Court File and Parties
COURT FILE NO.: CV-19-632707-0000 DATE: 20200611 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Aliyah Mohamed, a minor, by her Litigation Guardian Fatima Mohamed, Applicant AND: TD Insurance Meloche Monnex, Respondent
BEFORE: J. Wilson J.
COUNSEL: David F. Macdonald and Robert Ben, for the Applicant
Endorsement
[1] This is an application brought pursuant to Rule 7.08 of the Rules of Civil Procedure, R.R.O. 1990, O. Reg. 194 to approve a settlement of an accident benefits claim reached on behalf of Aliyah Mohamed, now nearly 17 years old. She was in a motor vehicle accident October 1, 2013 as a seat belted passenger in her father’s car. She suffered a traumatic brain injury. At issue is whether her injuries met the criteria of “catastrophic impairment” under the insurance policy.
[2] The tort actions are still outstanding against two defendants. There will be no issue as to liability.
[3] There are two problems in this application.
[4] First, the information filed as to the Plaintiff’s present situation was very stale-dated, with the last comprehensive medical reports dating from 2015.
[5] It was not possible for me to make an informed decision as to whether the proposed settlement was in Aliyah’s best interest based on the material filed before me. No evidence was provided whether the proposed structured settlement was adequate for Aliyah’s present needs, as there was no plan submitted as to her present needs with the application.
[6] I had discussions directly with counsel to attempt to expedite receipt of updated medical reports and school records that are available in the tort claim, as well as a present plan for Aliyah’s treatment needs to be able to assess whether both the settlement and the proposed structure is reasonable and in Aliyah’s best interests. I have now received updated information.
[7] Second, counsel proposes a block fee totaling 15% of the proposed recovery of 1.6 million dollars, plus HST, in circumstances when the retainer was clearly not a contingency agreement. Counsel for the plaintiffs are requesting payment of fees, including disbursements in the amount of $240,000.00 plus HST of $31,000.
[8] In the lengthy materials that were filed, counsel failed to produce any docket entries or disbursements to substantiate the reasonableness of the claim for fees and disbursements.
[9] Rule 7.08(1) of the Rules of Civil Procedure, R.R.O. 1990, O. Reg. 194 confirms “No settlement of a claim made by or against a person under disability, whether or not a proceeding has been commenced in respect of the claim, is binding on the person without the approval of a judge.” It is the judge’s task to assess the reasonableness of the proposed settlement and the fees to protect the interests of an infant plaintiff or person under disability, whether or not a contingency fee arrangement has been entered into.
[10] The time expended by the lawyer with supporting dockets is a factor to consider in assessing the reasonableness of fees charged: Raphael Partners v. Lam (2002), 61 O.R. (3d) 417 (Ont. C.A.), at para. 50; Henricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496, at para. 22. I note that Raphael Partners and Henricks-Hunter were decided in the context of contingency fee agreements. Obviously dockets are required to be produced in all cases. A judge cannot assess the reasonableness of fees proposed to be charged without the facts and the chronology reflected in the dockets confirming what has been done on the file, and by whom.
[11] The failure to provide dockets, disbursements and written retainer agreements is a common oversight. Dockets and disbursements must be produced by all counsel in any section 7.08 approval application for a minor or person under disability, whether or not the fee arrangement is based upon a contingency fee. Similarly, any written retainer agreement also must be produced.
[12] This disclosure is crucial, mandatory information in all Rule 7.08(1) motions and should be standard practice.
[13] Failure to make this essential disclosure causes delays and increases costs.
[14] I will return to the question of appropriate fees after reviewing the proposed settlement and structure in light of the up to date materials that have now been filed.
Updated Information Confirms that Settlement is Reasonable
[15] As in many accident benefit cases, in this case the Plaintiff’s expert confirmed catastrophic impairment that was contested by the defence experts.
[16] Although at first blush the proposed settlement of the accident benefits claim appears reasonable, it was not possible for me to make a fair determination of the reasonableness of the proposed settlement as the medical reports of both Plaintiff and Defence are very stale-dated. The latest report concerning the catastrophic assessment for Aliyah on behalf of the plaintiff by Dr. Cancelliere was prepared on April 16, 2015. The defence reports are dated March 2016 but relate to assessments conducted in mid-2015.
[17] The Plaintiff suffered serious injuries. The report of the occupational therapist for the insurer prepared in 2015 confirmed that due to the Plaintiff’s cognitive and behavioral limitations she needed “extraordinary supervision for a girl her age in all aspects of her care.” Dr. Cancelliere, retained by counsel for the Plaintiff concluded that the traumatic brain injury resulted in “adverse changes in her intellectual and cognitive capacities that … significantly altered her neurodevelopmental trajectory.” He concluded that the plaintiff met the test of catastrophic impairment.
[18] The assessment of TD Insurance confirmed that the plaintiff suffered a traumatic brain injury but concluded that she did not meet any of the tests for catastrophic impairment. The matter was set for a 6-day hearing.
[19] The proposed settlement of the accident benefits is for the sum of $1.6 million dollars: a significant recovery. Aliyah’s maximal entitlement if she was declared to be catastrophic would exceed the settlement amount by some $800,000.00.
[20] The mother Fatima, after consulting with counsel, instructed counsel to accept the proposed settlement.
[21] The Plaintiff is now nearly 17 years of age. Counsel suggested that the Office of the Children’s lawyer can perhaps manage the file for the next year. Counsel then suggests a capacity assessment. I will remain seized of this matter once these steps are taken as I now have familiarity with the file. It appears clear from the present record that the Plaintiff is not capable of managing her finances.
[22] I recently received an up to date neurological report of Dr. MacGregor dated May 21, 2020 concerning Aliyah’s present situation. As well I have received some updated school records. It appears clear that Aliyah minimizes her difficulties and has limited insight into her situation as compared to the observations of her mother. Understandably, she is tired of assessments and doctors.
[23] In light of the updated materials, I approve the overall quantum of the proposed settlement as reasonable and in Aliyah’s interests.
[24] The proposal is to structure the settlement so that Aliyah receives a monthly sum in the amount of $1488.52 per month indexed for life with a guaranteed term of 45 years. I am not sure if this is a reasonable structure to maximize Aliyah’s future potential particularly as it may affect education and employment, as no plan was included as to Aliyah’s present needs.
[25] Counsel appointed a case manager at the beginning of the file. The materials filed before me do not contain any concrete present management plan for Aliyah in light of her present and future needs at this crucial juncture. In the lengthy materials there was no evidence confirming a plan and whether the proposed structured settlement would meet the Plaintiff’s needs.
[26] The materials refer to a Guardianship Plan to be submitted and approved in the future by the Office of the Children’s Lawyer. Once the structure is in place it cannot be changed. Counsel’s affidavit simply says that the mother intends “to apply the funds solely toward the continuation of rehabilitation and other services that address Aliyah’s most essential crash related needs.”
[27] I have concerns that Aliyah may need enhanced vital but expensive support and treatment now to maximize her future potential, and that the proposed structured amounts would not be sufficient.
[28] Much of the exchange with counsel and responses have been in relation to the proposed fee, as opposed to outline a comprehensive plan to meet Aliyah’s needs.
[29] For these reasons at this juncture I approve the quantum of the settlement globally, but request updated information from a treatment provider, perhaps the case manager, to ensure that the proposed structure meets her present needs. I understand that this information will be available in the tort proceeding, so there should be no duplication of costs.
[30] I approve payment out for funds owing for prior rehabilitation services, without interest in the amounts claimed. This amount, excluding interest is $77,833.78. I further authorize a payment in the amount of $10,000.00 from the settlement funds to the mother for payment for needed rehabilitation services rendered pending the finalization of the structured settlement.
Legal Fees
[31] Fatima, Aliyah’s mother as litigation guardian signed the Personal Injury Litigation Retainer Agreement (the Retainer Agreement) with Thomson Rogers on October 8, 2013. The Retainer Agreement is clearly not a contingency fee agreement. The Retainer Agreement states:
This is not a contingency fee agreement. If your case is settled, won or lost, we will send you an account for legal services rendered and for disbursements incurred on your behalf…… Our hourly rates for Partners, associate lawyers, clerks … are available from us simply by asking any time. [Emphasis added]
[32] The rate of primary counsel during the period of the retainer was between $725 (2013) and $900 (2019) per hour. The other partner’s rates were between $425 and $575 per hour. These rates are competitive for complex personal injury work in Toronto.
[33] The Retainer Agreement refers to various factors that will impact the fee charged as follows:
As lawyers practicing in Ontario, we take many factors into account in charging you for the legal services we provide. The factors we consider include: (1) the time we expend working on your case; (2) the difficulty of your case; (3) the complexity of your case; (4) the responsibility we assume on your behalf; (5) the monetary value of the matters in issue; (6) the importance of the case to you; (7) the degree of skill and competence we exercise on your behalf; (8) hourly rates charged by lawyers in and around Toronto; (9) the results we achieve for you; (10) your ability to pay our bill; (11) your reasonable expectation of the amount of the legal fees in relation to the value of your claim; (12) the effort required to advance your case; (13) the fact that payment of our fees is postponed; and (14) the financial risks assumed by us in pursuing the action on your behalf, including the fact that we regularly prepay, from our own funds, very large amounts of money as disbursements to help prove your claims and the risk that our ultimate bill for fees, disbursement and H.S.T. will not be paid.
Thomson, Rogers handles personal injury claims differently than many lawyers in Ontario. We strive for early and efficient resolution of client matters without lengthy litigation, wherever possible. We achieve this by building the medical and economic evidence in your case at the earliest opportunity with the help of top quality experts. Our fees are designed to be fair and reasonable based on our expertise and our sophisticated hands-on approach to your case. We give you the highest quality legal representation. We are always on your side.
[34] At the time the Retainer Agreement was entered into, counsel confirms in his affidavit that he advised Aliyah’s mother that he “estimated that the fees for the accident benefits claim would likely be in the range of 15% to 20% of any amounts recovered.” This figure appears nowhere in the Retainer Agreement.
[35] This accident benefits file was settled before the anticipated six-day hearing concerning catastrophic impairment. Certainly if the matter had successfully proceeded to a six-day hearing reasonable fees would have been in the suggested range of 15% to 20% of the catastrophic award.
[36] The first factor in assessing the appropriate fees as confirmed in the Retainer Agreement is time spent on the file.
[37] The docketed time for both the accident benefits and the tort claim is 446.4 hours totaling $149,985.00 excluding HST.
[38] The total disbursements on the tort and accident benefit file are $58,148.43. This figure includes $11,781.43 for interest on disbursements. Expert reports shows an entry of $19,900.00 as well as an entry for Medical-Legal Reports of $11,432.82 for Dr. Cancelleire (totaling $31,332.82). Without considering interest on disbursements, I calculate the disbursements for the accident benefit file to be half of the remaining disbursements of $7500.00 rounded to $39,000.00 in total.
[39] Counsel for the plaintiffs are requesting payment of fees, including disbursements in the amount of $240,000.00 plus HST of $31,000.
[40] Counsel will receive fees and disbursements on the tort settlement or claim.
[41] I asked counsel for the accident benefits dockets only, and was advised that it was not possible to unscramble the egg at this point in time to differentiate between the costs in the two proceedings.
[42] Inevitably there is some overlap between the work performed on the accident benefits and the tort file.
[43] It is reasonable however for the firm, particularly in the case of a minor or a person under disability to distinguish between the accident benefit claim and the tort claim in a coding system. If work advances both claims it can be split between the accident benefits and tort file. This will assist the Court when reviewing the reasonableness of a proposed fee.
[44] I have carefully reviewed the dockets provided to me. It appears that the file proceeded efficiently, primarily driven by law clerks, supervised by counsel for both the accident benefit and tort claim. The tort claim has proceeded past discovery and mediation. Counsel advise it is ready for trial. In the accident benefit file there were two Licence Appeal Tribunal (“LAT”) meetings and it appears that the settlement proposal arose after the second LAT meeting.
[45] Based upon the dockets I attribute half of the docketed time to the accident benefit claim, and half to the tort claim. This is probably a generous allocation to the accident benefits file.
[46] I have carefully considered the lengthy and detailed submissions of Thomson Rogers in support of their request for payment of fees in the amounts suggested. I have considered the case law that has confirmed that docketed time is but one factor in assessing the reasonableness of a proposed fee, as well as the variety of other factors as outlined in the materials submitted by counsel.
[47] This was a relatively complex case, as the plaintiff had a pre-existing attention deficit disorder with anxiety prior to the accident. The defence inevitably refers to the plaintiff’s past condition as diminishing the value of the Plaintiff’s present significant difficulties arising from the brain injury in the accident. Of note, however is that notwithstanding the Plaintiff’s difficulties prior to the accident, she the plaintiff was a bright, sociable, A-student. She is now in a different stream at school with an average of 71% and has many issues including social isolation. The defence OT report prepared in 2015 flags very significant difficulties experienced by the Plaintiff in very basic functions.
[48] The Plaintiff’s case is a strong one, as reflected by the settlement achieved. Any risk to counsel for the Plaintiff was minimal given her traumatic brain injury. As well, by the terms of the Retainer Agreement the firm was entitled to payment of the fees and disbursements win or lose.
[49] In these circumstances I conclude that the fair and reasonable costs including disbursements payable to Plaintiff’s counsel taking into account the interests of both the Plaintiff, and the firm is $150,000.00 plus HST. This provides a significant increase over the time spent by some $35,000.00. This enhanced fee is warranted taking into account all of the relevant various factors including complexity of the case and result achieved in this resolution prior to a hearing. It must be remembered that the tort claims are outstanding and there is no doubt that the Plaintiff will receive a significant recovery, with associated fees for these claims.
[50] To expedite the question of a proposed treatment plan for Aliyah, to determine whether the proposed structure with payments in the amount of $1488.52 per month will meet Aliyah’s present needs, I suggest that we arrange a conference call through my assistant.
[51] I thank counsel for their assistance.