Court File and Parties
Court File No.: 14-61382 Date: 2019-06-14 Superior Court of Justice – Ontario
Re: ETAF HANNUNEH, by her Litigation Guardian, AHMAD AL SHEHABI, Plaintiff And: ECONOMICAL MUTUAL INSURANCE COMPANY, DOUGLAS STEL and GOSS McCORRISTON STEL, Defendants
Before: Corthorn J.
Counsel: Marc Binavince, for the Plaintiff Marc Smith, for the Defendant, Economical Mutual Insurance Company
Heard: In Writing
Endorsement
Corthorn J.
Introduction
[1] This is the second endorsement on a motion for 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] The motion was originally before the court in writing in 2018. In July 2018, an endorsement was released identifying that (a) there were a number of deficiencies in the record filed in support of the motion, and (b) the relief sought was incomplete in the circumstances of this case (Hannuneh v. Economical Mutual Insurance, 2018 ONSC 4588 and “the Endorsement”).
[3] In May 2019, a second motion record was filed. That record includes a new notice of motion, copies of the pleadings and other portions of the record in the action (which documents were not included in the original motion record), more recent affidavits from each of the litigation guardian and plaintiff’s counsel, and an affidavit from an articling student in the office of plaintiff’s counsel.
[4] The relief now sought is an order dismissing the plaintiff’s claim against Economical and sealing the record on the motion. The defendant consents to the first element and does not oppose the second element of the relief sought.
[5] Plaintiff’s counsel is not delivering a fee account to the client. Although not included in the relief requested, plaintiff’s counsel requires approval for the disbursement account he intends to deliver on a solicitor-client basis. The disbursements incurred are approximately $5,000.
Background
[6] 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) the 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.
[7] 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.
[8] The only remaining claim is that against Economical. It is based on the alleged failure of the insurer to deal with the plaintiff in good faith in the adjustment and settlement of her SABS claim. The relief requested in the action 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.
[9] There was no evidence in the original record as to the amount of the settlement, reached in 2013, of the plaintiff’s claim for accident benefits. There is still no evidence per se addressing that aspect of the factual background.
[10] 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.
[11] Paragraphs 11 through 16 of Economical’s statement of defence include allegations with respect to the settlement reached, the release and settlement disclosure notice executed by the plaintiff, and payment of the settlement funds.
[12] If a reply to the statement of defence was delivered, a copy of it is not included in the record. I therefore assume that a number of the allegations made in the statement of defence are undisputed. Those allegations include that:
- In April 2013, the plaintiff’s claim for accident benefits was settled as a result of a mediation held in the context of a Financial Services Commission of Ontario (“FSCO”) proceeding;
- The plaintiff’s claim for accident benefits in its entirety was settled for $35,000;
- The plaintiff personally executed a full and final release and a settlement disclosure notice; and
- In May 2013, the plaintiff received the settlement funds.
[13] The second motion record includes a copy of a report prepared by a former insurance professional who is now a partner and consultant in a business providing accessibility consulting services. That individual addresses the quality of the adjusting of the plaintiff’s claim and the alleged bad faith on the part of Economical in its adjustment of the claim and when the settlement of the SABS claim was reached in April 2013.
The Issues
[14] The issues to be determined on this motion are:
- Is the settlement approved pursuant to r. 7.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194?
- Is the plaintiff entitled to a sealing order with respect to the materials filed in support of the motion?
- Is the proposed disbursement account of $4,959.41 (inclusive of HST) approved?
Issue No. 1 - Is the settlement approved pursuant to r. 7.08 of the Rules of Civil Procedure?
[15] As already identified, the only specific allegation against Economical is that it 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. 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.
[16] The statement of claim makes reference to a report dated January 2013, prepared by neuropsychologist, Dr. Amy Moustgaard (“the Moustgaard Report”). A copy of that report was not included in the original motion record. A copy of the report is attached as an exhibit to Mr. Binavince’s most recent affidavit.
[17] In his first affidavit in support of the motion, Mr. Binavince listed a number of the test results included in the Moustgaard report, including that the plaintiff fell:
- 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.
[18] In neither of his affidavits does Mr. Binavince address the opinion expressed by Dr. Moustgaard with respect to whether the plaintiff’s performance on the neuropsychological testing was reflective of the plaintiff’s actual capability. In that regard, Dr. Moustgaard said that, “there was substantial evidence to suggest that [the plaintiff’s] performance on the current assessment under-represents her true ability … The level of impairment seen on the current testing is clearly incompatible with Ms. Hannuneh’s basic level of activities of daily living.”
[19] Dr. Moustgaard concluded that it was not clear whether external gain was a factor in the plaintiff’s performance. Dr. Moustgaard opined that it was “more plausible” that the plaintiff’s performance issues were related to somatoform issues (i.e., a conversion disorder). Ultimately, Dr. Moustgaard concluded that the overall results from the testing were “non-credible”.
[20] The particulars of the alleged bad faith on Economical’s part are difficult to discern from the statement of claim. Based on Mr. Binavince’s most recent affidavit, and the copy of the expert’s report, the claim in bad faith appears to be premised on the failure of Economical to take certain investigative and other steps upon receipt of a copy of the Moustgaard report.
[21] In his report, the expert is critical of Economical’s response to the Moustgaard report. He opines that there were a number of steps that Economical “should have” taken following receipt of the report. The expert describes these steps as “workflow process steps” that would have resulted in Economical adjusting the file objectively and providing peace of mind to the plaintiff. The expert describes Economical’s handling of the plaintiff’s SABS claim as “rudimentary”. The expert concludes that Economical failed to act in good faith.
[22] The expert’s opinion is based entirely on his personal experience working in the insurance industry. He cites no industry-wide standards or practices to support his conclusions. No mention is made of Economical’s internal standards or practices. The expert does not address whether the individuals handling the plaintiff’s claim met either the internal or any industry-wide standards or practices.
[23] The expert also does not identify how the plaintiff was prejudiced or how her claim might have been resolved differently had the workflow process steps been followed. For example, the expert does not (a) identify the amount of SABS benefits the plaintiff had remaining available to her at the time the settlement was reached, and (b) what additional benefits, if any, to which she might have been entitled if Economical had adjusted the claim differently and/or taken a different approach to the settlement of the claim.
[24] The record before the court does not include a copy of the expert’s curriculum vitae. Nor does it include any specific information about the expert’s experience working in the insurance industry. There is no Form 53 (acknowledgement of expert’s duty) in the record.
[25] In the absence of that evidence, it is difficult to determine whether the author of the report would, on a voir dire at trial, be qualified to give opinion evidence that relates to the merits of the plaintiff’s claim against Economical. Leaving aside any substantive weaknesses in the report, there is the issue of whether the author of the report would be permitted to give opinion evidence at trial.
[26] In his second affidavit, Mr. Binavince questions whether the opinions expressed by the expert are sufficient to support a finding in favour of his client on the claim of bad faith conduct. He comments that the expert “did not opine strongly in [favour] of [the plaintiff’s] position on bad faith.”
[27] Mr. Binavince queries whether a second report on the issue would be required for him to recommend to his client that the action be taken to trial. Mr. Binavince also questions whether, to succeed at trial, it would be necessary to establish that when the settlement of the SABS claim was reached the plaintiff lacked the capacity to understand the significance of the full and final release.
[28] The plaintiff’s tort claim was resolved some time ago. It has been over six years since her claim for accident benefits was settled. The claim in professional negligence against the plaintiff’s former lawyer was also settled. Only the claim, based in bad faith against Economical, remains to be resolved. For that claim to be pursued, additional evidence would be required including with respect to:
a) The merits of the allegation of bad faith; b) The quantum of benefits which the plaintiff had available to her when the settlement was reached in April 2013; c) The benefits which the plaintiff might otherwise have been entitled under the various heads of the SABS; and d) Economical’s financial position, in relation to the potential punitive damages.
[29] I am satisfied that the work involved on behalf of the plaintiff and the disbursements that would be incurred in amassing the relevant medical records and expert reports would be significant. Even in the absence of specific evidence on this motion of the damages to which the plaintiff might be entitled (additional benefits and punitive damages), I am satisfied that advancing the claim would be a significant risk to the plaintiff.
[30] In summary, a cost-benefit analysis, even at a general level (as required in the absence of specific evidence) demonstrates that the settlement reached of the claim against Economical is reasonable and in the plaintiff’s best interests. The plaintiff’s claim against Economical is therefore dismissed without costs.
Issue No. 2 - Is the plaintiff entitled to a sealing order with respect to the materials filed in support of the motion?
[31] The second notice of motion proposes that the motion be heard in writing “under subrule 37.12.1(1) because it is on consent”. That statement is not entirely accurate. Economical consents to the dismissal, without costs, of the action. Economical does not consent to the request for a sealing order; it is not opposing that request. There is a difference between consenting to relief and not opposing a request for certain relief.
[32] I note that in the section of the notice of motion which sets out the grounds upon which the plaintiff relies in support of the relief requested, there are two grounds listed. They both address the dismissal, without costs, of the plaintiff’s claim against Economical. There are no grounds listed in support of the request for a sealing order.
[33] In his second affidavit, Mr. Binavince says that his affidavit “discloses [his] tactical appreciation of the strengths and weaknesses of the plaintiff’s claim against Economical”. I make no finding as to whether Mr. Binavince’s affidavit discloses that type of information. Even if it does so, it did not have to do so.
[34] Dickson v. Kellett, 2018 ONSC 4920, includes a discussion (a) of the type of evidence required on a motion for court approval of a settlement, and (b) as to whether it is necessary for the supporting materials to include information that is subject to either solicitor-client or litigation privilege. In summary:
It is incumbent upon counsel to craft the supporting materials in such a way that the evidentiary requirements are met without, unnecessarily, disclosing information that is subject to solicitor-client or litigation privilege: “If [counsel for the moving party goes] further than need be to convince the court … that is his problem” (Makowsky (Guardian ad litem of) v. Jaron, 2004 BCSC 2, 26 B.C.L.R. (4th) 297, at para. 4).
[35] The plaintiff’s request for a sealing order is dismissed for the procedural reason that it cannot be brought as a motion in writing. The dismissal of the motion in writing for a sealing order is without prejudice to the plaintiff bringing a motion, in open court, for such an order.
[36] The plaintiff shall advise both the defendant and the court, within ten days of the date of this endorsement, as to whether she intends to proceed with such a motion. In the event she chooses to do so, the existing motion materials shall remain sealed pending the outcome of the motion for a sealing order. In the event the plaintiff chooses not to do so, the motion materials shall be returned to the court file and form part of the public record. Further, in the event the plaintiff fails to notify the court within ten days of her decision, the motion materials shall be returned to the court file and form part of the public record.
Issue No. 3 - Is the proposed disbursement account of $4,959.41 (inclusive of HST) approved?
[37] From the settlement of the plaintiff’s tort claim, $20,000 was held in trust by plaintiff’s counsel as a monetary retainer for the pursuit of this action against the plaintiff’s former lawyer and Economical. In May 2018, approximately three-quarters of the monetary retainer was returned to the plaintiff. From his firm’s trust account, plaintiff’s counsel paid $15,040.59 to the plaintiff.
[38] A copy of a trust statement dated April 30, 2019, from Menzies Lawyers, is attached as an exhibit to the affidavit of the firm’s articling student. The sole purpose of the student’s affidavit is to provide the court with a copy of the trust statement. It is not clear why the trust statement was not attached as an exhibit to Mr. Binavince’s second affidavit.
[39] The student’s affidavit does not offer any explanation for each of the disbursement items listed in the trust statement. Nor does Mr. Binavince, in either of his affidavits, include any explanation for the disbursement items listed in the trust statement. Two of the disbursement items appear to relate to examinations for discovery:
- The first is an invoice of $559.35 from “CISOC Discovery Interpretation Service”. That invoice was paid in November 2016.
- The second is an invoice of $2,029.36 from Catana Reporting Services. That invoice was paid in December 2016.
[40] There is no evidence that examinations for discovery were conducted in this action.
[41] Another disbursement item for which there is no explanation is the fee of a mediator ($932.25) paid in June 2017. Again, there is no evidence that mediation was conducted in this action.
[42] Had copies of the invoices for each of the three items discussed immediately above, been included with the trust statement, they would likely have made reference to a title of proceeding and/or a court file number. It would have been possible to confirm that the disbursements incurred were in fact for this action.
[43] In his first affidavit, Mr. Binavince states that a pre-trial conference was held in this action in February 2018. For that conference to have been conducted, the parties had to have completed mediation. It is unlikely that the parties proceeded to a pre-trial conference without first having conducted examinations for discovery. I draw an inference and find that the three invoices discussed above relate to this action.
[44] A brief description from counsel of both the steps in the action and the relationship of those steps to the disbursement items, would be helpful in support of the request for approval of a disbursement account.
[45] There are four other disbursement items listed in the trust statement. I approve two of those items. I approve the filing fee of $160 for the motion record filed in April 2019, and the $1,092.95 paid for the expert’s report.
[46] The first item that I do not approve is a filing fee of $160 for the filing of a motion. The April 2019 filing fee relates to the filing of the second motion record on this approval motion. The original motion record for the approval motion was filed in 2018. There is no disbursement for a filing fee related to that record. There is no evidence to support a finding that a motion record, related to the plaintiff’s claim against Economical, was filed in January 2017 (the month in which the filing fee is said to have been paid).
[47] The other item that I do not approve is $25.50 as reimbursement for a parking expense incurred by Mr. Binavince. Again, there is no evidence to support a finding that the disbursement is reasonable or that it is related to this action.
[48] A disbursement account totalling $4,773.91 is approved. The plaintiff is entitled to reimbursement of $185.50 ($160 + $25.50).
The Contingency Fee Retainer Agreement
[49] The contingency fee retainer agreement entered into as between Menzies Lawyers and the plaintiff personally was included in the original motion record. The deficiencies in that agreement were addressed in the first endorsement (cited at para. 2, above). The relief requested in the original notice of motion did not address approval of a proposed solicitor-client account. Approval of the contingency fee retainer agreement was required if Menzies Lawyers proposed to deliver a fee account to the plaintiff.
[50] In his second affidavit, Mr. Binavince says that Menzies Lawyers is not delivering a fee account in the matter. As a result, approval of the contingency fee retainer agreement is not required. The only account that required approval is the disbursement account, addressed above.
Disposition
[51] The settlement reached of the plaintiff’s claim against Economical Mutual Insurance Company is approved. I order as follows:
- The action as against Economical Mutual Insurance is dismissed without costs.
- The motion for a sealing order is dismissed, without prejudice to the plaintiff to pursue the motion in open court as an unopposed motion.
- The disbursement account of plaintiff’s counsel in the amount of $4,773.91 is approved.
Madam Justice Sylvia Corthorn Date: June 14, 2019