COURT FILE NO.: CV-19-2059 DATE: 20200421 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

LAIBA KHOKHAR BY HER LITIGATION GUARDIAN, AZHAR KHOKHAR Applicant – and – AVIVA INSURANCE COMPANY Respondent

Counsel: Lane Foster, for the Applicant Frank Benedetto, for the Respondent

HEARD: In writing

REASONS FOR DECISION

EDWARDS J. :

Overview

[1] The Plaintiffs have commenced this Application seeking court approval of a settlement reached with the Respondent. As a term of the settlement, the Respondent insisted on an order of this court approving the settlement as the Plaintiff, Laiba Khokhar (“Laiba”), is a party under disability.

[2] These Reasons will explain why I have not approved the proposed terms of settlement.

The Facts

[3] Laiba was a passenger in a motor vehicle that was involved in a motor vehicle accident on March 5, 2017. The accident was a single vehicle accident in which the driver appears to have lost control of his vehicle at a high rate of speed; struck a tree and rolled over. Counsel for Laiba was retained on June 15, 2017, as evidenced in a document entitled “Contract for Legal Services and Fees” (“the Contract”). On March 12, 2017, prior to the retainer, it would appear Azhar Khokar (“Azhar”), the father of Laiba, filed an Application for Accident Benefits with Aviva. The Application was filed by Barapp Law Personal Injury Lawyers.

[4] Laiba was transported from the scene of the accident by ambulance and treated in hospital. Of note, her Glasgow Coma Scale (“GCS”) was 3/15, evidencing a significant traumatic injury to the head. Included in the medical information provided to the court was a medical report prepared by Dr. Cherisse McKay on August 18, 2018. The report was prepared for Aviva and was copied to Mr. Kahler, counsel for the Plaintiff. Dr. McKay is a neuropsychologist. At the conclusion of her report, Dr. McKay states that “Laiba’s current neuropsychological profile remains consistent with a severe and diffuse traumatic brain injury…Overall Laiba meets criteria for the DSM-V diagnosis of Major Neurocognitive Disorder due to traumatic brain injury”.

The Accident Benefit Claim

[5] Included in the materials relied upon by the Plaintiff are various documents filed with the Licence Appeal Tribunal (“the LAT”). On January 14, 2019, Sherilyn Pickering (“Ms. Pickering”) from Mr. Kahler’s law firm, filed an Application (“the Application”) on behalf of Laiba disputing the reduction in her attendant care benefit to $343.00 per month. In the Application, Ms. Pickering sought attendant care benefits in the amount of $6,000.00 per month. Counsel for Aviva responded, and amongst other things noted that the reduction in benefits was in accordance with an assessment undertaken by Vinita Tandon. Ms. Tandon, an Occupational Therapist, authored a report dated September 25, 2018 that suggested Laiba only needed attendant care benefits at the rate of $343.14 per month.

[6] The Application came before Adjudicator Amanda Fricot on May 27, 2019 by teleconference. Mr. Kahler appeared on behalf of Ms. Pickering. A request for an oral hearing before the LAT was made on behalf of Laiba. As a result, an order was made by Arbitrator Fricot where the issues in dispute were framed as follows:

a) whether Laiba was entitled to attendant care benefits at the rate of $2,936.52; b) whether Laiba was entitled to interest on any overdue benefits; and c) whether Laiba was entitled to what is commonly referred to as a special award.

The order also listed the parties’ witnesses. Amongst the witnesses that counsel intended to call on behalf of Laiba was Ellen Pellett (Occupational Therapist) and Dr. Velikonja (Neuropsychologist).

[7] It is worth noting that in the materials provided to the court there was no report from Dr. Velikonja, nor any report from Ellen Pellett. There was a report on the letterhead of Storrie, Velikonja and Associates dated August 16, 2018. The author of the report, however, was Dr. McKay, not Dr. Velikonja. In the list of disbursements provided to the court by Laiba’s counsel, there does not appear to be any disbursement incurred for an expert’s report prepared by either Dr. Velikonja or Ellen Pellett – although it is possible their reports were reflected in some other manner in the list of disbursements.

[8] I raise this as a concern as it relates to the ability of Laiba’s counsel to prove their case had this matter gone before the LAT by way of a contested hearing in October 2019. It also is relevant to the result obtained by Laiba’s counsel, which is described in the motion material before this court as being an “excellent settlement for Laiba in light of the risks described below”.

Statutory Accident Benefits Paid and Payable

[9] In support of the motion seeking approval of the proposed terms of settlement was an affidavit of Lane Foster who is a lawyer with the Kahler Law Firm. I draw from that affidavit the details of the accident benefits that have been paid to date, and what benefits Laiba may have been entitled to from the Respondent if her claim for accident benefits never settled.

[10] Prior to the hearing before the LAT, Laiba’s claim for statutory accident benefits was resolved on a “full and final basis”. Even before the scheduled arbitration, the Respondent had paid Laiba accident benefits as follows:

1. attendant care at the rate of $2,936.22 from March 8, 2017 to January 11, 2019 and thereafter at the rate of $343.14, for a total of $58,195.65 to November 5, 2019;
2. income replacement benefits at the rate of $60.74 per week subject to an increase of $185.00 at the two-year anniversary of the accident;
3. housekeeping benefits;
4. as of November 5, 2019, medical and rehabilitation benefits in the amount of $167,623.84.

[11] As the Respondent accepted that Laiba had suffered a catastrophic impairment, Laiba was entitled to a combined limit of $1,000,000 for attendant care and medical rehabilitation benefits. As for income replacement benefits, Laiba would have been entitled to $185.00 per week until she reached the age of 65, provided she remained substantially disabled from working in any occupation for which she was reasonably suited. If she met the definition of being disabled, she would have been entitled to recover $258,199.00 (using a 2.5% discount rate).

[12] As for housekeeping benefits, Laiba would have been entitled to recover $100.00 per week if she was completely disabled from completing her pre-accident housekeeping duties. Over the course of her lifetime, Laiba would have been entitled to recover $167,692.39 (using a 2.5% discount rate).

[13] The parties have agreed to a resolution of Laiba’s claim for accident benefits as follows:

1. $250,000 for income replacement benefits;
2. $230,000 for medical benefits;
3. $120,000 for rehabilitation benefits;
4. $275,000 for attendant care benefits.

[14] The total settlement comes to $925,000. There was no amount contributed by the Respondent for Laiba’s legal costs. No explanation was provided for the absence of any contribution towards Laiba’s legal costs. The explanation presumably is found in Rule 19.1 of the LAT Rules, which provides that “where a party believes that another party in a proceeding has acted unreasonably, frivolously, vexatiously or in bad faith, that party may make a request to the Tribunal for costs”. It would have been helpful if counsel seeking approval for the terms of settlement had explained why the settlement did not provide for any contribution by the Respondent for Laiba’s legal costs.

[15] While counsel did provide details of what benefits Laiba has received to date as well as details of what Laiba could have received absent a settlement, it would have been helpful if details of what Laiba has potentially given up by settling her SABS claim was also included in the information supplied to the court. Considering what Laiba has been paid to date; what Laiba will receive by way of settlement; and the maximum amount Laiba may have received but for the settlement, it would appear that Laiba has given up the following:

1. income replacement benefits, $38,000;
2. medical rehabilitation and attendant care benefits, $149,000;
3. housekeeping benefits, $118,000.

[16] It is important to note that the benefits that Laiba has given up by settling her accident benefit claim would only have been paid by the Respondent had Laiba met the definition of entitlement and disability. As Mr. Foster correctly points out in his affidavit, there is no guarantee the benefits Laiba has given up would ever have been paid to her as she may, at some point in her lifetime, cease to meet the definition of being disabled.

The Material Filed for Court Approval

[17] In support of the motion seeking court approval, counsel filed the following:

1. the affidavit of Lane Foster, a lawyer in the Kahler Law Firm.
2. the affidavit of the proposed Litigation Guardian (Azhar Khokhar).
3. affidavit of Laiba.
4. consent of the parties signed by Sherilyn Pickering for Kahler Law Firm, and Frank Benedetto for the Respondent.
5. draft judgment.
6. Notice of Application.

[18] The exhibits to the affidavit of Lane Foster were provided to the court by “Dropbox” given the exigencies of the COVID-19 crisis. Counsel should be commended for providing the court with the materials in an electronic format that allowed the court to deal with this matter by email.

Deficiencies in the Motion Material

[19] Rule 7.08(4) of the Rules of Civil Procedure (“the Rules”), specifies what is required when approval of the court is sought for a settlement where a party is under disability. Amongst the things required is the affidavit of “…the lawyer acting for the litigation guardian setting out the lawyer’s position in respect of the proposed settlement” (emphasis added).

[20] If there is any doubt about what compliance with the Rule requires, counsel would be well advised to seek guidance from the Superior Court of Justice website which, amongst other things, contains a subheading dealing with “Rule 7 Motions and Applications - Guidelines and Checklist for Counsel”. The guidelines delineate quite clearly what is required in the “Affidavit of the Lawyer”. Under this subheading is found the following:

It is important that full disclosure be made to the Court in the material for approval. If there is a companion action, for example an action for accident benefits or disability benefits arising out of the motor vehicle accident or another claim for damages on which counsel acts for the party under disability, that information ought to be provided along with the status of those actions.

[21] A review of the Application filed on behalf of Laiba with the LAT reveals that the Representative (legal counsel) for Laiba was Sherilyn Pickering of the Kahler Law Firm. A review of the LAT Case Conference Report prepared by Amanda Fricot establishes that the appearances for Laiba at the case conference held on May 27, 2020 was “Brennan Kahler, counsel appearing on behalf of Sherilyn Pickering, counsel”. The consent filed on behalf of Laiba is signed by Sherilyn Pickering. The Notice of Application issued by the court on November 20, 2019 was issued under the name of “Kahler Law Firm…Sherilyn Pickering, lawyer for the Plaintiffs”.

[22] What is apparent from a review of the lawyers who have represented Laiba in connection with her claim for accident benefits is the absence of any reference to Lane Foster. I do not doubt Mr. Foster’s statement in his affidavit that as a lawyer in the Kahler Law Firm, he was involved with the file. Nowhere, however, does Mr. Foster depose that he was the lawyer responsible for the handling of the accident benefit claim on behalf of Laiba.

[23] In my view, while Mr. Foster may have been involved with the accident benefit file, he was not “the lawyer acting” for Laiba. The lawyer responsible for the carriage of the Application with the LAT was Ms. Pickering. The Application bears the signature of Ms. Pickering as Laiba’s “Representative”. The affidavit required by Rule 7.08(4)(b) should have been filed by Ms. Pickering or Mr. Kahler. This conclusion appears to be supported in the Notice of Application filed with the court, which states “the following documentary evidence will be used at the hearing of the Application: 14) The Affidavit of Brennan Kahler, lawyer for the adult Applicant under disability…” The Notice of Application does not refer to the affidavit of Lane Foster.

[24] In order to properly assess whether a settlement on behalf of a party under disability is fair and reasonable, the court requires information about the nature of the injuries suffered by the injured party. In addition, the court needs information about what treatment the injured party has received as well as the treatment, if any, that the injured party may require in the future. As well, the court requires the assistance of a medical doctor or doctors who can provide an opinion in terms of the injured party’s prognosis for the future. Without this evidence, the court is left to speculate about the injured party’s future needs and, thus, can only speculate about the fairness and reasonableness of a settlement.

[25] In this case, the only medical evidence provided to the court came in the form of the following:

1. the Ambulance Call Report;
2. the Hospital Discharge Report;
3. the report of Dr. McKay (neuropsychologist) dated August 16, 2018 - a report prepared for the Respondent;
4. report of Vinita Tandon, Occupational Therapist, dated October 23, 2018 - a report also prepared for the Respondent.

[26] The medical documentation referenced above is woefully inadequate in terms of providing the court with any expert medical information about Laiba’s present medical status; her present and future medical needs; her ability to work in the future; and most important, her future medical prognosis. It is completely unacceptable in a motion brought under Rule 7.08, for counsel to comment on the medical needs of a party under disability without any expert medical evidence.

[27] In Mr. Foster’s affidavit he references Laiba’s present state of recovery. He states at para. 31 under the subheading “Arbitration Risks”, “…She (Laiba) does not present as significantly impaired enough to warrant the level of attendant care recommended in the Applicants’ Form 1” (the Application filed with the LAT claiming $6,000.00 per month). There is no medical evidence filed that supports that statement.

[28] A review of the List of Disbursements appended as Exhibit T to Mr. Foster’s affidavit reveals a disbursement for $8,725.66 paid for a report prepared by Dr. Daune MacGregor. The disbursement is shown as having been incurred on January 28, 2020. Dr. MacGregor is a well-known and well-respected pediatric neurologist at the Hospital for Sick Children. I cannot speculate as to what Dr. MacGregor’s report would add to the evidence presently before the court. It can, however, be safely surmised, that her report (being dated in early 2020), would have provided a much more accurate medical reflection of Laiba’s present medical status than the information contained in Mr. Foster’s affidavit. Very simply put, there is no excuse for not including Dr. MacGregor’s report in the material supplied to the court.

[29] As noted above from the extract quoted from the website of the Superior Court, counsel must make full disclosure to the court when approval is sought for a settlement where a party is under disability. There is good reason for this requirement. Without full disclosure, the court cannot exercise the jurisdiction that it has as parens patriae to protect the best interests of those who are most vulnerable. The court relies on counsel to make full disclosure.

[30] In this case, full disclosure has not been made in at least two material respects. First, it is evident counsel has a report from Dr. MacGregor and it has not been disclosed. Second, while counsel has disclosed that there is a tort action, there has been no disclosure of the status of that action nor has there been any disclosure of what, if any, settlement offers have been made in that action. The disclosure of the tort action and any settlement discussions or offers in that action is highly relevant not just to the approval of the settlement of Laiba’s claim for accident benefits, but it is also very relevant to the fees claimed by the Kahler Law Firm and the overall reasonableness of those fees.

The Proposed Allocation of the Settlement Funds

[31] Out of the $925,000 settlement, it is proposed that Laiba will receive a net amount of $560,118.16. I will refer to this as the net amount. It is proposed that the net amount will then be used as follows:

1. $100,000 shall be used for Laiba’s immediate and near future treatment and care;
2. Ninety percent of the remaining $460,118.16 shall be used to invest in an income-generating property or properties, and 10% to invest in mutual funds.

[32] The draft judgment proposes that out of the $925,000, the following amounts will be paid:

1. the sum of $262,357.38 shall be paid to Kahler Law Firm (“Kahler”) with respect to fees and an amount for costs (“The Kahler Fees”).
2. the sum of $34,106.46 shall be paid to Kahler with respect to taxes on fees and the amount of costs.
3. the sum of $63,666.99 shall be paid to Kahler with respect to loans made to fund Laiba’s attendant care during the dispute (“the Kahler loan”).
4. approximately $4,750.00 to what appears to be various treatment facilities.
5. the sum of $560,118.16 shall be paid to Azhar (Laiba’s father) for the use and benefit of Laiba.

Deficiencies with the Proposed Allocation of Settlement Funds

[33] I will deal separately with the proposed fees claimed by Kahler. Under this subheading, I will deal with the suggested disbursement of the proposed settlement.

[34] In the “Grounds for the Application” counsel stated at para. 2, “The Applicant (Laiba) is not competent to instruct counsel and therefore requires a litigation guardian”. While not sought in the Notice of Application, the draft judgment at para. 1 proposes that “This Court Orders and Adjudges that service of the within Application Record on the Public Guardian and Trustee is hereby dispensed with”. Counsel have not filed any medical evidence that would assist the court in determining if Laiba is mentally competent or not. This is an important consideration, as it would then inform the court’s decision as to whether the provisions of the Substitute Decisions Act may apply and whether a management plan may be required.

[35] There is nothing in the materials filed with the court that addresses how the proposed method of distributing the net settlement funds will, in any way, further Laiba’s present and future medical needs. It is very hard to comprehend how investing $414,106 in an income-generating property and $46,000 in mutual funds will produce a secure income that can provide for Laiba’s future needs. There is also absolutely nothing in the material filed with the court that would assist in the court’s determination that the net settlement funds will be secured in a manner that ensures such monies belong to Laiba. There is nothing in the materials filed with the court that suggests any consideration has been given to securing the net settlement funds in a structure that would provide guaranteed monthly tax-free payments that would provide for Laiba’s present and future needs. These are all deficiencies that must be addressed before the court will consider approving the settlement. In addition, the motion materials which have been presently filed with the court, together with any supplemental materials, shall be served on the Office of the Public Guardian together with a copy of these Reasons.

The Kahler Loan

[36] As noted above, one of the items which the draft judgment proposes to be paid from the settlement funds is a loan made by Kahler “with respect to loans made to fund Laiba’s attendant care during the dispute”.

[37] The “dispute” presumably refers to the reduction in the monthly payments made by the Respondent for Laiba’s attendant care. That dispute began on January 11, 2019, when the Respondent wrote to Laiba advising that her claim for attendant care benefits of $3,000.00 per month had been adjusted to $343.14 per month, as a result of an assessment of her attendant care needs that had been done by Occupational Therapist, Vinita Tandon, on September 25, 2018. The dispute continued between January 2019 and October 2019, when the parties agreed to settle Laiba’s accident benefits claim on a full and final basis. Laiba was, therefore, without her monthly attendant care benefit of approximately $3,000.00 per month, for a period of what would appear to be a maximum of 10 months. Over that 10 months, Laiba saw a reduction in her attendant care benefit in an amount that I calculate as being approximately $26,570.00 ($3,000.00 - $343.14 x 10).

[38] The details of Kahler’s loan of $63,666.99 are in no way revealed in the motion materials filed with the court. There is absolutely nothing filed that would assist the court in understanding the principal amount of the loan; when the funds were advanced; to whom were the funds advanced; for what specific purposes were the funds used; what interest rate was charged; and whether interest was simple interest or compound interest. There is no indication in the motion materials whether consideration was given to the need for independent legal advice – see Gnyś v. Narbutt, 2016 ONSC 2594 (Divisional Court), at para.75. In the absence of evidence that addresses these issues, the court will not consider payment of the Kahler loan.

The Kahler Fees

[39] Included in the motion materials was the “Contract for Legal Services” (“the Contract”), signed on June 15, 2017 by Azhar on behalf of his daughter Laiba. The contract was signed by Brennan Kahler on behalf of the law firm. The contract forms the basis for Kahler’s fees claimed in the amount of approximately $262,000.00. As a percentage of the gross settlement, the proposed fees claimed by Kahler works out to approximately 28%.

[40] The law as it relates to contingency fee agreements is well set forth in the decision of Shaughnessy J. in Jorisch v. Toronto Catholic District School Board, 2017 ONSC 784, (upheld by the Court of Appeal in Jorisch v. Toronto Catholic District School Board, 2017 ONCA 845), as follows:

[52] Contingency fee agreements are governed by the Solicitors Act, R.S.O. 1990, c. S.15. A contingency fee agreement is not binding on a party under disability until it receives approval of the Court under section 5 of the Solicitors Act which provides:

5. (1) A solicitor for a person under disability represented by a litigation guardian with whom the solicitor is entering into a contingency fee agreement shall, (a) apply to a judge for approval of the agreement before the agreement is finalized; or (b) include the agreement as part of the motion or application for approval of the settlement or a consent order under Rule 7.08 of the Rules of Civil Procedure, O. Reg. 195/04, s. 5(1). (2) In this section, “person under disability” means a person under a disability for the purpose of the Rules of Civil Procedure. O. Reg. 195/04, s. 5 (2).

[41] Since this legal fee agreement was not approved before it was finalized pursuant to section 5(1)(a) of the Solicitors Act, it must now be reviewed by the court as part of the court approval under section 5(1)(b) of the Act.

[42] A contingency fee agreement will only be enforceable if it appears to the court that the agreement is, in all respects, fair and reasonable between the parties. Under section 24 of the Solicitors Act,

…if it appears to the court that the agreement is in all respects fair and reasonable between the parties, it may be enforced by the court by order in such manner and subject to such conditions as to the costs of the application as the court thinks fit, but if the terms of the agreement are deemed by the court not to be fair and reasonable, the agreement may be declared void, and the court may order it to be cancelled and may direct the costs, fees, charges and disbursements incurred or chargeable in respect of the matters included therein to be assessed in the ordinary manner. R.S.O. 1990, c. S. 15, s. 24.

[43] The Court of Appeal in Raphael v. Lam, [2002] O.J. No. 3605, at para. 37, has held that the onus is on the solicitor seeking to enforce the contingency agreement to prove that the agreement was fair at the time it was made, and the fees were reasonable under the circumstances assessed at the date of the settlement.

[44] The case law establishes that contingency fee agreements are the subject of careful scrutiny by the court. Only the court is entitled to determine whether a contingency fee agreement is “in all respects fair and reasonable between the parties” (Cookish v. Paul Lee Associates Professional Corp., 2013 ONCA 278, [2013] O.J. No. 1947). Further, as stated in Cookish v. Paul Lee Professional Corp., (supra, at para. 43), referencing Henricks-Hunter v. 814888 Ontario Inc., 2012 ONCA 496 (CA):

Contingency fee agreements may only be enforced if they are fair and reasonable, as these qualities form the heart of their legitimacy. Only where such an agreement is not fair and reasonable may it be declared void or be cancelled or disregarded.

[45] Another factor is at play in relation to the Kahler fees. The Application before the court is to approve a settlement of Laiba’s claim for statutory accident benefits. It is not a motion to approve the settlement of Laiba’s tort claim. There is a big difference between the court approval of a contingency fee agreement in a tort action and the approval of a contingency fee agreement in the context of a claim for accident benefits - see the comments of Wilkins J. in Adler (Litigation Guardian of) v. State Farm Mutual Automobile Insurance Co., (2008) 32809, at paras. 35 - 38.

[46] In this case, the contract which contains a form of a contingency fee arrangement was not submitted to the court for approval at the time it was negotiated. As such, it falls to this court to now determine if it was fair and reasonable. The onus of establishing that it was fair and reasonable rests with Kahler. In determining whether the contract was fair and reasonable, the Court of Appeal in Henricks-Hunter (Litigation Guardian of) v. 814888 Ontario Inc. (c.o.b. Phoenix Concert Theatre), 2012 ONCA 496, at para. 50, set forth the following factors that a motion judge must consider:

(a) the time expended by the lawyer; (b) the legal complexity of the matter at issue; (c) the results achieved; (d) the risk assumed by the lawyer.

[47] Unfortunately, there is a complete dearth of evidence filed that addresses these issues. There is no affidavit from Mr. Kahler, who executed the contract, as to the information and advice he supplied to Laiba’s father prior to the contract being signed. As the Court of Appeal observed in Henricks-Hunter, at para. 20, in determining whether a contingency fee agreement is fair, the court must be concerned with the circumstances surrounding the making of the agreement and whether the client fully understood and appreciated the nature of the agreement that he/she was signing.

[48] In this case, the court was provided with no information about the circumstances surrounding the signing of the contract. As for the other factors this court must consider as it relates to the reasonableness factor, there are no time dockets filed with the motion material. There is absolutely no evidence filed regarding the hours expended by Kahler in connection with his retainer as it relates to Laiba’s claim for accident benefits.

[49] As it relates to any risk assumed by Kahler in connection with Laiba’s claim for accident benefits, it is hard to conceive that there was any risk whatsoever. The Respondent accepted Laiba had suffered a catastrophic injury and, as such, was entitled to claim for the enhanced statutory benefits reviewed above.

[50] The only issue that was disputed that came before the LAT was Laiba’s level of attendant care. That issue only went so far as a case conference. A full arbitration was never required. As for the legal complexity, while a claim for accident benefits can have a degree of legal complexity, I entirely agree with the following comments of Wilkins J. in Adler, at para. 35:

In my view, there is a significant difference between a contingency fee requiring court approval in a tort action in which many complex issues are at stake. Tort actions frequently involve issues of liability and they have the requirement of proof on the balance of probabilities. An accident benefits claim, on the other hand, is very different in nature, particularly when the demonstrable injuries are catastrophic, the needs of the claimant are patent and the wording of the Act, the regulations and the policy are applicable.

[51] As there as been almost a complete absence of the kind of evidence that this court requires to assess the fairness and reasonableness of the contract, I will not approve the Kahler fees at this time. Even if this court was provided with some of the evidence that is required to assess the fairness and reasonableness of the contract, there are many problems with the contract on its face. There is no reference in the contract that it relates to the retainer of Kahler in connection with Laiba’s claim for statutory accident benefits. The contract refers in numerous instances to a “lawsuit”. Anyone reading the contract with any experience with claims for personal injury, would have to conclude the contract is prepared in conjunction with a tort claim and not a claim for accident benefits.

[52] Examples of how the contract relates to a tort claim and not a claim for accident benefits can be found in the following extracts:

(a) “It can take up to two years or longer for a lawsuit to go to trial or settle” (page 2, my emphasis). (b) “Upon settlement of your claim, the Firm will charge you fees of 15% of the amount recovered and an amount for ‘Costs’ of 15% of the amount recovered. The defendant will contribute an amount of costs which you pay to the firm in addition to what it pays to settle your claim. In the event that your claim proceeds to trial then the firm will charge you fees in the amount of 25% of the amount recovered” (page 2, my emphasis). (c) “A plaintiff who proceeds in a claim against another party is allowed to recover from the defendant an amount representing a contribution towards their legal fees. This sum is referred to as party and party costs. These costs are paid to the successful claimant in addition to their damages award” (page 3, my emphasis).

[53] The contract, in my view, does not apply to Laiba’s claim for statutory accident benefits. The contract refers to legal concepts that almost exclusively relate to a tort claim. Very simply put, there is no legal entitlement to “party and party costs” in the context of a claim for accident benefits before the LAT. The contract is confusing as it conflates the concept of fees and costs. In future, where counsel is involved in the conduct of a claim for accident benefits and a tort claim, consideration might be given to separate retainer agreements.

[54] In the result, the motion to approve the settlement is denied until such time as the deficiencies I have identified in these Reasons are addressed by counsel.

Sealing the Court Record

[55] Included in the relief sought in the Notice of Application is a request to seal the court record. The request to seal the court record is on consent of the Respondent. In his affidavit, Mr. Foster states “The Applicant seeks an order that this record be sealed. The claim for Laiba’s tort action remains ongoing. The discussion of risks could negatively affect Laiba’s tort action if this motion record were to become part of the public record”.

[56] Much of the information contained in the motion materials filed in support of this Application contain facts that would otherwise be discoverable in the tort action. Specifically, information about Laiba’s medical treatment; her level of recovery; and need for treatment in the future, are all discoverable facts. As it relates to the issue of “risk” identified in Mr. Foster’s affidavit, there may be some debate as to whether those comments may be subject to solicitor-client privilege and possibly should be redacted until the completion of the tort action.

[57] Before any consideration would be given to the Applicants’ request to seal the entirety of the court record, counsel needs to address the comments of the Court of Appeal in M.E.H. v. Williams, 2012 ONCA 35, where it is made crystal clear that a sealing order is an extraordinary one which requires the court to undertake the two part inquiry mandated by R. v. Mentuck, 2001 SCC 76, [2001] 3 S.C.R. 442. As Leitch J. summarized the test in the context of a request to seal the court record in Rops v. Intact Insurance Company, 2013 ONSC 7366, at para. 37:

…a sealing order should only be made where it is necessary to prevent a serious risk to the proper administration of justice and where the salutary effects of the publication ban or sealing order outweigh the deleterious effects on the rights and interests of the parties and the public.

[58] In Rops, the Application before the court was like the matter before me - an application to approve the settlement of an accident benefit claim. The tort action, as with the tort action in this matter, had not been resolved. I agree entirely with the comments of Leitch J. at para. 39 of Rops, when she concludes “there is simply no basis put forward in the application materials that would justify the sealing order requested”. The comments of Del Frate J. in St. Jean v. Armstrong, 2015 ONSC 13, at para. 64, are also worth repeating:

In my view, infringement of the solicitor client privilege regarding the CFA (contingency fee agreement) is minimal if at all. All other information about the accident and treatment would be public information in view of the pleadings that have been filed. There is nothing extraordinary that would require such an order (my emphasis).

[59] The request to seal the court record in “its entirety” is dismissed. I will entertain submissions about possible redactions that may relate to issues of solicitor-client privilege.

[60] I will remain seized of this matter. Once there has been compliance with these Reasons, counsel may re-submit to me for approval.

Justice M.L. Edwards

Released: April 21, 2020

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: LAIBA KHOKHAR BY HER LITIGATION GUARDIAN, AZHAR KHOKHAR Applicant – and – AVIVA INSURANCE COMPANY Respondent REASONS FOR DECISION Justice M.L. Edwards

Released: April 21, 2020