Court File and Parties

COURT FILE NO.: CV-18-78018 DATE: 20190610 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: WARREN ACRES, (a minor by his Litigation Guardian, Janet Bablola) Applicant -and- INTACT INSURANCE, Respondent

BEFORE: Mr. Justice Robert N. Beaudoin

COUNSEL: Anthony L. C. Mineault, for the applicant No one for the respondent

HEARD: In writing

Endorsement

[1] This is an Application for:

a) Approval of the settlement of Warren Acres’ claim against Intact Insurance for accident benefits in the total amount of $1,450,000, b) Approval of the payment into a structured settlement of $1,060,000, c) Approval of the payment of solicitor-client fees, inclusive of HST, in the amount of $293,800 for services rendered to Warren Acres by the applicant law firm Quinn Thiele Mineault Grodzki LLP, (“QTMG”) d) Approval of the contingency fee agreement executed between QTMG and the applicant’s litigation guardian (the “Agreement”).

[2] The application was originally filed on or after October 3, 2018. After my review of volumes 1 and 2 of the materials, I noted a number of deficiencies in the record and provided a brief endorsement on November 27, 2018. A copy of that endorsement is attached as schedule “A”.

[3] I subsequently received a supplemental application record, (volume 3), dated April 1, 2019. I also received a separate application (No. 19-CV-79800) for Janet Babalola to be appointed the guardian of Warren Acres’ property (“the Related Application”).

[4] I noted further deficiencies in the materials provided and released a further endorsement dated May 2, 2019. A copy of that endorsement is attached as Schedule “B”.

[5] I have now received a fourth supplemental motion record. It includes the third affidavit from Anthony Mineault, applicant’s counsel.

[6] In my second endorsement, I note that the litigation guardian is described as “Janet Bablola” in the title of this proceeding; as “Janet Babloba” in an earlier draft judgment; and as “Janet Babalola” in the Related Application. The latest draft judgment once again identifies the litigation guardian as “Janet Babalola”. The litigation guardian is referred to as “Janet Acres” in the first contingency fee agreement submitted to the Court. If Janet Babalola is the correct name, then the title of these proceedings needs to be amended.

[7] With respect to the application to have Janet Babalola appointed as guardian of Warren Acres’ property in the Related Application, I have not been provided with any response from the Office of the Children’s Lawyer. Based on the additional information I have received, and subject to any response from the Office of the Children’s Lawyer, I am prepared to appoint Janet Babalola as guardian of property subject to confirmation of her proper name. If further settlement funds become available, an amended guardianship plan must be submitted for approval.

[8] In this matter, there is a global settlement of $1,450,000, inclusive of costs, interest and disbursements. Intact requires that a minimum of 70 percent of the total amount be structured. Subject to my concerns with respect to the proposed solicitor-client account, I find that the settlement appears to be fair and reasonable. The $1,450,000 represents almost the entirety of the benefits, remaining under the policy, to which Warren Acres may be entitled. The settlement will provide his family with some certainty, and will avoid any need for any further assessments of Warren Acres’ function and needs.

[9] In his second affidavit, Mr. Mineault reports that Warren continues to qualify for medical and rehabilitation benefits under his parents’ respective private insurance plans. I requested details of those benefits. The details are necessary to permit me consider the appropriateness of the proposed structure, the payments from which will end after 10.5 years. The details have not been provided.

[10] In his first affidavit, Mr. Mineault states that he is retained on a contingency fee basis, and that the standard contingency fee charged by QTMG is 25 per cent. He claims that the time spent on Warren’s accident benefits file exceeds 600 billable hours. He describes the work as “a significant effort on the part of the firm”. Mr. Mineault further states:

(a) that his usual hourly rate is $350; (b) the application of the usual hourly rates of the lawyers and law clerks who have worked on this file results in fees in excess of $175,000 plus HST; and (c) the disbursements are approximately $45,000.

[11] I requested clarification as to whether any portion of the settlement in the amount of $1,450,000 is allocated as costs. In his second affidavit, Mr. Mineault says that Intact’s offer “was inclusive of legal costs and HST to be charged”. Mr. Mineault also says that QTMG and Janet Babalola negotiated and agreed to fees payable in the amount proposed on this application ($260,000.00 plus HST of $39,000.00). It is not clear how the lawyer and client agreed upon that figure – pursuant the Agreement, or otherwise.

[12] Mr. Mineault’s evidence is that all accident benefits claim-related time dockets were inputted in a separate “PC law account”. Mr. Mineault says that all entries included in Warren Acres’ accident benefits account relate solely to work with respect to his accident benefits claim.

[13] Following my review of Volume 1 of the Record, I requested the time dockets in support of the Mr. Mineault’s claim: “that the time spent on Warren’s accident benefits file exceeds 600 billable hours and represents a significant effort and risk to my law firm”. The dockets, now produced, tell a different story.

[14] Only 310 hours of billable hours are recorded - approximately one half of the time originally claimed. The total of the fees based on time docketed, is approximately $112,000: much less than the $175,000 stated by Mr. Mineault; and less than one- half of the amount for which approval is sought. Without expressly stating as much, it appears that QTMG is seeking a fee premium of approximately $150,000 ($260,000 - $112,000).

[15] I also reviewed the first contingency fee agreement filed by applicant’s counsel. In my second endorsement, I found that this agreement is not compliant with Regulation 195/04 to the Solicitors Act, R.S.O. 1990, c. S.15. (“the Regulation” and the “Act”).

[16] At para. 12 of his May 21, 2019 affidavit, Mr. Mineault states that the reference to 600 hours in his earlier affidavit is a “typo”. He does not, however, explain the difference between his initial figure for fees docketed of $175,000 and the $112,000 as evidenced by the dockets produced.

[17] Mr. Mineault now “wishes to apologize for the confusion created by the Contingency Fee Agreement included in the original Application Record”. He says that, in error, he attached as an exhibit, an “old version” of an agreement that references the firm’s former name, Plant, Quinn Thiele, LLP.

[18] Mr. Mineault has now produced a signed original of a contingency fee agreement ( “the Agreement”) between QTMG and the litigation guardian. Mr. Mineault’s evidence is that the Agreement is compliant with the regulation. He also says that the agreement addresses all of the issues raised in my second endorsement.

[19] The first contingency fee agreement is dated December 30, 2009 and is with Plant Quinn, Thiele. The Agreement is also dated December 30, 2009; it is an original signed document and is with QTMG. It is not clear which law firm existed on December 30, 2009; nor is it clear why two different versions of a contingency fee agreement were purportedly executed on the same date.

[20] In my second endorsement, I requested clarification as to how the lawyers and client reached an agreement with respect to the fees in the amount of $260,000 plus HST. In his May, 21, 2019 affidavit, Mr. Mineault explains that QTMG’s fees are 25 per cent of the proposed $1,450,000 settlement. He says that, pursuant to the Agreement, QTMG is entitled to charge fees of $362,500 (25% x $1,450,000). He says that the reduction to $260,000 is provided “as a means to ensure that Warren Acres would have access to more immediate funds for his care needs”.

[21] Mr. Mineault’s explanation with respect to the proposed fees is problematic. At page 6 of the latest Agreement, costs are explained:

It often happens that in settlement discussions, mediation(s), pretrial(s), or other interactions between the parties the bargaining occurs with offers being exchanged. The offers as exchanged and even as recommended by a Judge may be presented as an all-inclusive number (lump sum) meaning that the sum they are part includes all of your ward, all of your legal costs and all of your disbursements without actually specifying any amount for any category – i.e. general damages, special damages, costs, disbursements. If this occurs in your case, and unless otherwise agreed between us, we will attribute 10% of the “all-inclusive” offer towards your costs and disbursements. Legal fees are not charged against this notional amount of costs. (Emphasis mine)

[22] The proposed fees of $260,000, plus HST ($293,800), do not comply with that paragraph. I note that costs are also addressed at page 3 of the Agreement: “Any money received from the Defendant for costs are not included in the calculation of our fee, and serve to partially offset our charges”.

[23] In any event, the Agreement continues to be non-compliant with the Regulation. The Agreement does not address the following matters:

• If the client is a plaintiff, a statement that the solicitor shall not recover more in fees than the client recovers as damages or receives by way of settlement.
• A statement that explains costs and the awarding of costs and that indicates, i. that, unless otherwise ordered by a judge, a client is entitled to receive any costs contribution or award, on a partial indemnity scale or substantial indemnity scale, if the client is the party entitled to costs, and ii. that a client is responsible for paying any costs contribution or award, on a partial indemnity scale or substantial indemnity scale, if the client is the party liable to pay costs.
• For the purposes of clause 28.1 (11) (b) of the Act, the client or the solicitor may apply to the Superior Court of Justice for an assessment of the solicitor’s bill rendered will in respect of a contingency fee agreement to which subsection 28.1 (6) or (8) of the Act applies within six months after its delivery. (Note: Contrary to the express terms of the Regulation, the Agreement limits that right of review to a 30 day period).

[24] In Séguin v. Van Dyke, 2013 ONSC 6576, Justice Lalonde of this Court concluded that a contingency fee agreement that provides for a contingency fee calculation that includes costs awarded under a global settlement is void and unenforceable.

[25] Lalonde, J. noted that contingency fee agreements that provide for the lawyer to receive any portion of the costs paid are permitted only as an exception under s. 28.8(8) of the Act:

A contingency fee agreement shall not include in the fee payable to the solicitor, in addition to the fee payable under the agreement, any amount arising as a result of an award of costs or costs obtained as part of a settlement, unless,

(a) the solicitor and client jointly apply to a judge of the Superior Court of Justice for approval to include the costs or a proportion of the costs in the contingency fee agreement because of exceptional circumstances; and (b) the judge is satisfied that exceptional circumstances apply and approves the inclusion of the costs or a proportion of them

[26] I am not prepared to approve the Agreement or the proposed fees. The Agreement does not comply with the Regulation. As a result, the proposed fees are considered on a fee-for-service basis.

[27] As I said in my second endorsement, it appears that the applicant’s counsel is seeking a fee premium based on the results achieved. I invited further written submissions if fees are claimed on any basis other than a contingency fee basis. Mr. Mineault responds with the Agreement, which is also non-compliant with the Regulation.

[28] No claim of exceptional circumstances has been expressly made, nor can I find that any exceptional circumstances exist. The request for a “fee premium” is undermined by:

(a) the numerous and admitted errors found in the records filed, and, (b) by counsel’s repeated failure to prepare proper materials for the approval of the settlement.

[29] I find that reasonable amount for solicitor-client fees is $145,000 (plus HST); in other words, ten per cent of the global settlement. Allowing fees based on 10 per cent of the amount received is in keeping with costs as explained at page 6 of the Agreement (see para. 21 above).

[30] QTMG is more than fairly compensated for the time actually devoted to this matter and the fees allowed recognize the result obtained. Most importantly, Warren Acres will continue to have access to a larger amount of funds for his present and future care needs.

[31] Applicant’s Counsel shall seek an appointment before me for approval of the proposed management of the additional funds now available to Warren both in the context of this application and the related application.

Mr. Justice Robert N. Beaudoin Date: June 10, 2019

Schedule A

18-CV-78018 Warren Acres by his Litigation Guardian Janet Babloba v. Intact Insurance Heard: November 27, 2018

[32] Overall settlement seems fine, however;

1. Please provide copy of original Application as issued; the one in the record is not signed and has a return date of July 13, 2017.
2. While this is a minor annoyance, the Application Record is improperly described as an Applicantion Record.
3. There is no affidavit of Litigation Guardian in this proceeding as required by 7.02(2).
4. Ms. Babloba must be appointed as Guardian of the Property pursuant to section 47 of the Children’s Law Reform Act on notice to the Children’s Lawyer. This relief is not requested in the copy of the Application provided to the Court nor is there any proof of service.
5. The draft order should provide incorporate particulars of the structure which should be attached as a Schedule to the order sought – guidance may be sought by Henderson Structured Settlements.
6. Where is the proof of settlement? Minutes of Settlement? Response to letter set out at Tab P?
7. Where is Intact’s Offer to Settle referred to at para. 130? Was it inclusive of fees and disbursements?
8. Was any part of the settlement allocated to fees? If not, why not?
9. Please provide time dockets. How are these segregated from the time spent on the tort action? What steps will be undertaken to prevent double recovery?

Schedule B

COURT FILE NO.: CV-18-78018/CV-19-79800 DATE: 20190502 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: WARREN ACRES, (a minor by His Litigation Guardian, Janet Bablola), Applicant -and- INTACT INSURANCE, Respondent

BEFORE: Mr. Justice Robert N. Beaudoin

COUNSEL: Anthony L. C. Mineault, for the Applicant No one for the Respondent

HEARD: In writing

Endorsement

[33] This is an Application for the following:

e) the approval of the accident benefits settlement offered by Intact Insurance to Warren Acres, a party under disability, in the total amount of $1,450,000, f) the approval of the payment of $1,060,000 to be paid into a structured settlement, g) the approval of the payment of legal fees inclusive of HST for services rendered to Warren Acres by the applicant law firm Quinn Thiele Mineault Grodzki LLP, (QTMG LLP) h) the approval of the Contingency Fee Agreement executed between QTMG LLP and the Applicant’s Litigation Guardian.

[34] The Application was originally filed sometime on or after October 3, 2018. After my review of the two volumes of materials, I noted a number of deficiencies and provided an Endorsement on November 27, 2018.

[35] I subsequently received a Supplemental Application Record, (Volume 3). A separate Application (No. 19-CV-79800) has been commenced to have Janet Bablola appointed the Guardian of Warren Acres’ property.

[36] I note that the Litigation Guardian is described as “Janet Bablola” in Application No. 18-CV-78018; as “Janet Babloba” in the draft judgment, and as “Janet Babalola” in Application No. 19-CV-79800. This needs to be corrected.

[37] In the title to the most recent Application, Warren Acres was described as being represented by his Litigation Guardian, The Children’s Lawyer. I was curious as to how that appointment had occurred, and in response to my question, I was provided with an Amended Application which deleted the reference to The Children’s Lawyer. It does not appear that any steps have been taken to have a Litigation Guardian appointed for Warren Acres in that proceeding.

[38] In my original Endorsement, I sought additional information in order to approve the payment of the fees requested by QTMG LLP. I specifically requested time dockets and information as to how the time allocated to this matter was segregated from the time spent by the law firm on the related tort proceedings.

The Claim

[39] It appears that this Claim for accident benefits was an unusual and challenging one. In November 2009, Janet and Roy Acres retained QTMG LLP to assist them in seeking compensation for the injuries sustained by themselves which they suffered as a result of her rear end motor vehicle collision that occurred on November 4, 2009. At that time, it appeared that significant injuries had been sustained by the Janet and Roy and that their son, Warren, had escaped serious injury. At that time, Warren was a healthy 15 month old child.

[40] Prior to the collision, Warren’s medical history had been uneventful. Subsequent to the collision, Warren began to experience many difficulties and developmental delays. Applicant’s counsel became convinced that Warren had sustained more serious injuries that had been previously thought. Thereafter, he conducted a very thorough investigation to ascertain the nature of Warren’s injuries and impairments, and of their causality to determine what accident benefits were owed to him by the Respondent, Intact.

[41] An initial assessment diagnosed Warren with suffering from a Pervasive Development Disorder rather than suffering from a traumatic brain injury. That assessment did not attribute the cause of that diagnosis to the collision of November 4, 2009.

[42] Convinced that this diagnosis was incorrect, Applicant’s counsel then set out to obtain further expert opinions. As a result of those opinions. Intact upgraded Warren’s benefits to the catastrophic category of benefits in June 2013. This both increased the amount of funding available to Warren for medical rehabilitation benefits and also increased his monthly entitlement to attendant care services. The designation made the benefits available to Warren payable over his entire lifetime.

[43] Further assessments took place as Warren was diagnosed with an Autism Spectrum Disorder and causation continue to be an issue. Ultimately, an opinion was obtained from Dr. Wayne Langburt who concluded that it was more likely than not that Warren’s injuries materially contributed to his severe frontal lobe and autistic symptoms and that these injuries significantly interfered with his activities of daily living. According to Applicant’s counsel, this medical-legal opinion was a pivotal document as it provided a firm diagnosis that Warren had sustained a traumatic brain injury as a direct result of the collision.

[44] Further consultations took place and additional medical-legal opinions were obtained. These reports confirmed that Warren was qualified for accident benefits under the catastrophic category and provided direction with regard to the treatments and therapies that were required to assist Warren on a day-to-day basis.

[45] Thereafter, Applicant’s counsel engaged in settlement discussions with Intact and obtained a Future Cost of Care report. A present day valuation calculation of Warren’s accident benefits claims determined these to be in the amount of $1,903,872.77. The monetary reserves remaining under Warren’s accident benefits claim was by then $1,453,000.00.

[46] Intact proposed a final settlement offer that amounted to the sum of $1,450,000 to settle Warren’s claim with a minimum of 70% of the total amount to be structured ($1,015,000.00). That offer was accepted on July 25, 2017.

[47] Subject to my concerns about the claim for fees, I conclude that the settlement is fair and reasonable because it amounts to a payment by Intact of almost the entirety of the remaining policy limits for which Warren qualified. The settlement will provide his family some certainty and will avoid any need a any further re-assessments. In addition, I am advised that Warren continues to qualify for additional medical and rehabilitation benefits under his parents’ private insurance plans. The details of those benefits should be provided.

The Proposed Structure

[48] The Litigation Guardian has selected a payment of a structure in the amount of $10,000 per month as this will guarantee Warren’s participation in a rehabilitation program that is proven to be very beneficial to him. This amount will cover the respite and the after school care and transportation costs he requires. The amounts are tax-free and the term is for 10.5 years. Since the acceptance of the settlement, Intact has continue to provide ongoing funding for Warren.

[49] I have concerns with respect to the structure selected by the Litigation Guardian as it is limited to a term of 10.5 years. Given Warren’s significant disability and the lack of any information with respect to his life expectancy, there is no information as to how his future needs will be addressed when the accident benefits will be exhausted. This is not addressed in the proposed management plan.

[50] I am advised that the tort action is ongoing and that the Respondent in that action has admitted liability for causing the collision. Applicant’s counsel states that the remaining policy limits in relation to that claim are $14,750,000 and that accordingly there is sufficient coverage to indemnify Warren appropriately and provide him with funds that he will need to obtain treatments over his lifetime.

[51] Given that this is a motor vehicle claim, and the unusually high amount of these policy limits, I require proof that these policy limits are indeed available and that any claims by Warren’s parents will not impact the amount available to him.

Legal Fees

[52] In his affidavit in support of the settlement, Mr. Mineault states that he was retained on a contingency basis and that QTMG LLP has a standard contingency retainer for a 25% fee. He adds that QTMG LLP has invested a large amount of resources in this matter and has paid for all the expenses related to the case including clinical notes and records, expert fees and in-house disbursements. He claims that the time spent on Warren’s accident benefits file exceeds 600 billable hours which represents a significant effort to the firm.

[53] QTMG LLP seeks approval of its legal costs in the amount of $260,000 plus $33,800 for HST. The firm is not seeking the repayment of the legal disbursements incurred as those disbursements will be repaid to QTMG LLP by the Respondent at the time of the settlement of the tort action.

[54] Mr. Mineault says that his usual hourly rate is billed at $350, and the application of the usual hourly rates of the lawyers and law clerks who have worked on this file indicates the fees would be over $175,000 plus HST with disbursements of approximately $45,000.

[55] Although not expressly stated, it appears that QTMG LLP is seeking a fee premium having regard to the challenges presented by the file and the results obtained.

[56] I have sought clarification as to whether any portion of the settlement in the amount of $1,450,000 had been set aside for costs. In his supplemental affidavit, Mr. Mineault says that the offer was inclusive of legal costs and HST. He then added that QTMG LLP and Janet Bablola negotiated and agreed to fees payable in the amount claimed. It is not clear if this negotiation was based on the Contingency Fee Agreement or how the fee was calculated.

[57] QTMG LLP further advises that all accident benefits claim related time dockets were inputted in a separate account. Mr. Mineault ensured that all entries contained in Warren Acres’ accident benefits account relate solely to work completed in relation to his accident benefits claim.

[58] The time dockets for that account list approximately 310 hours of billable hours; or one half of the time originally claimed. The total value of the fees is approximately $112,000. This is less than one half of the amount claimed. In the end result, it appears that QTMG LPP is seeking a fee premium of approximately $150,000.

[59] This requires a closer examination of the Contingency Fee Agreement set out in the Application Record. I find that it is not compliant with Regulation 195/04 to the Solicitors Act, R.S.O. 1990, c. S.15.

[60] I note the following:

1. The Contingency Fee Agreement is executed between Roy and Janet Acres with regard to a personal injury/motor vehicle accident. There is no reference to a claim being advanced on behalf of Warren Acres, a party under disability.
2. The Contingency Fee Agreement refers to a rate of 30% and not 25% as stated in the Affidavit.
3. The agreement is to be signed by the solicitor and the client with each of their signatures being verified by witness. Counsel’s signature has not been witnessed.
4. The following required statements are missing:
   • That the client and the solicitor have discussed options for retaining the solicitor other than by way of a Contingency Fee Agreement, including retaining the solicitor by way of an hourly-rate retainer.
   • A simple example that shows how the contingency fee is calculated.
   • A statement that informs the client of their right to ask the Superior Court of Justice to review and approve of the solicitor’s bill and that includes the applicable timelines for asking for the review.
   • A statement that explains costs and the awarding of costs and that indicates, i. that, unless otherwise ordered by a judge, a client is entitled to receive any costs contribution or award, on a partial indemnity scale or substantial indemnity scale, if the client is the party entitled to costs, and ii. that a client is responsible for paying any costs contribution or award, on a partial indemnity scale or substantial indemnity scale, if the client is the party liable to pay costs.
   • If the client is a party under disability, for the purposes of the Rules of Civil Procedure, represented by a litigation guardian, i. a statement that the Contingency Fee Agreement either must be reviewed by a judge before the agreement is finalized or must be reviewed as part of the motion or application for approval of a settlement or a consent judgment under rule 7.08 of the Rules of Civil Procedure, ii. a statement that the amount of the legal fees, costs, taxes and disbursements are subject to the approval of a judge when the judge reviews a settlement agreement or consent judgment under rule 7.08 of the Rules of Civil Procedure, and iii. a statement that any money payable to a person under disability under an order or settlement shall be paid into court unless a judge orders otherwise under rule 7.09 of the Rules of Civil Procedure.
   • A statement that a Contingency Fee Agreement that provides that the fee is determined as a percentage of the amount recovered shall exclude any amount awarded or agreed to that is separately specified as being in respect of costs and disbursements.

[61] Given that fees claimed may be reflection of that Contingency Fee Agreement, I am not prepared to approve the amounts claimed.

[62] If counsel wishes to resubmit a request for the approval of their fees on any other basis, counsel is to provide me with written submissions not exceeding 10 pages in length as well as copies of the relevant authorities upon which they may wish to rely. They are to do so within 30 days of the release of my Endorsement.

[63] The Draft judgment continues to problematic. Paragraph 1 of the draft judgment provides that Intact is to pay $1,450,000 forthwith, in trust, to Janet Bablola. Paragraph 2 further orders that the Respondent pay to Warren Acres the amount set out in Schedule A. Paragraph 3 provides that the Applicant (unnamed) recovers from the Respondent the sum of $293,800 for partial indemnity costs. Assuming that there is only one amount that is payable to Janet Bablola, and that this amount is to be allocated between the structure and the payment of fees; the numbers do not add up. The judgment does not reflect what was sought in the Application. I recommend that counsel obtain assistance on preparing the draft Judgment in proper form.

[64] Finally, a copy of the Settlement Disclosure Notice that was signed by Intact on February 20, 2019 is attached as schedule B of the draft judgment. I fail to understand why that document is part of the judgment.

Date: May 2, 2019

COURT FILE NO.: CV-18-78018 DATE: 20190610 ONTARIO SUPERIOR COURT OF JUSTICE

RE: WARREN ACRES, (a minor by His Litigation Guardian, Janet Bablola, Plaintiff -and- INTACT INSURANCE, Defendant

BEFORE: Mr. Justice Robert N. Beaudoin

COUNSEL: Anthony L. C. Mineault, for the Plaintiff No one appearing for the Respondent

Endorsement

Beaudoin J. Released: June 10, 2019