Court File and Parties

COURT FILE NO.: 14-61382 DATE: 2018/07/27 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

ETAF HANNUNEH, by her Litigation Guardian, AHMAD AL SHEHABI Plaintiff – and – ECONOMICAL MUTUAL INSURANCE COMPANY, DOUGLAS STEL and GOSS McCORRISTON STEL Defendants

Counsel: Marc Binavince, for the Plaintiff Marc Smith, for the Defendant, Economical Mutual Insurance Company

HEARD: In Writing

Endorsement

corthorn j.

Introduction

[1] This motion is for the approval of a settlement reached of the plaintiff’s claim against the only remaining defendant at this time, Economical Mutual Insurance Company (“Economical”). The proposed settlement is for the claim to be dismissed without costs.

[2] There are a number of deficiencies in the record filed in support of the motion. In addition, the relief sought is incomplete in the circumstances of this case.

Background

[3] In April 2006, the plaintiff was injured in a car accident. In 2016, a settlement was reached of the tort claim arising from that accident. The present action relates to (a) a settlement reached in 2013 of the plaintiff’s claim for Statutory Accident Benefits (“SABS” and “the Settlement”), and (b) the manner in which the plaintiff was represented by her former lawyer.

[4] In the record before me, there is no evidence of the Settlement of the plaintiff’s SABS claim. The only document that speaks to the Settlement is a copy of the statement of claim in this action. From the allegations made in the plaintiff’s pleading, it appears that:

• Economical was the plaintiff’s motor vehicle insurer at the time of the 2006 accident;
• The plaintiff claimed entitlement to and received SABS with respect to her injuries;
• In April 2013, the plaintiff executed a Full and Final Release in favour of Economical. The consideration for the release was an all-inclusive settlement of the plaintiff’s claim for SABS ( i.e., the Settlement); and
• At the time the Settlement was reached, the plaintiff was represented by Mr. Stel and Goss McCorriston Stel (“the Firm”).

[5] The plaintiff’s claim against Mr. Stel and the Firm is based in professional negligence. That claim was settled and, with the approval of the court in February 2017, dismissed without costs.

[6] The plaintiff’s claim against Economical is based on the alleged failure of the insurer to deal with the plaintiff in good faith. The relief sought includes an order permitting the plaintiff to rescind the Settlement, pecuniary damages with respect to medical and rehabilitation benefits to which the plaintiff claims entitlement, and damages for bad faith conduct on the insurer’s part.

[7] The vast majority of the allegations in the statement of claim relate to the plaintiff’s claim against Mr. Stel and the Firm. The only specific allegation against Economical is set out in paragraph 24 of the plaintiff’s pleading. It is therein alleged that Economical acted “in violation of its duty of good faith” when dealing with the plaintiff, in early 2013, in an effort to negotiate a settlement of her claim for accident benefits.

[8] A copy of the pleading delivered on behalf of Economical is not included in the record. The defendant’s pleading would, in this case as in any other, be of assistance and relevance to the court in (a) identifying the defences to the claim, and (b) to a lesser extent, assessing the merits of the claim advanced and the defences to it.

[9] The claim of bad faith conduct on Economical’s part is premised on the insurer’s direct dealings and pursuit of a settlement with the plaintiff. It is alleged that Economical was, at the relevant time, aware of an opinion expressed by a neuropsychologist as to the plaintiff’s cognitive deficits. In the statement of claim, reference is made to a report dated January 2013 prepared by neuropsychologist, Dr. Amy Moustgaard. It is alleged that, in her report, Dr. Moustgaard opines that the plaintiff was:

• In the seventh percentile of the population in verbal comprehension;
• In the second percentile in perceptual reasoning;
• In the first percentile in working memory; and
• Below the first percentile in processing speed.

[10] I pause to note that the motion record does not include a copy of either the Full and Final Release executed by the plaintiff in favour of Economical in April 2013 or a copy of the report of Dr. Moustgaard, dated January 2013. Copies of those documents would be of assistance to the court on the motion.

Evidence of Proposed Settlement

[11] The motion is brought in writing on the basis that it is on consent. The record does not include either a consent signed by counsel for the parties or minutes of settlement signed by one or both of the parties and their respective counsel.

[12] In addition, evidence as to the terms of the settlement reached between the plaintiff and Economical is lacking. The motion record includes two affidavits sworn by counsel for the plaintiff. The second affidavit was required to correct an error in the first affidavit sworn by counsel for the plaintiff. The error relates to the evidence of the terms of the proposed settlement.

[13] In his first affidavit, counsel for the plaintiff swore that “An email exchange confirming the existence of an agreement in principle subject to court approval to settle the A.B. action for zero dollars and a no costs dismissal is attached as Exhibit “F”.” There is no exhibit “F” to counsel’s first affidavit.

[14] Counsel attempts to correct that error by including in the record a second affidavit, sworn some three weeks subsequent to the date on which the first affidavit was sworn. In his second affidavit, counsel for the plaintiff says:

After a review of the email correspondences in the file, I realized that opposing counsel and I did not exchange an email in which we discuss that the AB action would settle for zero dollars and a no cost dismissal. But rather, there was in email exchange in which I confirm to opposing counsel that the litigation guardian has agreed to accept the defendant’s pre-trial offer, subject to judicial approval.

[15] A copy of the email exchange to which counsel refers is attached as Exhibit “A” to his second affidavit. That exhibit does not provide any evidence of the terms of the settlement reached. The exchange of emails included in the exhibit is limited to the following emails dated March 7, 2018:

• From counsel for the plaintiff to counsel for Economical (at 9:41 a.m.): “The Lit Guard has advised me that he will accept your client’s pretrial offer, subject to judicial approval”; and
• From counsel for Economical to counsel for the plaintiff (at 12:23 p.m.): “Ok, thank you.”

[16] Evidence is required that Economical consents to an order dismissing the action without costs. The most efficient and effective way to put that evidence before the court would be in the form of a consent or minutes of settlement.

[17] The lack of evidence of the terms of the settlement reached is not the only concern. The manner in which the evidence of the terms of the settlement was presented to the court is troubling for a number of reasons. First, it is difficult to understand how the first affidavit could have been sworn and commissioned without Exhibit “F” attached to it. Second, it is perplexing that there is a commissioned exhibit page for Exhibit “F, to which no document is attached.

[18] These concerns relate to the conduct of counsel in swearing the affidavit, and of the individual who commissioned the affidavit, when no document was attached as Exhibit “F”. I infer that the intention was to add a document as the exhibit, after the affidavit was sworn and commissioned. In my view, swearing and commissioning an affidavit in that manner is not in keeping with the requirements of the Commissioners for taking Affidavits Act, R.S.O. 1990, c. C.17.

Relief Requested is Incomplete

a) Approval of the Contingency Fee Retainer Agreement

[19] The relief requested does not include an order approving the contingency fee retainer agreement (“CFRA”) entered into by the litigation guardian on behalf of the plaintiff. Such an order is required because (a) the plaintiff is a person under a disability (Contingency Fee Agreements, O. Reg. 195/04, s. 5(1)(b)—“the Regulation”), and (b) in any event, the CFRA included in the motion record does not meet the requirements of the Solicitors Act, 2002, S.O. 2002, c. S.15 (“the Act”).

[20] The CFRA is deficient in a number of ways, including that:

• The sample fee calculation identifies that the fees charged are based on a percentage of an all-inclusive settlement amount (i.e. including a percentage of costs recovered);
• Paragraphs 8 and 9 of the CFRA appear to be an attempt to address that deficiency. Regardless, they create ambiguity and are not sufficient to overcome the deficiency; and
• The CFRA does not identify that the lawyer/law firm explained to the plaintiff, by her litigation guardian, that she has the right to consult other counsel with respect to hourly rates for lawyers working on the matter (the Regulation, s. 2(3)(ii)).

[21] It is, therefore, up to the plaintiff and her counsel to decide whether to pursue approval of the CFRA. If the decision is made to do so, then additional evidence is required in support of relief in that regard.

b) Approval of the Solicitor-Client Account

[22] The relief requested on the motion does not include an order approving the account to be delivered to the client. When the plaintiff is a person under a disability, it is not possible to approve a settlement of the substantive claim without at the same time approving the solicitor-client account to be delivered.

[23] Whether on the basis of the CFRA or on a fee-for-service basis, evidence in support of the proposed solicitor-client account is required. There is no evidence before the court as to the fees and disbursements counsel for the plaintiff is including in the solicitor-client account.

[24] There is a general reference by counsel for the plaintiff to (a) monies held in trust from the tort settlement, (b) the application of some of those funds towards disbursements incurred to advance the claim against Economical, and (c) the delivery of the balance of those funds to the plaintiff. There is no evidence of the specific disbursements incurred on behalf of the plaintiff.

[25] The CFRA makes no reference to the client being required to pay disbursements, other than if one of the client or the lawyer terminates the CFRA prior to the completion of the matter. The paragraphs in the CFRA that reference disbursements generally, the requirement for a monetary retainer to be maintained at a specific amount, and the application of the monetary retainer over time to pay disbursements have been specifically crossed out.

[26] Regardless of whether the solicitor-client account proposed is based on the CFRA or a fee-for-service basis, evidence is required in support of the amounts proposed for each of fees and disbursements. In addition, the statutory or other authority in support of counsel’s entitlement, in these circumstances, to charge fees and/or disbursements, if any, is required.

[27] The evidence to be filed shall include a trust statement setting out:

• All monies received from or on behalf of the plaintiff, including the money from the settlement of the tort action;
• The extent, if any at all, to which funds held in trust on behalf of the client were applied towards disbursements incurred in the pursuit of this action;
• An itemized list of the disbursements to which the trust funds have been applied;
• Monies, if any at all, paid to the client; and
• The balance remaining in trust for the client at this time.

c) Dispensing with the Requirement for Service

[28] No affidavit of service was filed with the motion record. If the plaintiff intends to proceed with the motion in writing and without serving Economical with the motion record, then relief in the form of an order dispensing with the requirement for service is required. That relief is to be set out in the notice of motion, the grounds in support of that relief are to be set out in the notice of motion and, absent consent to that relief, and evidence in support of it is required.

Request for a Sealing Order

[29] The relief requested includes a sealing order. Although not identified as such, I assume that reference is made in the notice of motion to s. 137(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43, in support of the request for a sealing order. Economical’s position with respect to the request for a sealing order is not identified in the record:

• If Economical consents to that aspect of the relief requested, then evidence of that consent is required;
• If Economical does not oppose that element of the relief requested, then the insurer’s position in that regard needs to be set out in the notice of motion;
• If Economical opposes the request for a sealing order, then the motion cannot proceed in writing and must be heard in open court.

[30] In the event the plaintiff intends to pursue the sealing order, then additional materials are required. The materials required and the manner in which the motion is heard (in writing or orally) will depend on the position taken by the insurer with respect to that aspect of the relief, if requested.

Draft Order

[31] The draft order submitted in addition to the motion record has not been approved as to form and content by opposing counsel. If the matter proceeds on consent, then the draft of the order sought should, in my view, be approved as to form and content by counsel for the defendant before it is filed with the court.

The Record in an Action

[32] Counsel for the plaintiff in this action has, like counsel in many other matters before the court, incorrectly included the pleadings and orders previously made in the action as exhibits to a supporting affidavit.

[33] The statement of claim, a pleading in the action, is part of the record. The correct way to include a pleading in a motion record within the same action is as a discreet document—separate and apart from the supporting affidavits and exhibits to the affidavits.

[34] The same is true for orders previously made in the action. They are included in a motion record as discreet documents.

Disposition

[35] Once the plaintiff has determined the manner in which the motion is to proceed, and the substantive relief she intends to pursue, the additional materials required in support of the relief sought shall be served (unless an order is sought dispensing with the requirement for service) and filed. I remain seized of the matter.

Madam Justice Sylvia Corthorn Date: July 27, 2018

COURT FILE NO.: 14-61382 DATE: 2018/07/27 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ETAF HANNUNEH, by her Litigation Guardian, AHMAD AL SHEHABI Plaintiff – and – ECONOMICAL MUTUAL INSURANCE COMPANY, DOUGLAS STEL and GOSS McCORRISTON STEL Defendants endorsement Madam Justice Sylvia Corthorn Released: July 27, 2018