact amount of Wesley’s monthly expenses. Therefore I order and direct Suzanne Jorisch to submit a further Amended Management Plan to the PGT within 60 days of Court approval of this settlement.

Summary of Terms of Court Approval

[67] There will undoubtedly have to be mathematical calculations made by counsel for the plaintiff and reviewed and approved in a draft judgment by the PGT. I will then review and sign the draft judgment. In summary the settlement of this action is approved on the following basis:

(1) The total settlement is approved at $12,500,000.00 all inclusive.

(2) The sum of $4,000,000.00 shall be put into the structure as detailed in Schedule “B” of the PGT report dated December 23, 2016.

(3) There is to be no fee paid by the Plaintiffs on the $1,000,000.00 OHIP subrogated claim.

(4) The total amount on which contingency fee is to be calculated is $10,400,000.00.

(5) The contingency fee agreement as proposed is not approved on the basis that it is not reasonable or fair, and the Court fixes the contingency fee at 20%.

(6) Any reduction in the legal fees are to be allocated to the privately invested funds for the benefit of Wesley Jorisch which should approximate the amount of $4,014,600.00 subject to exact mathematical calculations and adjustments.

(7) The disbursements claimed in the amount of $275,000.00 are approved.

(8) The sum of $25,000.00 shall be paid to Brittany Jorisch for her FLA claim.

(9) The sum of $500,000.00 shall be allocated to modify the residence at 48 Silkwood Crescent.

(10) The sum of $1,000,000.00 shall be paid to OHIP for their subrogated interest.

(11) The sum of $335,400.00 shall be paid to Suzanne Jorisch to compensate her for her FLA, and past and future loss of income claims.

(12) It is ordered that Suzanne Jorisch shall not charge guardian’s compensation or a care and management fee, subject to further Court Order.

(13) It is ordered and directed that Suzanne Jorisch shall submit an Amended Management Plan within 60 days of this judgment approving the settlement, and if the Public Guardian and Trustee does not approve the Amended Management Plan, then Suzanne Jorisch shall apply to the Court for directions on the Amended Management Plan.

(14) The Judgement of this Court will provide that Suzanne Jorisch shall make an application to pass accounts as guardian of property within 6 months of the 3rd year anniversary of this Judgment approving this settlement.

[68] This Court further orders and directs that the Public Guardian and Trustee shall submit an account within 60 days for services rendered in preparing and submitting the report of December 23, 2016, and which account shall be paid out of the pool of funds to be privately invested.

[69] In the event of any mathematical errors or if clarification is required to draft the Judgment, counsel may contact my judicial assistant to arrange a conference call. I also wish to express my gratitude to the Office of the Public Guardian and Trustee for their report and recommendations which provided a great deal of assistance to the Court.

Dated: __________________________________ February 1, 2017

The Honourable Justice J. Bryan Shaughnessy

ADDENDUM

[1] On February 2, 2017, following the release of my Reasons on Court Approval of the Settlement in this mater, I received a letter from Mr. Balena wherein he correctly noted a mathematical error at para. 64 in relation to the calculation of HST on the contingency fee allowed at 20%. The corrected amount is calculated as follows for fees: Contingency fee of 20% on $ 10,400,000.00 is $2,080,000.00 plus HST of $270,400.00 equals $2,350,400.00. Therefore my Reasons are amended to reflect this $400.00 error as noted.

[2] Mr. Balena in the same correspondence also takes issue with the reallocation of funds by referencing his subsequent affidavit of January 16, 2017 wherein he stated that he was prepared to accept that his legal fees be calculated (at 30% contingency fee) on the settlement net of the OHIP subrogated claim which he calculates at $ 3,525,600.00. In my Reasons at para. 49 I dealt with how counsel sought fees at 30% on the sum of $ 11,400,000.00 (including OHIP) which calculated out to fees claimed of $3,864,600.00. Thereafter at para. 50 I provided my reasons for not allowing any contingency fee on the OHIP subrogated claim. I thereafter calculated the amount on which a contingency fee of 20% should be calculated namely, $10,400,000.00 plus HST.

[3] For the purpose of clarity, in order that the Judgment may issue, I will restate the issue in a different way as follows:

Total fees $2,350,400.00 Disbursements $ 275,000.00 Total Fes and Disbursements $2,625,400.00 LESS Party and Party costs $1,100.000.00 Balance owing on Fees and Disbursements $1,525,400.00

[4] Counsel for the Plaintiff will accordingly receive $2,625,400.00 all-inclusive from the total settlement of $12,500,000.00.

[5] The mathematical calculations of the disposition of the remaining funds including funds to be placed in the private investment pool of funds as detailed in the Reasons may, as of necessity, have to be re-calculated.

[6] The draft judgment is to be sent to the PGT for approval.

Dated: February 16, 2017 ______________________________

Justice. J. Bryan Shaughnessy