Court File and Parties
COURT FILE NO.: 18-75898
DATE: 2018/04/10
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HUDSON CONNOLLY (a minor, by his Litigation Guardian, Samantha Hannah)
Applicant
– and –
CHANDELLE MARTIN
Respondent
Counsel:
Kevin Butler, for the Applicant
Unrepresented Respondent
HEARD: In Writing
ENDORSEMENT
corthorn j.
Introduction
[1] Hudson Connolly was seven years old when, in May 2016, he was bitten by a pit bull mastiff dog. The respondent is the owner of the dog. The incident occurred at the respondent’s home.
[2] The injuries sustained are limited to two lacerations, each 1 cm or less in both length and width. The lacerations were to Hudson’s stomach. The lacerations are said to have healed well. All medical treatment was provided within the first two weeks following the date of the incident.
[3] An application is made for approval from the court of a proposed settlement in the amount of $6,000. That amount appears to be inclusive of all claims for damages, interest and costs.
The Court Approval Process
[4] In Leonard v. Saint Vincent Hospital, I concluded that the Rules of Civil Procedure[^1] do not allow for an application to be heard in writing unless:
a) The matter falls within one of the specific exceptions created by the rules; or
b) The applicant secures relief, on motion or as part of the application, in the form of an order dispensing with the requirement for the application to proceed by way of an oral hearing.[^2]
[5] The only relief requested on this application is for approval of the proposed settlement. The relief requested does not include an order dispensing with the requirement for an oral hearing. There is no evidence in support of a finding that a liberal interpretation of the Rules supports an order dispensing with the requirement for an oral hearing.[^3]
[6] It would be reasonable for the court to draw an inference and find that, because of the quantum of the proposed settlement, a cost-effective and efficient approach to the application is to dispense with the requirement for an oral hearing. If the failure to address this aspect of the court approval process was the only deficiency in the application record, I might be inclined to draw such an inference.
[7] There are, however, a number of deficiencies in the application record. Given that additional materials will have to be filed, there are two options open to the applicant in requesting an order dispensing with the requirement for an oral hearing. One option is to seek that relief on an interim motion, before filing additional materials in support of the application. The other option is to serve and file an amended notice of application, in which the relief sought includes a request for an order dispensing with the requirement for an oral hearing.
[8] Given the other deficiencies in the materials, including with respect to other relief required and not requested, it appears that an amended notice of application is required in any event.
Deficiencies in the Application Record
1) The Parties and Service of the Documents
[9] The respondent is an individual. There is no indication that she is represented by counsel in the matter.
[10] The application record and the notice of application are both addressed to “Certas Home and Auto Insurance Company” (“Certas”). The addressee of the notice of application is Ms. Martin in care of Certas. On the cover of the application record, Ms. Martin is not identified as an addressee; the only addressee is Certas.
[11] The affidavit of service filed with the application record states that, “on consent of the parties”, Ms. Martin was served with the application record by email to Kevin Sanford, a claims representative with Certas. The notice of application is an originating process. It must be served personally or by an alternative to personal service provided by rr. 16.01, 16.02, and 16.03.
[12] The only possible methods of alternative service on Ms. Martin are by:
a) Mail to her last known address with a request that she sign and return an acknowledgement of receipt card (r. 16.03(4)); or
b) Service at her place of residence in accordance with r. 16.03(5).
[13] Neither of those methods was relied on in this matter; nor did the relief requested include an order validating the method of service utilized. Either the deficiency in service needs to be addressed, or the applicant requires relief from the court with respect to service on the respondent of the application record and the materials to follow.
2) Evidence of the Proposed Settlement
[14] There is minimal evidence to support a finding that a settlement of Hudson’s claim was reached. In his supporting affidavit, counsel for the applicant says, “In or around September 14, 2017, I was instructed to settle Hudson’s case for the sum of $6,000.00 inclusive of all interest, lawyer’s fees, costs, disbursements and HST.” Counsel makes no mention of damages being included as part of the $6,000 proposed settlement.
[15] Counsel provides no context for the circumstances in which the proposed settlement was reached. For context in that regard, it is necessary to turn to the supporting affidavit from the litigation guardian (Hudson’s mother, Samantha Hannah.) In her affidavit, Ms. Hannah says:
I was informed by Mr. Butler that a proposed settlement was reached in Hudson’s claim on September 14, 2017. Mr. Butler recommended acceptance of the final offer in the amount of $6,000.00 inclusive of all interest and costs.
Mr. Butler explained to me that this represented a fair and reasonable compromise and that it fairly compensated Hudson in light of his injuries and present condition.
[16] Nowhere in her affidavit does Ms. Hannah explain her understanding of the settlement (i.e. the net amount to be paid into court on Hudson’s behalf.) Nowhere in her affidavit does Ms. Hannah state that, in her capacity as Hudson’s litigation guardian, she instructed counsel to accept the offer.
[17] From the method of service utilized and the inclusion of Certas as an addressee for both the notice of application and the application record, I infer that counsel was negotiating directly with Mr. Sanford or one of his colleagues at Certas. Evidence of the proposed settlement could be provided in the form of an email or letter sent to or received from Mr. Sanford (or one of his colleagues) to counsel for the applicant and confirming the terms of the proposed settlement.
[18] The application record does not include minutes of settlement or a consent executed by or on behalf of the parties. Ms. Martin is a self-represented litigant. Unless she retains counsel or counsel is retained on her behalf, her signature is required on minutes of settlement or a consent filed in support of the application for court approval. Alternatively, if there is otherwise sufficient evidence of the proposed settlement, the applicant may be in position to proceed on the basis of a record that does not include minutes of settlement or a consent.
3) Quantum of the Proposed Settlement
[19] Counsel’s evidence is that the net amount of the settlement to be paid into court on Hudson’s behalf is $3,303.07. That amount is said to be net of a payment to the Ministry of Health for its subrogated claim ($427.90) and net of payment of the proposed solicitor-client account.
[20] It appears that the proposed settlement was reached on an all-inclusive basis. Regardless, it is incumbent upon counsel to provide a breakdown of the $6,000 in terms of the heads of damages addressed in the settlement, prejudgment interest, and costs (fees, disbursements and HST). Only with that breakdown can the net amount payable to Hudson be calculated and considered.
[21] I deal below with the contingency fee retainer agreement (“CFRA”). For the moment, I highlight that despite providing the amount of the proposed contingency fee, counsel does not provide any figure for the general damages for Hudson. Counsel calculates the 25 per cent contingency fee based on the net amount after the $6,000 is reduced for disbursements and HST ($303.70) and the full amount of the Ministry’s subrogated claim ($427.90).
[22] First, that approach to calculation of the contingency fee is incorrect. Second, I see no reason why the Ministry should receive the full amount of its subrogated claim. The Ministry is entitled to its pro-rata share of the costs recovered and to have that share applied towards payment of its pro-rata share of the solicitor-client account. The Ministry would then receive a net figure with respect to its subrogated claim. Otherwise, Hudson is required to cover the amount that the Ministry would contribute towards payment of the solicitor-client account.
[23] Based on the available evidence, I have done my best to calculate the damages for Hudson included in the proposed $6,000 all-inclusive settlement. My calculation is set out in Appendix ‘A’ to this endorsement. By my arithmetic, the portion of the settlement representing Hudson’s damages is $4,455. There is no evidence of any pecuniary damages. I therefore assume that the $4,455 is for non-pecuniary general damages.
[24] In support of the reasonableness of the non-pecuniary general damages portion of the proposed settlement, counsel refers to a 1996 case involving a three year old boy who was bitten by a dog and suffered an injury similar to that suffered by Hudson.[^4] The boy was awarded $2,500 for general damages.
[25] I relied on the Bank of Canada inflation calculator and determined that $2,500 in 1996 equates to $3,760 in 2018. It therefore appears that the damages for Hudson are reasonable. My finding as to the reasonableness of the overall settlement is, however, reserved until additional materials are filed.
4) The Contingency Fee Retainer Agreement (“CFRA”)
[26] The CFRA executed by Ms. Hannah in 2016 does not comply with the Solicitors Act, and the regulations thereunder.[^5] The CFRA defines “The Amount of the Fee” as follows:
Under all circumstances, any partial indemnity or substantial indemnity legal costs recovered or paid in the case, whether through settlement or judgment, shall be retained by our firm as part of our proper compensation for services rendered and disbursements incurred. In addition to any partial indemnity or substantial indemnity legal costs awarded or obtained by judicial approval for inclusion of costs or proportion of them, the clients agree to pay the firm 25% of all amounts recovered for claims plus any applicable H.S.T. (Emphasis as per original.)
[27] For the CFRA to comply with the Solicitors Act, the costs recovered from the defendant must be excluded from (a) the figure upon which the percentage contingency fee is calculated, and (b) the solicitor-client account.
[28] With Hudson being a minor, court approval of the CFRA and of the proposed solicitor-client account is required. That would be so even if the CFRA met the requirements of the Solicitors Act. In the additional materials to be filed it will be necessary to identify whether the relief requested includes approval of the CFRA. If so, evidence is required in support of that relief. If not, then the proposed solicitor-client account must be on a fee-for-service basis and evidence is required in support of the account proposed on that basis.
5) The Subrogated Claim
[29] It appears that the proposed settlement calls for the Ministry to recover the full amount of its subrogated claim. As I have already noted, there is no evidence to support approval of the Ministry paying nothing towards the solicitor-client account. Otherwise, the Ministry’s recovery of the full amount of its subrogated claim only serves to reduce the net amount to be paid to Hudson.
Summary
[30] Additional materials shall be filed to address the matters raised in this endorsement. I remain seized of the matter. The additional materials shall be filed in the normal course and to my attention.
Madam Justice Sylvia Corthorn
Date: April 10, 2018
APPENDIX ‘A’
Connolly v. Martin, Court File No. 18-57898
Endorsement dated April 10, 2018
[1] The starting point for my calculation of the portion of the $6,000 for non-pecuniary general damages for Hudson is as follows:
Total Settlement $ 6,000.00 Disbursements (incl. HST) $ 303.70 Sub-total (damages, PJI, fees, and HST) $ 5,696.30 Ministry’s damages $ 427.90[^6] Sub-total (damages, PJI, fees & HST) $ 5,268.40
[2] I assume that the party and party fees included in the proposed settlement are based on 15 per cent of the total of the damages for Hudson and the Ministry’s subrogated claim.
[3] I calculate Hudson’s damages, and the total party and party fees (with HST) as follows:
Notes: “D” = Hudson’s damages plus PJI thereon “C” = party and party fees plus HST “F” = party and party fees (i.e. excluding HST)
$5,268.40 = D + (0.15 x D) + (0.13 x 0.15 x D) = 1.1695 x D
D = $5,268.40 / 1.1695 = $ 4,504.83 C = $5,268.40 - $4,504.83 = $ 763.57 F = $763.57/1.13 = $ 675.36
[4] To calculate the general damages, exclusive of pre-judgment interest, I relied on a PJI rate of 0.8 per cent per year and accrual of interest over 17 months (May 2016 to September 2017). On that basis, I calculate the damages to be $4,453.54 ($4,504.83 = $4,453.54 + (0.008 x 17/12 x $4,453.54)).
[5] When ‘D’, ‘C’, the figure for disbursements, and the full value of the Ministry’s claim are added together, they total $6,000.
COURT FILE NO.: 18-75898
DATE: 2018/04/10
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HUDSON CONNOLLY (a minor, by his Litigation Guardian, Samantha Hannah)
Applicant
– and –
CHANDELLE MARTIN
Respondent
endorsement
Madam Justice Sylvia Corthorn
Released: April 10, 2018
[^1]: R.R.O. 1990, Reg. 194. [^2]: 2018 ONSC 370, 289 A.C.W.S. (3d) 61. [^3]: Rule 1.04 of the Rules of Civil Procedure, footnote 1. [^4]: Collins (Litigation Guardian of) v. St. Amour, [1996] O.J. No. 485 (Gen. Div.). [^5]: R.S.O. 1990, c. S. 15. [^6]: For the purpose of this calculation, I assume that the settlement does not include any prejudgment interest with respect to the Ministry’s subrogated claim.