Court File and Parties
COURT FILE NO.: CV-18-00610340-0000
DATE: 20190206
SUPERIOR COURT OF JUSTICE - ONTARIO
B E T W E E N:
HABIBULLAH POPAL, a person under disability, by his Litigation Guardian, Nazefah Normohamad, Applicant
- and -
JOEL DELA-CRUZ, Respondent
BEFORE: G. Dow, J.
COUNSEL: Darcy R. Merkur, for the Applicant Alain Young, for the Respondent
ENDORSEMENT
[1] This application for approval of a proposed tort settlement involves a person under disability and was directed to me for review. I am approving the settlement but altering the proposed division of the settlement funds with regard to the amounts to be paid to counsel for fees and the proposed Guardian of Property (who is the person under disability’s spouse and litigation guardian in this matter). I am advised that there is a companion application for that purpose which has been submitted to Estates Court.
[2] The applicant, born April 14, 1982 (subsequently described as “Habib”) was 33 years old when involved in a motor vehicle collision on October 18, 2015. The motor vehicle accident report indicates the applicant’s vehicle was struck on the passenger side, front corner by the respondent’s driver side front corner in an intersection governed by a traffic signal. Counsel for the applicant detailed in his affidavit, in support of a $225,000.00 all-inclusive settlement, that fault for the collision rests with the respondent. The applicant suffered soft-tissue injuries including headaches, dizziness and tinnitus. He was examined, treated and discharged from a local hospital. He was then examined by his family physician with referral for diagnostic testing between February 10 and March 6, 2016 which included a CT scan of his head. On April 1, 2016, the applicant suffered a ruptured anterior communicating artery (or brain) aneurysm. This is described in the medical records as a “catastrophic neurological injury”. Multiple brain and related surgeries were performed. He was discharged home in September, 2017 with a day program at Providence Hospital.
[3] His capacity to manage his own affairs was assessed in June, 2018 and he was found incapable of managing his property. Applicant’s counsel appropriately focused on attempts to obtain evidence that the brain aneurysm was caused or materially contributed to by the motor vehicle accident.
[4] Plaintiff’s counsel was unable to secure an opinion from an expert in the required field that could establish a relationship between the motor vehicle accident and the aneurysm. As a result, the proposed settlement of $225,000.00, all-inclusive, and attributed to general damages and future cost of care, is accepted as in the best interests of Habibullah Popal.
[5] The retainer agreement executed describes itself as not a contingency fee agreement and is contained in the material filed. It details fourteen factors to be considered in determining the fee to be charged which is over and above any portion of the legal bill recovered by way of costs from the respondent (or in this matter, the respondent’s motor vehicle insurer). It includes stating that the experience of the firm allows them to estimate the balance of the fees to pay and such “will be approximately 15% to 20%, plus HST” of the damages in addition to disbursements incurred. To merely state that a document is not to be a contingency fee agreement does not determine that issue. However, I find in these circumstances that this retainer agreement is not a contingency fee agreement. More importantly for this application, where the retainer involved representing a person under disability, the retainer agreement correctly stated that the “final bill for legal fees, costs, disbursement and taxes is subject to the approval of a Judge”. This requirement was apparent from the outset of the retainer. The agreement also correctly cited Rule 7.08 noting the court “will determine whether the settlement amount and fees charged are fair and equitable in all of the circumstances”.
[6] The breakdown for the proposed settlement provided by counsel is as follows:
Damages $190,341.42
Partial Indemnity Fees $24,034.14
HST on Fees $3,124.44
Contribution towards assessable disbursements $7,500.00
TOTAL $225,000.00
[7] Applicant’s counsel was retained after the applicant had retained a different counsel who assisted the applicant and his family from October 30, 2015 to January 6, 2016. Their account was protected and negotiated the amount of $2,260.00 inclusive of HST and disbursements of $888.92, the latter of which were paid at the time the file was transferred in March, 2017.
[8] In the portion of counsel for the applicant’s supporting affidavit dealing with the “Retainer and Fees” (paragraph 70-82), he relied on two decisions. The first, Howran v. Travelers, released December 22, 2017, involved another partner at the plaintiff’s law firm. This is an endorsement of Justice Shaughnessy in which he states the fees amount to “11.7% of the total settlement” and concluded that same are fair and reasonable.
[9] The second decision is that of Justice Firestone in Kee Kwok v. State Farm Mutual, 2016 ONSC 7339. It involved the proposed settlement negotiated by another downtown Toronto law firm specializing in plaintiff personal injury litigation. I agree with the statement by Justice Firestone, at paragraph 21, that a “contingency fee agreement is not the only type of agreement or retainer permissible in a tort-related or Statutory Accident Benefit action or application”. In that decision, $50,680.00 for legal fees, inclusive of HST was approved. I calculate this to be 13.59% of the total $373,000.00, all-inclusive settlement attained in that matter. Justice Firestone referred to the appropriate factors to consider in determining the reasonableness of the proposed counsel fee at paragraph 32.
[10] Counsel for the applicant relied on these decisions in support of the claim for $52,585.35 in fees or 23.37% of the $225,000.00 all-inclusive settlement. Of note, in this matter, the partial indemnity costs of $24,034.14 represents 12.6% of the damages figure of $190.341.42. The remaining $28,551.21 being sought represents 15% of $190,341.42 or, stated by counsel (at paragraph 78) “the minimum-end of the range of fees agreed to in the retainer agreement”. However, as counsel maintained, and as I have agreed, the retainer agreement is not a contingency fee arrangement. As a result, the amount of additional fees should not be calculated as a percentage. The fees are not “agreed” to as deposed by counsel for the applicants but “merely an estimate” as stated in the retainer agreement.
[11] Counsel set out a multitude of legal services his firm performed in paragraph 77. I have no doubt that this occurred but I am concerned the time and reasonable cost to perform such activity does not approach the value or the fee being sought. Counsel deposed his expertise and the experience of his firm adds value to the settlement they achieved. I agree. However, counsel chose not to attach the time dockets of counsel and clerks kept indicating they were “private and confidential” and available on request. No summary of what the dockets indicate was provided. Similarly, no information was provided about the hourly rates of individuals involved in the handling of the file. Thus, I am unable to use this information to support the proposed total legal fee of $52,585.35.
[12] I have no difficulty in accepting counsel of almost 18 years personal injury experience and a Certified Specialist in Civil Litigation commands a top level hourly rate. However, with such expertise and experience, I would expect a level of efficiency as noted by counsel when he deposed:
a) there was no doubt about liability (paragraph 3);
b) the key issue in this matter is causation (paragraph 4);
c) that Habib’s tort claim was not viable (paragraph 6);
d) that he was required to do some “housekeeping” type work at the outset of the retainer (paragraph 25);
e) the accident benefit insurer was going to deny all future treatment and/or applications for benefits until they were furnished with an opinion that Habib’s aneurysm was, in fact, related to the collision (paragraph 36);
f) as of May, 2018, he was writing the tort insurer that the potential value of the applicant’s damages would be many multiples of the respondent’s $1,000,000.00 policy limit and the need to seek out any excess or umbrella policies (paragraph 39);
g) given the causation issue, no Statement of Claim was ever issued (paragraph 43).
[13] Mindful of the factors identified in paragraph 32 of Justice Firestone’s decision, this matter does not strike me as particularly time consuming or complex. This would be particularly so given the level of experience and expertise noted by counsel for the applicant. The monetary value of the case was large if causation could be shown but of little or no value if it could not. Applicant’s counsel correctly focussed on attempting to obtain an opinion that the aneurysm was caused by the motor vehicle accident. However, he was unsuccessful. Given the amount of the settlement, the risk of non-payment did not materialize. Counsel and his firm were able to well serve the social objective of providing access to justice for injured parties.
[14] As a result of considering the appropriate and relevant factors used to determine the reasonableness of a solicitor’s proposed fee to be paid by a party under disability, I have no difficulty in allowing fees in excess of the respondent’s contribution towards the legal fees of applicant’s counsel. That amount, $24,034.14, as partial indemnity legal fees, I conclude should fairly and reasonably represent 62.5 percent of the actual legal expense. If $24,034.14 is 62.5 percent of the legal fees, one hundred percent would be $38,454.62. I am prepared to and allow $40,000.00. The payment of HST is an additional $5,200.00. This reduces the fees and HST proposed be payable to Thomson Rogers by $14,221.45 and increases the amount to be disbursed to the Guardian of Property, in trust, for the benefit of Habibullah Popal to $170,040.00.
[15] As a result judgment is awarded in favour of the plaintiff that the defendant pay $225,000.00 all-inclusive broken down as follows:
to the Guardian of Property of Habibullah Popal, in trust, following entry of an order that his spouse and litigation guardian, Nazefah Normohamad has become same; $170,040.00
to Thomson Rogers, for fees, inclusive of HST, which they agree to accept in full satisfaction of their solicitor and client account; $45,200.00
to Thomson Rogers, for disbursements, inclusive of HST which they agree to accept in full satisfaction of same; and $7,500.00
to Thomson Rogers, in trust to satisfy the balance of the account of Lofranco Corriero, which they agree to accept of full satisfaction of their solicitor and client account. $2,260.00
TOTAL: $225,000.00
[16] I invite plaintiff’s counsel to forward a draft judgment with the aforementioned changes to paragraph 1 which shall also include paragraphs 2 to 5 of the previous draft judgment provided.
Mr. Justice G.Dow
Released: February 6, 2019