Court File and Parties

COURT FILE NO.: CV-09-378388 DATE: 20181002 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jason Clive Walters by his Litigation Guardian, Pearline Samuda, Carlton Burke, Pearline Samuda, J’Ia Alissa Walters by her Litigation Guardian Alicia Wilson, and Adrian Clive Walters, Plaintiffs AND: Her Majesty the Queen in Right of the Province of Ontario and John Doe, Tim Doe and Bill Doe, Defendants

BEFORE: D.A. Wilson J.

COUNSEL: Donald R. Fiske, Counsel for the Plaintiffs

HEARD: In writing

Endorsement

[1] This motion is brought pursuant to Rule 7 of the Rules of Civil Procedure for approval of a judgment with a structure as well as approval of additional legal fees and other expenses. By way of history, the motion was filed on February 28, 2018. I did an endorsement on April 2, 2018 requesting further information. I received and reviewed an affidavit from the solicitor sworn April 11, 2018, and in reasons released June 21, 2018, I articulated my concerns about payments that had been made without court approval and the quantum of further fees sought to be charged. I sent the file to the Office of the Public Guardian and Trustee (“PGT”) for comments. I received the report and have considered its contents. I invited Mr. Fiske to attend and provide any comments he had on the report of the PGT and he did so.

[2] Briefly put, Jason Clive Walters (“Walters”) was beaten at the Don Jail by other inmates in November 2008 and suffered catastrophic injuries. He sustained permanent brain damage, he will never work and he requires constant care and supervision; he cannot be left alone. He lives with his mother, Pearline Samuda (“Ms. Samuda”), who was his Litigation Guardian for this proceeding. A claim was issued and proceeded in the normal course, through trial before Gans J. in May 2015. The Plaintiff was awarded the net sum of $3,170,700.00 in damages. His mother was awarded the net sum of $46,800.00 for damages pursuant to the Family Law Act, R.S.O. 1990, c. F.3. Gans J. fixed the solicitor/client fees for counsel for the Plaintiff in the sum of $951,210.00 plus disbursements of $186,429.45, inclusive of HST. The judgment of Gans J. (“Judgment”) provided that Walters could structure any portion of the funds from the Judgment.

[3] The solicitor for the Plaintiff attended before Cavanagh J. on September 5, 2017 and secured an order for distribution of various monies. There was an unopposed guardianship application brought before Conway J. on November 21, 2017. Ms. Samuda was appointed as Walters’s Guardian of Property and there was a management plan (“the Management Plan”) that was approved by Conway J.

[4] This Rule 7 motion seeks approval of a structure for Walters as appended to the draft judgment. The proposal is that the sum of $1,914,414.25 be paid into the structure, reduced from $2,091,903.25, which was originally contemplated. It also seeks approval of fees sought to be charged for the appeal and the leave application to appeal to the Supreme Court of Canada in the sum of $205,000.00 plus HST, less the costs received from the Crown of $35,000 for the appeal and $1,200 for the leave application. Finally, the order sought includes approval of a variety of payments including $34,363.09 paid to the Pace Law Firm, approximately $9,818.80 to the lawyer representing Walters on a family law matter, and payments to various experts totalling $10,566.45. Numerous other accounts have been paid since the receipt of funds.

The funding amount for the structure

[5] The first issue to be addressed is the proposed reduction of the funds being placed in the structure, from $2,091,903.25 to $1,914,414.25, a difference of $177,489.00. This is due to the fact that the solicitor for the Plaintiff is requesting additional fees. The record demonstrates that following the unsuccessful appeals launched by the Crown, the sum of $2,284,403.25 was sent to McKellar Structured Settlements (“McKellar’s”) by counsel for the Crown in order to put the structure in place. McKellar’s used $2,091,903.25 to secure the structured settlement with monthly payments to commence November 2017 over the course of Walters’s life.

[6] On November 21, 2017, counsel appeared before Conway J. on the application for the appointment of Ms. Samuda as the Guardian of Property and approval of the management plan; this application was unopposed. The Management Plan indicated the sum of $2,091,903.25 was being placed in the structure. Schedule B of the Management Plan listed payments that had to be made from the damage award and that included $70,000 for anticipated legal fees for the appeal. Conway J. granted the application, approved the Management Plan and fixed the fees of the application in the sum of $30,000.

[7] There is no basis in the materials that justifies any reduction in the funding for the structure. As pointed out in the report of the PGT, the care needs of Walters are “tremendous” in light of his catastrophic injuries. The proposed reduction in the amount of the structure decreases the monthly payment to Walters by $442.00. As he gets older, it is likely his care needs will increase and there is no reason articulated in the evidence before the court that persuades me that the amount placed in the structure should be less than the figure contained in the Management Plan. I am not prepared to approve the reduced funding of the structure in order to increase the fees to counsel.

The fees of Pace Law Firm

[8] Turning to the quantum of fees the solicitor for the Plaintiffs is entitled to, I wish to emphasize that I understand this was a risky case for the Plaintiffs and the Pace Law Firm is to be commended for taking it on. The firm did so pursuant to a Contingency Fee Agreement (“CFA”), which is the usual case in personal injury actions.

[9] As I noted in Henricks-Hunter v. 814888 Ontario Inc., 2013 ONSC 5245, contingency fee agreements increase access to justice. Cronk J.A. commented on this topic in Raphael Partners v. Lam (2002), 61 O.R. (3d) 417 (C.A.), where she noted, at para. 54, “This court has recognized that the advantages to the administration of justice, in the form of increased access to justice, from properly regulated contingency fee agreements are compelling.” I recognize that without counsel acting pursuant to a CFA, it is highly unlikely Walters would have been successful in obtaining a favourable judgment in this case. However, the fee that is charged must be fair and reasonable and approved by the court.

[10] In this case, the Plaintiff was successful at trial. Mr. Fiske asked the trial judge to approve fees of $951,210 plus disbursements. This represents the maximum amount pursuant to the CFA signed by Ms. Samuda. Gans J. approved these fees and this was incorporated into the Judgment he signed on August 4, 2015.

[11] Not surprisingly, the Crown appealed the trial decision. Mr. Fiske had Ms. Samuda sign a further retainer for the appeal on September 16, 2015. In that document he estimated the fees would range from $250,000-$300,000. On April 21, 2017, she signed yet another retainer for the leave application to the Supreme Court of Canada. In that document, he estimated the fees would range from $100,000-$125,000. These retainers were not CFAs; rather, they provided that the Plaintiff would pay the fees of the Pace Law Firm charged on an hourly basis for the work done on the appeal.

[12] One of the hallmarks of a CFA is that if the plaintiff’s action is successful, the lawyer gets paid on a percentage of the amount of the damages, which may well be in excess of the docketed time of counsel. The fact that a litigation guardian has signed a retainer that provides for payment on a percentage of the damages award in the event of success on a claim does not automatically entitle counsel to charge the maximum amount pursuant to that agreement, even if the outcome at trial or upon settlement is a good one. The fee still must have court approval and be fair and reasonable in all of the circumstances: Raphael Partners. In the instant case, the trial judge approved the proposed fee following the trial, which was the maximum provided for under the CFA: exactly 30 percent of the damages awarded at trial. In my view, the Pace Law Firm was appropriately compensated for the work it did on behalf of the injured Plaintiff until the time of the appeals.

[13] Following the trial, Mr. Fiske did work in furtherance of an Ontario Disability Support Program (“ODSP”) application for Walters. In addition there is reference to work done for the guardianship application between July and September of 2017. The fees were $34,363.09 for this work and the firm was paid from the trial funds on November 29, 2017. In my view, the firm ought not to have done so without an order from this court and Mr. Fiske conceded this when he appeared before me. Those funds are to be returned to the trust account of Walters.

[14] The order of Conway J. provided for payment of fees for the guardianship application in the sum of $30,000. In his supplementary affidavit, Mr. Fiske deposed that it was necessary to retain outside counsel, Whaley Estate Litigation Partners (“WEL Partners”) as well as Ms. Charlebois, to prepare the guardianship plan because of the “complexity” of the application. Mr. Fiske advised me that he was not familiar with the preparation of guardianship applications and as a result, he retained WEL because they specialize in this area. This was a reasonable decision. However, I do not understand what Ms. Charlebois did on this file that WEL Partners was unable to do.

[15] I do not view the application as complex. These applications are prepared in the normal course when a party under a disability is awarded significant sums of money and there must be a plan in effect for how it is to be used. In any event, Mr. Fiske paid WEL Partners $23,369.21 and Ms. Charlebois $6,463.60 for an unopposed application. The total fees for the guardianship application were $29,832.81, which is very close to the $30,000 allowed in the order of Conway J. I am not prepared to approve any further fees for the guardianship application.

[16] I note that Mr. Fiske arranged for a family lawyer to deal with issues surrounding the support of the daughter of Walters. He is to be commended for doing so and the amounts paid and sought to be paid to Pierre Sicco are reasonable and appropriate. On September 27, 2018, I approved the payment of $900 for support payments for J’la Walters to ensure the payments were current as of November 2018.

[17] The Management Plan provided for payment of all appeal costs totalling $70,000. In this motion, however, approval is sought for fees of the appeal set at $205,000 less the amounts received from the Crown for costs, $36,200. Ms. Samuda was asked to sign a retainer, which she did, for the work necessary for the appeal.

[18] The appeal was argued in October 2016. Mr. Fiske asserts that he spent 535 hours of time on the appeal and that other lawyers in the firm spent an additional 230 hours, incurring fees of $340,000. I find the number of hours spent is excessive, given that Mr. Fiske was counsel at trial and therefore was familiar with the issues and the evidence. I note as well that the trial was not a lengthy one; it lasted but ten days and dealt only with liability, the damages having been settled.

[19] Similarly, on the leave to appeal application, written materials had to be filed; there was no attendance to make submissions. Again, given that Mr. Fiske was counsel at trial and on the appeal, preparing the written materials should not have been an arduous task, certainly not one that would result in fees in excess of $100,000. When the leave application was dismissed, the costs to the Plaintiff were fixed at $1,200.

[20] In its report, the PGT objects to fees to Pace Law Firm for any amount beyond the $70,000 figure approved in respect of the appeal proceedings, as set out in the management plan. I concur with this view. I am of the opinion that this is a fair and reasonable fee in all of the circumstances of this case.

[21] I pause to make a comment about the process of approval for persons under a disability. The Judgment from the trial was signed by Gans J. in August of 2015. The appeals were exhausted in 2017. The Guardianship Order and Management Plan were approved in November 2017. The motion for court approval was filed at the end of February 2018. The materials were deficient and additional particulars had to be provided. The matter was referred to the office of the PGT and further information had to be given, including a copy of the original retainer agreement and CFA. The manner in which approvals of cases involving persons under a disability has been, unhappily, the subject of a great deal of judicial commentary. More than a decade ago, Wilkins J. said the following about motions for approval for parties under a disability in Marcoccia (Litigation Guardian of) v. Gill, [2007] O.J. No. 12 (S.C.), at paras. 20-22:

In essence, a settlement for a person under a disability requires an approval of the amount for which the claims are being settled. It further requires an approval of the disposition of those funds for the best interests of the plaintiff under a disability, a guardian as to property must, of necessity, be appointed by the Court, and the Court must further approve a scheme of management and accounting for the ultimate disposition of monies.

In my view, the settlement of actions for persons under a disability, the approval of the monetary sum of the settlement, the appointment of the guardian as to property, the disposition of the funds and the management scheme together with a scheme of reporting, should properly all be dealt with at the same time by the same judge.

I am of the view that the settlement of a claim on behalf of a person under disability is a complete entity consisting of a number of different parts and should not be treated as a series of separate and independent entities. Any one of the steps necessary to complete the entirety of the resolution of the settlement might affect the judge's view as to the appropriateness of some other part of the settlement. How the money will ultimately be managed and its disposition could, within reason, reflect on the adequacy of the actual settlement itself. Many settlements are very straight-forward and simply involve the payment of a small sum of money into court. Some settlements, however, are complex. At the present time, rule 7 does not differentiate between simple straight-forward settlements involving small sums paid into court, and complex settlements involving the management of money over the life expectancy of a plaintiff under a disability.

[22] The trial of this action took place before Gans J. Counsel attended before Cavanagh J., Conway J. and then filed materials for approval, which I have been dealing with. There is nothing unusual about this proceeding involving approval by the court of a structure, the need for a management plan and guardianship application. Personal injury claims where the plaintiff has sustained catastrophic injuries and is a party under a disability generally involve significant sums of money. It is usually necessary for more than one motion for approval to be brought; these motions for approval ought to be brought before the same judge who is familiar with the case. It is the court who is the gatekeeper and is tasked with the duty of ensuring that the outcome, including the proposed structure and fees to counsel, is in the best interests of the party under a disability. It is the obligation of counsel acting on behalf of parties under disabilities to satisfy the court that the proposed settlement or use of funds from a judgment is reasonable and is in the best interests of the party under a disability. Similarly, the management plan put forward must be based on the evidence and the expert opinions secured in order to receive approval from the court. If possible, the judge who approved the settlement or judgment should deal with subsequent motions in order to promote consistency of approach.

[23] In the instant case, the office of the PGT noted in its report,

It has been almost nine months since a guardian of property was appointed for Jason. If the structure judgment was reviewed contemporaneously with the guardianship application, the same judge could have reviewed the entire package as to whether it was in Jason’s best interests rather than the piecemeal approach that has occurred here. This delay has presumably caused prejudice to Jason Walters who has yet to receive the benefit of his structure payments over a year after the conclusion of the appeal proceedings and nine months since the appointment of his guardian of property.

[24] I make the following orders:

• Pace Law Firm is directed to return the sum of $34,363.09 to the trust account of Walters;
• Payments shall be made as follows:
  • Carol Beirbrier & Associates--$1,067.85
  • Maven Inc.--$3,921.10
  • Dr. Silberfeld--$1,977.50
  • Pierre Sicco--$4,818.80 plus a further sum up to $5,000 as fees to complete the support application relating to J’la Walters
  • Excel Medical Diagnostics--$3,600;
• Court approval is granted for the fees for the appeal and the leave application in the sum of $70,000 inclusive of HST and disbursements. No fees are to be charged for the preparation of the Rule 7 materials, the supplementary affidavit filed in response to my original endorsement or for responding to the inquiries from the office of the PGT;
• The balance of the funds currently in the trust account of Pace Law Firm after payment of the outstanding amounts listed above is to be applied to fund the structure for the benefit of Jason Walters. Counsel is to provide me with an accounting of the funds in the trust account, along with an updated structure proposal from McKellar’s with the draft judgment;
• Any further motions on this matter are to be directed to me for approval.

[25] I am indebted to Nick Hedley from the office of the PGT for his timely and helpful report. As well, Mr. Fiske responded to my inquiries quickly and was candid in his responses, for which I am grateful.

D.A. Wilson J. Date: October 2, 2018