Court File and Parties

COURT FILE NO.: CV-20-641828-0000 DATE: 20210208 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: ROBERT JONES by his Litigation Guardian Gregory Jones, Applicant AND: BELAIR INSURANCE COMPANY INC., Respondent

BEFORE: J. Wilson J.

COUNSEL: Ryan M. Naimark, for the Applicant

Costs Endorsement

[1] The action and this application were commenced as a result of the serious injuries the Plaintiff Robert Jones (Robert) sustained arising from a motor vehicle accident that occurred on September 22, 2015. Robert was a seat-belted passenger in the Defendant Carol King's motor vehicle when she lost control, and violently struck a concrete guardrail.

[2] On March 16, 2020 Gilmore J., in a motion in writing, appointed Robert’s brother Gregory Jones (Gregory) as Litigation Guardian for Robert, as well as his guardian of property and of personal care.

[3] On April 14, 2020 Dow, J. approved the tort settlement for $865,000.00.

[4] This came before me as an application brought pursuant to r. 7.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to approve the proposed settlement of the accident benefits claim brought on behalf of Robert, a person under disability, initiated by Gregory. For reasons outlined in the July 6, 2020 endorsement, I did not approve the initial settlement proposed of 1.1 million dollars. I have since approved a global settlement for 1.3 million dollars with the condition that at least 60% of the sum is to be structured.

[5] There are three issues outstanding in this matter:

• Determining the reasonable fees for counsel for Robert in this accident benefit claim
• Deciding the appropriate structure for Robert and establishing a revised management plan
• Determination as to whether it is appropriate for Gregory to continue as guardian of property for Robert

[6] This endorsement deals with determination of reasonable costs payable to counsel for the disabled Plaintiff in the settlement of the accident benefit claim.

Background

[7] Robert has been in the care of his brother, Gregory and has been residing with him since July 2002. Both their parents are deceased. Their mother passed away on July 4, 2002 and their father passed away in March 2017.

[8] Prior to the accident Robert was 38 years old. He was born with Down’s Syndrome. It is suggested that at the time of the accident he was functioning at the level of a six-year old. Prior to the accident Robert was happy, largely independent in many activities within his limits, able to ambulate, and able to enjoy a simple family life living closely supervised with his brother in the basement of Gregory’s rental home in Aurora.

[9] The multiple injuries suffered in the accident include a closed head injury, headaches, facial/orbital fractures, spinal fractures, rib fractures, pelvic fractures, neck pain/strain, shoulder pain/strain, bilateral hip pain/strain, pain disorder. As a sequalae of the accident Robert now has a major depressive disorder, in-vehicular phobia, and a sleep disorder.

[10] It is acknowledged by the insurer that Robert suffered catastrophic injuries.

[11] Before specifically addressing the costs issue, I review briefly what has transpired in the file.

[12] In my endorsement dated July 6, 2020 I declined to approve the proposed settlement of 1.1 million dollars. I raised issues about the adequacy of the proposed settlement, the failure to address the living conditions of Robert, trapped in an inaccessible basement, and the absence of a proposed management plan for Robert presented in the materials. I also raised concerns about the reasonableness of the proposed fees of 23% of the settlement funds requested by Mr. Naimark, counsel acting on behalf of Robert. No dockets were produced. No disbursements were produced. There was inadequate disclosure about the details of the fees and disbursements paid following the tort settlement.

[13] I have had several conferences conducted by Zoom in this matter. At my request the Office of the Public Guardian and Trustee has become involved and prepared a very helpful report dated November 30, 2020 considering the issues raised in my endorsement of July 6, 2020.

[14] Due to my concerns, and as there was no management plan for Robert included in the application, at my urging the Plaintiff, and the defendant insurer commissioned a jointly retained occupational therapist report to assess Robert’s present and future needs with a cost outline to realize the recommendations.

[15] This jointly prepared Future Care Cost report, prepared by Heather Pickin, confirmed that the cost of these recommended services and attendant care significantly exceeds the available limits of $1,734,953.89 remaining for accident benefits, taking into account amounts already paid.

[16] In further conferences, the insurer agreed to pay a further sum of $200,000.00. At the urging of all, including the representative of the Public Guardian and Trustee, and with some reluctance, I agreed to approve the settlement in the revised amount of $1,300,000.00.

[17] This global settlement has been approved, with the requirement that a minimum of 60% of this amount is to be structured.

[18] An amended management plan dated July 20, 2020 has been submitted but has not yet been approved. Circumstances have changed since that date. I have just received the options for the suggested structured payments that were to be provided to me and the Public Guardian and Trustee before Christmas. The appropriate structure needs to be determined.

[19] Gregory Jones has retained new counsel. He is working with Gregory to prepare a new management plan reflecting the current housing situation, and covid restrictions. He will also address a management plan post covid, when Robert can leave the home for programs and treatment, and when caregivers can come into the home.

[20] The outstanding issues about amendments to the proposed management plan for Robert will be addressed by me with input from the parties, their counsel, and the Public Guardian and Trustee at the next scheduled conference.

[21] Another issue has arisen. In light of what has transpired during the various conferences before me, and in light of the facts outlined in the Public Guardian and Trustee report, I have raised issues about whether it is in Robert’s interests for his brother Gregory continue to be Guardian of Property for Robert. That issue will also be addressed at the next conference.

[22] It appears that the terms outlined in the management plan approved by Gilmore J. in March 2020, appointing Gregory as Litigation Guardian, and guardian of property and personal care have not been met. Although part of the problem relates to COVID-19 there are other issues as outlined in the report signed by the Deputy Legal Director of the Public Guardian and Trustee prepared by Ms. Phipippa Geddie dated November 20, 2020.

[23] If the question of guardianship of property is not resolved at the next conference I will write an endorsement outlining in more fulsome fashion the reasons for my concerns. Another judge of this court will determine whether Gregory should continue as guardian of property for Robert.

Determining Reasonable Costs

[24] I turn now to the question of costs.

[25] On April 30, 2017, Robert and Gregory retained Ryan Naimark and Naimark Law Firm with respect to the accident.

Proposed fees in context of proposed accident benefit settlement

[26] In this accident benefit claim, Mr. Naimark proposes to charge fees in the amount of 23% of the 1.1 million dollar settlement. He requests a payment of $292,319.13 to his firm which includes $253,000.00 for fees, $32,890.00 for HST on fees and $6429.13 for disbursements.

[27] In fact, the suggested settlement for fees appears according to my math to be 26.57% of the total proposed settlement of 1.1 million.

[28] After payment of other costs incurred by Mr. Naimark of $5613.84 including obtaining a financial management plan this proposal would leave $802.067.00 available for Robert’s lifetime care.

[29] The insurer required that 60% of the funds be structured as a term of the proposed settlement. The proposed structure initially suggested by Mr. Naimark, resulted in a monthly non-taxable payment to Robert of $3047.45 per month, not indexed, for his anticipated life expectancy to 64 years, 3 months. No provision is made for periodic payments for Robert if he exceeds the anticipated life expectancy. There would also be a lump sum payment of $142,067.03 available.

[30] The potential lump sum figure has increased as a result of the approved settlement of 1.3 million dollars to $342,067.03. The increase in the settlement reflects my position that this was a minimum figure I was prepared to approve, otherwise the accident benefit claim would be paid on a monthly basis including attendant care and medical rehab expenses until the available accident benefit funds were exhausted.

[31] Whether the requested percentage is 23% or 26.5% is not the measure of what is reasonable in assessing whether a contingency agreement should govern the costs payable by a person under disability.

[32] A contingency agreement may be enforced as against a party under disability only if the evidence establishes that the agreement was fair at the time it was made, and that the fees are reasonable under the circumstances at the time the question of costs is addressed. The onus is upon the solicitor to provide proof that the test is met: Henricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496, 294 O.A.C. 333, at paras. 17, 20, 22.

[33] As I outlined in my endorsement of July 6, 2020 the materials that were filed by counsel were wholly inadequate to allow me to assess the reasonableness of the proposed fee.

[34] I required counsel to file all dockets in this file, and in the tort file as well as confirmation of all disbursements incurred on both files.

[35] It is essential that full docket and disbursements be disclosed in all cases seeking approval of a settlement on behalf of an infant or a person under disability as a prerequisite to approval of any settlement. There also must be full disclosure of the status of the parallel file, be it tort or accident benefits, including information about all fees charged, dockets and disbursements in the parallel file. The reasonableness of any proposed fee cannot be assessed without this information.

[36] The dockets and information were slow in coming, but have now been produced.

Question 1: Was the contingency agreement fair at the time it was entered into?

[37] The contingency agreement was signed by Gregory on June – 2020.

[38] There is no evidence before me about what was discussed and what was disclosed by Mr. Naimark to Gregory at the time the contingency agreement was signed.

[39] Given the close proximity of the settlement of the tort and the accident benefit case with minimal time expended, given the fees charged in the tort claim, and given the acknowledgement by the insurer that Robert’s injuries meet the test of catastrophic, it is not clear to me that the contingency agreement of 23% of the proposed settlement was fair at the time the contingency agreement was entered into in June 2020. It appears to the contrary, that the agreement was not fair.

Question 2: Are the fees reasonable, to be determined at the time the question of costs is considered?

[40] In determining the reasonableness of a contingency fee arrangement the factors to consider are as follows (Henricks-Hunter, at para. 22):

• The time expended on the file
• The complexity of the case
• The results achieved and
• The risk assumed by the solicitor in accepting the file

Time expended

[41] The time expended by the solicitor’s firm for both the tort and accident benefit claim to the date of this application total $93,370.00. The firm suggests that $53,732.50 is related to the accident benefit claim, but I note that many of these docket entries must refer to both the tort and accident benefit claim (i.e. the initial meeting). The usual fair division of time between the two matters is 50% of the time attributed to each file. Whether the docketed time for the accident benefit file to the date of this application is $53,732.50 or $46,685.00 matters not.

[42] There have been several meetings after the receipt of this application which brings the total docketed time to date to be approximately $106,000.00.

[43] The time spent after this application is obviously attributable only to the accident benefit file, and these fees should be paid at the solicitor’s hourly rate, and the applicable rate for his assistants.

[44] The tort action was settled for $865,000.00 all-inclusive and approved by Dow J. on April 14, 2020. In the tort claim a total of $202,315.11 was paid to Mr. Naimark for costs including fees of $127,000.00 plus HST of $16,575.00 and disbursements of $58,740.01.

[45] Gregory received a $50,000.00 award for his FLA claim. The net recovery to Robert for the tort claim appears therefore to have been $606,249.79.

[46] In this accident benefit claim, Mr. Naimark proposes that there be a payment of $292,319.13 to his firm which includes $253,000.00 for fees, $32,890.00 for HST on fees and $6429.13 for disbursements, representing what he suggests to be 23% of the settlement.

[47] Mr. Naimark has already received compensation in the tort claim of $127,000.00 plus HST and disbursements which covers that time expended in the tort claim, taken as 50% of the docketed time up to this application of $46,685.00. He has already received a significant premium for his work in the tort claim.

Complexity

[48] As a result of the accident, as confirmed by both the experts retained by Plaintiff’s counsel, and the independent assessment of the insurer, Robert sustained undeniable catastrophic injuries. Given the undeniable extent of Robert’s injuries and the acknowledgement that the injuries are catastrophic, this is not a complex case.

[49] What has been complex in this case is not the settlement itself, but the aftermath of the settlements, and ensuring that proper arrangements are made for Robert’s care, including attendant care and treatment. At the time of this application, Robert was living with his brother and his brother’s family in a non-accessible basement in a rental accommodation. The family is now living in a home financed by the funds from the tort settlement, and by a mortgage assumed by Gregory. Renovations are being done to the home to make it accessible, and the funds for this work advanced from the settlement funds are being managed by Mr. Sael Eisen, Gregory’s former counsel.

[50] During the COVID-19 pandemic Gregory does not want any caregivers or treatment professionals to enter the home due to Robert’s vulnerabilities. This is reasonable until COVID is under control, but is not reasonable in the long term. These questions will be addressed in the endorsement when I consider amendments to the management plan for Robert.

[51] It does not appear prior to the section 7 application being filed that Mr. Naimark as counsel for Robert has taken any proactive responsibility to ensure that Robert’s needs are met in a management plan for Robert. At times it has appeared that Mr. Naimark was far more concerned with having a lump sum payment by way of settlement in the accident benefit file so he could get compensation for fees, as opposed to pursuing what is in Robert’s best interests.

Result achieved

[52] As indicated in these reasons, I did not approve the proposed settlement submitted by Mr. Naimark as reasonable, and I still have misgivings on the settlement, but agreed to approve it after hearing submissions from all. In many ways I would have been more comfortable with the insurer paying attendant care and medical rehab costs on an ongoing basis having access to the $1,734,953.89 funds still available following the recommendations in the occupational therapy report, rather than receiving the funds as a lump sum. It is clear that Robert’s needs greatly exceed what will be available to him, even with the increased settlement.

[53] In my view the results achieved even with the revised settlement at 1.3 million is at the low end of entitlement. The prior proposed settlement of 1.1 million dollars, on the facts of this case was not an acceptable settlement, and certainly not a settlement deserving of any premium for fees.

Risk assumed by the solicitor

[54] Due to the undeniable severity of Robert’s injuries, there was little or no risk to the solicitor assuming this file.

Conclusion on Costs

[55] In my view, taking into account the facts of this case, and the criteria to assess the reasonableness of fees charged to a person under disability, there is not any reason to award a premium for services rendered by Mr. Naimark. The settlement of the accident benefit claim followed immediately the settlement of the tort claim.

[56] In my view taking into account the criteria of fairness at the time the contingency fee agreement is signed, and the criteria to ascertain the reasonableness of an account, Mr. Naimark should be paid his fees to date, and any fees in the future to conclude this file in accordance with his hourly rate and dockets. I am prepared to agree that up to the date of this application the docketed time for fees associated with the accident benefit claim were as suggested to be $53,732.50 before HST, rather than half of the docketed time, along with disbursements of $6,429.13. As well, the reasonable fees based upon docketed time from the date of this application to date are entirely attributable to the accident benefit file and should be paid from the settlement funds.

[57] As well, Mr. Shael Eisen, Mr. Gregory Jones’ former counsel, in this application should be paid reasonable fees from the settlement funds for his time since this application was brought. He has indicated that he is not claiming any further fees, but in the interests of fairness he should be paid his fees at a reasonable hourly rate from the date of this application. His fees paid to date in the amount of $5000.00 are not adequate given the time he has expended, and given his contribution to ensuring Robert’s well being in this settlement and a management plan are protected.

[58] I may be spoken to about the fees of Mr. Gregory Jones’ new counsel when we have the next conference.

J. Wilson J. Date: February 8, 2021