COURT FILE NO.: CV-14-0169
DATE: 2021 01 27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
KEVIN TRELEAVEN by his Litigation Guardian Raphael Budd, and MONIQUE TRELEAVEN
Wendy Sokoloff, for the Plaintiffs wendy@sokoloff.ca
Plaintiffs
- and -
MARK THOMAS KILGOUR and ECHELON INSURANCE COMPANY, added by order pursuant to section 258 open paragraph 14) of the Insurance Act, RSO 1990, c. I.8, as amended
Defendants
Bruce Arnott, for the Public Guardian and Trustee bruce.arnott@ontario.ca
HEARD: in Chambers
REASONS FOR JUDGMENT
Trimble J.
The Motion
[1] Raphael Budd, the Litigation Guardian for Kevin Treleaven, seeks approval of the settlement of Mr. Treleaven’s accident benefits (“AB”) and tort claims under Rule 7.08(5) of the Rules of Civil Procedure, because Mr. Treleaven is an incompetent. Monique Treleaven is Mr. Treleaven’s mother. She seeks reimbursement for attendant care she provided to Mr. Treleaven in the past as part of the approval of Mr. Treleaven’s AB claim. She is also an FLA claimant in the tort action.
Summary
[2] The settlements of the AB and tort claims are fair and reasonable.
[3] The Contingent Fee Arrangement (“CFA”) between Mr. Treleaven and his law firm, Sokoloff Lawyers, is neither fair nor reasonable, and is not enforceable. The reasonable contingent fee for the AB file is 17% of the settlement and for the tort file, 25% of the total settlement (both exclusive of disbursements and HST).
The Accident
[4] Kevin Treleaven was injured in a motor vehicle accident which occurred on 26 October 2013. He sustained significant injuries.
[5] Mr. Treleaven was a passenger in Kilgour’s vehicle. Kilgore was significantly impaired by cocaine and alcohol when he drove, as was Kevin Treleaven. Police investigation indicates that Mr. Treleaven was not wearing his seatbelt.
[6] Kilgour was driving on a rural gravel road at a speed of approximately 180 k.p.h. He lost control of the vehicle, drove into the ditch, struck and broke off a road sign, then struck two trees where he came to a halt. Mr. Treleaven managed to get out of the car before emergency services arrived. They found him 15 to 20 feet from the vehicle.
Pre-Accident Health
[7] Mr. Treleaven had been on Ontario Works since 9 January 2009 due to cognitive and adaptive disabilities he suffered from his entire life.
[8] A psychological assessment dated on 18 February 2013, conducted for his ODSP application, confirmed that Kevin Treleaven had a history of development delays since birth. He required special education plans from preschool through to the completion of elementary school. He did not complete high school. He had cognitive and adaptive functioning levels in the extremely low range which were likely to be lifelong in nature. He was also in the low range on nonverbal reasoning, working memory, and processing speed.
[9] This opinion was confirmed by capacity assessor Dr. Turrall, who, in his report of 5 September 2016, indicated that Mr. Treleaven had an historical premorbid issue with attention deficit disorder. In his opinion, Mr. Treleaven has never been able to lead an autonomous life and, in all probability, will not be able to do so in the future.
[10] As a result of his of his limitations, Mr. Treleaven worked periodically as a forklift operator, backhoe operator, and a machine press operator. He was usually dismissed, however, because of poor attendance and inability to perform his duties.
[11] In addition to his cognitive issues, it appears that Mr. Treleaven had a long-standing drug abuse problem, the nature and extent of which is not clear. The medical records indicate a long history of abusing marijuana, Percocet and cocaine. His addiction was exacerbated by his injuries
The Injuries
[12] In the accident, Mr. Treleaven sustained an oblique fracture to his left femur requiring open reduction and internal fixation which was performed at Brampton Civic Hospital. As a result of this injury, he has developed a significant limp in his left leg. He has developed chronic pain syndrome pain in his lower back, left leg, bilateral hips, neck and shoulders, and has difficulty sleeping.
[13] In addition, Mr. Treleaven has sustained a traumatic brain injury accompanied by depression, anxiety, opioid dependence, and further reduced cognitive function.
[14] In his reports of 7 August 2016 and 5 September 2016, Dr. Turrall indicated that Mr. Treleaven suffered significant psychological distress suggestive of post-traumatic stress disorder. He had severe chronic pain. These two conditions have reduced his cognitive abilities, emotional life, and behavioural presentation. He has significant short-term memory difficulty which requires repetition of things that he is required to do. He had serious difficulties with attention, concentration, problem-solving and cognitive flexibility, which also affected his overall cognitive abilities. He had limited short-term memory, difficulties with multitasking, judgement, problem solving, insight, abstract reasoning, and decision-making.
[15] Dr. Turrall did not think that Mr. Treleaven could communicate rationally with, receive instructions from, and instruct counsel. In addition, he did not have the legal capacity to enter binding legal relationships.
[16] In order to cope with his post-accident pain and psychological issues, Mr. Treleaven began to self-medicate with prescription medication and illicit street drugs - primarily Percocet and marijuana - to manage his pain.
[17] Not surprisingly, the overwhelming conclusion of the medical brief assembled by Mr. Treleaven’s solicitors supported the catastrophic nature of his injuries.
[18] The defence, on the other hand, relied on the report of Dr. Devlin who indicated there was no evidence of ongoing physical injury that would preclude Kevin Treleaven from returning to his pre-accident employment or activities. Any limitations that Kevin Treleaven continued to face, in Dr. Devlin’s view, was a result of his pre-existing conditions and not the accident.
[19] The defence also obtained a neuropsychological assessment by Dr. Hunt who opined that there was no reliable support that Kevin Treleaven sustained a permanent and serious impairment from a psychological or neuropsychological perspective as a result of the accident. He was either feigning or exaggerating his level of impairment.
[20] The accident benefit insurer had its own neuropsychological report prepared which concluded that the assessor had significant concerns with respect to symptom amplification and, accordingly, was unable to provide an objective opinion. A provisional diagnosis was made of an adjustment disorder of a mild nature.
Procedural History
[21] The statement of claim in this matter was issued in 2014 by Krylov & Company, naming Kevin Treleaven and Monique Treleaven as plaintiffs, without a litigation guardian. Mr. Treleaven is reported to have signed a contingent fee agreement (CFA) with Krylov, although it was not produced.
[22] By order dated 25 May 2015, Echelon Insurance Company added itself as a Statutory Third Party and on 26 May 2015, filed its Statement of Defence.
[23] On 18 September 2015, Mr. Treleaven changed solicitors to Rochon, Genova LLP, and signed a CFA with them. His mother signed it as well.
[24] On 16 April 2016, the Treleavens moved their file to Sokoloff Lawyers, their current solicitors. Both Mr. Treleaven and Ms. Treleaven signed CFA’s on 6 July 2016.
[25] Wendy Sokoloff swore the main Affidavit on this motion. She said that Monique Treleaven was present when the Sokoloff Lawyers retainer was explained to Mr. Treleaven and he executed it. Ms. Sokoloff states that she was advised and believes that Ms. Treleaven was also present when the retainer agreements with the earlier firms were explained and executed. She does not describe the source of her belief. I cannot accept her statement.
[26] On 17 July 2017, the Statement of Claim was amended to add Raphael Budd as Mr. Treleaven’s Litigation Guardian pursuant to the order of Emery J., dated 10 July 2017.
[27] Mr. Treleaven’s AB and tort actions were settled and on 14 November 2019 Sokoloff Lawyers filed a three volume motion for approval of the settlement of the tort claim for $200,000.00, plus $100,000.00 in costs, and the AB claim for $400,000.00 all-inclusive.
[28] Bridgepoint Financial Services sought to intervene in the approval motion to recover payment from Mr. Treleaven pursuant to its loan agreements with Mr. Treleaven.
[29] On 8 January 2020 I convened a case conference with all parties and issued an endorsement with respect to further information required to assess the settlement. The Public Guardian and Trustee (“PGT”) did not attend. I ordered that it be served with the motion material and all material thereafter.
[30] On 11 February 2020, Sokoloff Lawyers filed supplementary materials as ordered.
[31] On 15 June 2020, the PGT prepared its report as ordered.
[32] On 18 June 2020, I wrote to counsel and advised that because of the Covid-19 pandemic, I had no access to the court paper file until the return to normal operations, which at the time, was projected to be after July 6, 2020, at the earliest, and that I would attend to the approval motion thereafter.
[33] On 3 July 2020, Sokoloff Lawyers responded to the PGT’s report, rejecting the PGT’s recommendations with respect to the fees. They outlined what they believed to be the unusual and time-consuming complexities involved in the matter that the PGT did not appreciate, including:
When they received the file, it became apparent that Mr. Treleaven lacked capacity. Neither of the two previous lawyers was sensitive to this issue. Sokoloff Lawyers obtained capacity assessments.
Causation was a complex matter because of significant pre-existing intellectual disabilities which resulted in his application for and receipt of ODSP long before the accident, and which pre-existing conditions impacted on his claim.
At the time Sokoloff Lawyers was retained, Mr. Treleaven had already exhausted up his non-catastrophic $100,000.00 AB limits and the insurer had denied his claim for catastrophic level benefits.
They had to address the Bridgepoint loan question which loan was incurred before Sokoloff Lawyers’ involvement.
There were issues with respect to limitation periods, all of which were remedied by the capacity assessments done.
Loan from Bridgepoint Financial Services
[34] Kevin Treleaven entered into a loan agreement with Bridgepoint Financial Services which, between 2 June 2014 and 28 August 2015 paid him varying amounts totaling $19,000.00. Interest was 24%, compounded semiannually. By September 2019 the total obligation was $58,064.73.
[35] Initially, Bridgepoint sought to intervene in this motion. A case conference was held followed by my endorsement of 8 January 2020, released 10 January 2020.
[36] On 7 February 2020, the court was advised that Bridgepoint and the plaintiffs had settled Bridgepoint’s claim for $35,000.00. Because of that settlement, and the need to adjust some of the settlement materials, the plaintiffs’ solicitors asked for more time to provide the court with the materials requested in January. An extension was granted to 11 February. Those materials were filed.
The Settlements
1. Tort Action
[37] On instructions from the Litigation Guardian, the tort action was settled for $300,000.00, comprising the uninsured motorist liability minimum limit of $200,000.00, plus an additional $100,000.00 for costs. This reflected the uninsured motorist insurer’s insurance policy limit. This was recommended to and accepted by the Litigation Guardian plaintiff because:
The driver, Kilgour, refused to cooperate with Echelon, the liability insurer, by failing to attend examinations for discovery several times.
As a result of the non-cooperation, the insurer denied coverage and added itself as a Statutory Third Party to the action.
There are serious liability issues in the file. The police investigation concluded that Mr. Treleaven was not wearing a seatbelt.
Kevin Treleaven would have made a questionable witness under any examination.
[38] Out of the $300,000.00, it is proposed that the following payments be made:
(a) $20,000.00 to Monique Treleaven for FLA claims;
(b) $119,532.97 to Kevin Treleaven;
(c) $74,580.00 to Sokoloff Lawyers for legal fees and HST (which complies with the CFA fee agreement of 33% plus HST and disbursements); and
(d) $85,887.03 for outstanding accounts for services by third parties for Mr. Treleaven.
[39] Overall, I find the settlement amounts reasonable. I will return to the issue of legal fees.
2. Accident Benefits Action
[40] The accident benefits insurer settled the accident benefits claim for an all-inclusive $400,000.00. This included $115,000.00 for all past and future medical benefits, $85,000.00 for all past and future rehabilitation benefits, and $200,000.00 for all past and future attendant care benefits. Pursuant to section 19.1 of the LAT Rules of Practice, no costs were payable as the insurer did not behave unreasonably, frivolously, vexatiously, or in bad faith.
[41] Overall, I find the settlement amounts reasonable. I will return to the issue of legal fees.
[42] The settlement is reasonable because of the significant risks Mr. Treleaven faced in the claim against the AB insurer. Medical opinions obtained by the insurer indicated that while Mr. Treleaven sustained a cerebral injury, it was not expected that there would be any neurocognitive or neuropsychological compromise. Mr. Treleaven amplified his symptoms.
[43] The insurer-obtained reports did not support a catastrophic finding. The reports indicated that Mr. Treleaven was a poor historian and a poor patient who self-limited his movement, put in submaximal effort, and magnified his symptoms.
[44] In addition to medical documentation, the AB insurer undertook surveillance in July 2014, March 2015, and August 2015 which cast serious doubt on Mr. Treleaven’s credibility.
[45] By the time of the settlement, Mr. Treleaven had exhausted the non-catastrophic policy limit of $50,000.00 medical and rehabilitation benefits and $36,000.00 for attendant care, prior to Sokoloff Lawyers’ retainer.
[46] Sokoloff Lawyers propose that the following payments be made from the $400,000.00:
(a) $212,911.47 to Kevin Treleaven;
(b) $20,000.00 to Monique Treleaven for past attendant care services she provided;
(c) $138,498.95 to Sokoloff Lawyers for fees and disbursements, and HST (which complies with the 33% CFA); and
(d) $28,589.58 for various disbursements to service providers who provide service to Kevin Treleaven.
[47] The sum of $20,000.00 is to be paid to Monique Treleaven to compensate her for attendant care she provided, and $35,000.00 to fund the settlement with Bridgepoint.
[48] In total, from the settlement with the insurers for AB and tort claims, Kevin Treleaven would receive $332,444.44.
PGT Report
[49] By email dated 16 June 2020, the PGT provided its report with respect to the settlement, as I requested by my 8 January 2020 Endorsement.
[50] The PGT took no issue with the settlement. Indeed, it found both to be reasonable. It took issue, however, with the legal fees.
[51] The PGT accepted that the outcome of the tort litigation was highly unpredictable because of causation liability and damages issues, and Mr. Treleaven’s presentation as a witness.
[52] The PGT accepted that without Sokoloff Lawyers’ involvement, the insurer would treat Mr. Treleaven’s injuries as non-catastrophic. The PGT accepted that the catastrophic impairment issue would have been central in the AB claim. If Kevin Treleaven was catastrophically impaired, his attendant care and medical rehab limits would increase to $1 million each, less the benefits already paid. Had he been defined as catastrophically impaired, the available limit to him (net benefits paid to date) would have been $947,322.50.
[53] The PGT approved of the AB settlement but took issue with the July 2016 CFA in that it did not meet the requirements under O. Reg. 195/04 governing CFAs under the Solicitors Act, RSO 1990, C. S. 15 in that:
The 2016 CFA was not titled “Contingency Fee Retainer Agreement” as required by section 1(1)(a). It is merely titled “Retainer Agreement”.
The 2016 CFA is not signed by the solicitor as required by section 1(1)(C).
The 2016 CFA does not include the address and telephone number of the client as required by section 2(1).
The 2016 CFA does not include any of the following statements, which are required by section 2(3):
a. that the client and the solicitor have discussed options for retaining the solicitor other than by way of CFA , e.g. by way of an hourly rate retainer;
b. that the client has been advised that hourly rates may vary among solicitors and that the client can speak with any other solicitors to compare rates;
c. that the client has chosen to retain the solicitor by way of a CFA; and
d. that the client understands that all the usual protections and controls of the Law Society and the common law applied to CFA’s.
The 2016 CFA does not include the statement as required by section 2(8) informing the client of his/her right to ask the Superior Court of Justice to review and approve the solicitor’s bill, and including the applicable timelines for asking for such a review.
The 2016 CFA does not include a statement as required by section 3(1) that if the client is a plaintiff that the solicitor shall not recover more in fees than the client recovers as damages or received by way of settlement.
Under section 6, a CFA that provides that the fee is determined as a percentage of the amount recovered shall exclude any amount awarded for disbursements and costs. Indeed, the 2016 agreement includes costs in the calculation of the contingency fee.
[54] These deficiencies were not corrected until 13 May 2020, after my request that the PGT review the settlement, when the Litigation Guardian signed a new retainer.
[55] The PGT expressed the view that the CFA does not meet the fairness requirement because the PGT considered that Kevin Treleaven did not likely have legal capacity at the time the 2016 CFA was signed. Sokoloff Lawyers responded to the PGT’s inquiries by saying that it was not aware of any lack of capacity until it received the capacity assessment report on 7 August 2016. The PGT is of the opinion that Sokoloff Lawyers would have or ought to have been aware that there were capacity issues with Mr. Treleaven as early as April 29, 2016 when the capacity assessments began and while the assessments were in progress.
[56] The PGT expressed the view that the fees are not reasonable. Sokoloff Lawyers did not differentiate between the tort and the accident benefits files in its recorded time. The PGT noted some discrepancies in the computer printouts. It conceded that the matter was complex and that the solicitor assumed significant risk if the matter did not settle. The PGT recommended that the court decline to approve the CFA as either fair or reasonable. It felt that the AB fees are excessive it recommended fixing the fees at 25% in the tort claim and 15% in the accident benefit claims, excluding costs paid.
[57] The PGT also recommended that Ms. Treleaven’s FLA claim be reduced by the CFA amount. The failure to do so means that Kevin Treleaven is paying the costs on her award.
Are the Settlements Reasonable
[58] I find that the tort and AB settlements are reasonable.
Are the Contingency Fee Agreements Reasonable and Fair?
1. The Law
[59] The principles of law applicable in the assessment of CFAs in the case of a minor are well settled. They are set out by McKelvey J. in Mounce v. Rae, 2017 ONSC 2288, and Daley, then R.S.J. in Karwal v. Karwal, 2017 ONSC 5485, and are:
while CFAs increase access to justice, they are not a carte blanche to permit lawyers to charge what the agreement states. Fairness and reasonableness must be considered (St. Jean v. Armstrong, 2015 ONSC 13, aff'd 2017 ONCA 145);
the CFA must be assessed both in terms of reasonableness and fairness. The fairness of the CFA is to be assessed as of the date of the agreement. The reasonableness of the CFA is to be assessed at the date of the hearing or settlement. A CFA can only be declared void if the court determines that it is either unfair or unreasonable. (Hendricks-Hunter v. 814888 Ont. Inc., 2012 ONCA 496 (C.A.);
the fairness of a CFA is concerned with the circumstances surrounding the making of the agreement and whether the client fully understood and appreciated the nature of the agreement (Raphel Partners v. Lam, 2002 CanLII 45078 (ON CA), [2002] O.J. No. 3605 (C.A.));
a solicitor seeking to collect fees under a CFA with a party under disability must comply with section 5 (1) of Ontario Regulation 195/04 under the Solicitors Act which provides that the solicitor shall either apply to a judge for approval of the CFA before it is finalized or include the agreement as part of the motion or application for approval of a settlement under Rule 7.08;
when assessing the reasonableness of fees charged by the solicitor, the court should consider a number of factors including the time expended by the semester, the legal and factual complexity of the matter, the results achieved, and the risk assumed by the solicitor (Raphel Partners, supra); and
if the CFA violates Section 28.1(8) of the Solicitors Act, or is not approved, the agreement is not enforceable (Hodge v. Neinstein, 2015 ONSC 7345 (Div. Ct.).
2. Fairness of the CFA
[60] The solicitor has an onus to ensure that his CFA is fair and reasonable, and to explain the agreement to the client.
[61] In this case, CFA is not fair. The lawyer has not established that the client was competent at the time he signed the 2016 CFA to execute it.
[62] There is a presumption at common law.
[63] Section 2 of the Substitute Decisions Act says that people over 18 years of age are presumed to be competent. Section 2(3) provides that a person is entitled to rely upon the presumption of capacity with respect to another person unless he or she has reasonable grounds to believe that the other person is incapable of entering into the contract or of giving or refusing consent, as the case may be.
[64] It is also a lawyer’s duty to make an assessment of the client’s capacity to instruct. It is inappropriate for a solicitor to take instructions or a retainer from someone whose competence they doubt.
[65] I reject Sokoloff Lawyers assertion that until the capacity assessment reports came it, it was entitled to assume that Mr. Treleaven had the legal capacity to enter into the CFA. Such an assertion is unsupportable based on the information available to the firm, as stated by Ms. Sokoloff in her Affidavits, the (meagre) detail provided in the Sokoloff Lawyers’ print out of time on the file, and her response to the PGA’s June 2020 report.
[66] For example, as of the date of 6 July 2016 when Kevin Treleaven signed the retainer, the dockets contain ample evidence to doubt Kevin Treleaven’s capacity:
• The family raised concern about Mr. Treleaven’s capacity, his violence, and his drug addictions on several occasions.
• The firm emailed back and forth with Dr. Turrall about capacity assessment on 27 April 2016, nine days after the initial meeting with the client, and spoke to the client and the client’s aunt thereafter. They scheduled the assessments as well.
• On 28 April the firm received email from Dr. Turrall inquiring about Mr. Treleaven’s drug addiction facility recommendations.
• On 28 and 29April the firm received and reviewed the AB file.
• On 2 May they had a telephone meeting with Dr. Turrall to discuss Mr. Treleaven’s needs, followed up by emails to and from Mr. Treleaven’s aunt about capacity, drug addiction and treatment options.
• On 8 May there is email to and from Raphael Budd, the person who became Litigation Guardian in 2017.
• On 1 June the firm received a report from Dr. Turrall, discussed it in the office, and had a meeting with the client.
• They had received substantial portion of the medical file.
[67] In addition, in response to Bridgeport’s claim for payment of the loan, Ms. Sokoloff took the position that when he signed the loan agreements (before Sokoloff Lawyer were retained), Mr. Treleaven lacked legal capacity to enter the agreements, a fact which ought to have been obvious to Bridgepoint had it done minimal due diligence.
[68] From the foregoing, and from the opinions expressed in the medical file and those relied upon in the material for this settlement approval motion, by the time that Mr. Treleaven signed the CFA, the family had expressed to Sokoloff Lawyers their concern about Mr. Treleaven’s capacity, and the lawyers obviously had sufficient concerns of their own, that they sought a capacity assessment.
[69] Even without knowing what that capacity assessment result would be, it is not appropriate for Sokoloff Lawyers in these circumstances to have Mr. Treleaven sign a CFA when they were concerned about his capacity to take advice, give instruction and enter a CFA. Given Sokoloff Lawyers’ concerns, I do not see how they could have explained the agreement to Mr. Treleaven sufficiently such that he would have understood it. The fact that Mr. Treleaven’s mother was present at these discussion does not relieve the firm of their obligation to make sure that the client, Mr. Treleaven, understood the CFA.
[70] Sokoloff Lawyers’ approach since the initial case conference in January 2020 is disturbing for two reasons. First, Sokoloff Lawyers’ “capacity until proven otherwise” position in this approval motion, in light of the evidence, is merely an attempt to justify ex post facto having Mr. Treleaven sign the 2016 CFA when the facts do not support their action.
[71] Second, Sokoloff Lawyers obtained a signed, regulation-compliant CFA from the Litigation Guardian in May 2020. This does not assist the firm with respect to their fees. One cannot rehabilitate the initial defective CFA signed by Mr. Treleaven at a time when the firm doubted that he had capacity. The firm either ought to have retained a CFA from Ms. Treleaven and obtained a CFA from the litigation guardian after the capacity assessments were done, or have Mr. Treleaven sign one and then the litigation guardian ratify or adopt it immediately after the capacity assessments were done.
[72] The solicitors provide no evidence about whether Kevin Treleaven understood the retainer agreement. Mr. Treleaven’s mother, Monique Treleaven, was present when the retainer was explained, but provides no evidence as to the level of Kevin Treleaven’s understanding of the retainer agreement.
[73] For these reasons, the CFA does not meet the fairness requirement of section 24 of the Solicitors Act and is unenforceable.
3. Reasonableness of the CFA
[74] As indicated above, reasonableness of the CFA is assessed at the time of the settlement or approval. In other words, the CFA's reasonableness must be viewed in light of the results and the legal expense to the client that the CFA generates. The onus is on the solicitor to justify the fee.
[75] In determining the reasonableness of the agreement, I considered the factors from Raphel Partners, supra. The most significant of those factors, as applied to this case, are:
There is a significant liability risk in this file both on the accident benefits and the tort files. The solicitors bore that risk.
The issues were complex both on the tort and the accident benefit files. They were relatively complex, contrary to the PGT’s submission.
The files had significant value, or no value, depending on the findings of fact made.
The firm did significant work. There were significant productions to be obtained. A CAT assessment was obtained. Expert opinions were obtained. A WAGG motion was brought. There was difficulty in finding someone to act as litigation guardian. A dispute arose with Bridgepoint that had to be attended to. There were extensive discussions in settlement culminating in a mediation in July 2017. Examinations for discovery of Kevin Treleaven were held. The firm had to resolve the disputes with two previous law firms. The pre-trial conference was held. The case proceeded through oral discovery and voluminous medical documentation was produced.
Notwithstanding the work the firm did, they did not keep segregated dockets between the accident benefits and the tort files. Therefore, it is impossible to determine what work was done on either file. Further, the descriptions of the time lacked detail and there was significant intra-office duplication, with two or three people attending each meeting and reading all communications.
The firm’s actions with respect to the CFA are very suspicious, and suggests it knew, at the time it was signed, that the CFA would not be enforceable. It took a CFA from someone whose competence it doubted. It obtained a CFA from the Litigation Guardian in May 2020, almost four years after the initial CFA was signed and four years after receiving the capacity assessment. In other words, the firm attempted to make valid what was invalid from the outset.
The firm took the new CFA after the scrutiny by the court had commenced. It appears that the firm only undertook this new agreement after it realized its initial agreement may not be enforceable.
[76] I do not find, for these reasons, that the agreement was reasonable.
What Are the Reasonable Fees in this Matter?
1. Approach
[77] Having determined that the CFA is neither fair nor reasonable, it is therefore, not enforceable. What is the approach that the Court should take when setting the appropriate fees?
[78] In determining what fees are fair and reasonable where there is no CFA (or the CFA has been determined to be unenforceable), as in this case, I use the same criteria as would be used in determining if the fees under the CFA were reasonable; namely,
(a) the time expended by the solicitor;
(b) the legal complexity of the matter in issue;
(c) the results achieved; and
(d) the risk assumed by the solicitor.
(see: Mulhall v Fraser, 2017 ONSC 6551, para. 58)
[79] In addition, I factor in my concerns about the firm’s conduct with respect to the CFA.
2. Accident Benefit Fees
[80] The PGT, at pages 16 and 17 of its 15 June 2020 report, reviews the case law suggesting that contingency fees on AB files should generally be around 15% and on tort files, 25%. The percentage is driven by the facts in each case, and circumstances may take the percentage above or below the norm.
[81] The philosophy behind setting this range in AB files is that the no-fault benefits are “no fault”; that is, a claimant’s entitlement is determined by the wording of the statute, regulations, and the policy. Once entitlement is established, the benefits flow. Further, the AB scheme in the Province of Ontario contains its own dispute resolution process which is designed to minimize costs when comparted to the more expensive option of litigation. The AB scheme is designed to efficiently and effectively pay all allowable claims at minimum cost and provides for a relatively speedy, low-cost dispute resolution processes (see: Adler (Litigation Guardian of) v. State Farm (2008), 2008 CanLII 32809 (ON SC), 92 O.R. 3d 266 at paras. 33-38; Aywas v. Kirwan, 2010 ONSC 2278, at para. 2).
[82] Where a case is complex, the settlement achieved in the accident benefits claim is a good settlement, and where the case carried a much higher risk than a typical accident benefit case, a fee outside the range is warranted (see: Mujlhall v. Fraser, [2017] O.J. No. 5621 (S.C.J.) where the court reduced fee from the 27.5% agreed to, to 17%.
[83] Ms. Sokoloff did not contest or respond to the case law referred to by the PGT. Instead, she outlined aspects of the case that made it complex and stated:
“I am not aware of any reputable personal injury law firm that charges15%, as the third lawyer retained, given that there would be significant fee accounts rendered by previous counsel which would have to be addressed, and with a $200,000 maximum recovery on the tort action due to the coverage issues. Any reputable firm would decline to accept retainer of 15% under the circumstances, knowing that both the tort and accident benefits claims would be contentious, given the causation and liability issues involved and the need to pursue an application for catastrophic impairment.”
[84] Considering the time expended by the firm, the complexity of the matter, the work undertaken, results achieved, risk assumed by the firm, and my concerns about the law firm’s actions with respect to the CFA, I set a reasonable fee at 17%. I agree with the PGT that Monique Treleaven’s $20,000.00 portion of the settlement for past attendant care services she provided, should also be reduced by 17% for fees.
3. Tort Action Fees
[85] As a general rule, fees recoverable in a tort action are allowed at a higher amount than in an accident benefits claim.
[86] In considering the time expended by the firm, the complexity of the matter, the work undertaken, results achieved, risk assumed by the firm, and my concerns about the law firm’s actions with respect to the CFA, I set a reasonable fee at 25% plus HST and disbursements. Monique Treleaven’s FLA settlement of $20,000.00 should be reduced to reflect fees payable.
Family Communications
[87] On 24 September 2020 I received an email from Elizabeth Steele, Kevin Treleaven’s aunt, who said that she was applying to be guardian of Kevin Treleaven’s property. Her email followed a lengthy call with my assistant, in both of which she a) described the difficulties that Mr. Treleaven faces on a day-to-day basis, b) outlined issues with the Litigation Guardian and Sokoloff Lawyers, and c) raised concerns about delays in the litigation. Ms. Steele followed up on 14 January 2021.
[88] On 19 January 2021 Monique Treleaven telephone the Trial Coordinator’s office and asked for an update.
[89] On 19 January 2021, I issued a brief endorsement advising that I could not speak to either of these individuals, explaining that the plaintiffs were represented by counsel and I could only address counsel.
[90] It is clear to me that Mr. Treleaven’s mother and aunt are concerned about Mr. Treleaven’s health, his financial situation, his need for treatment and assistance, the amount of the settlement, and the timeliness of it.
[91] I understand their concern for their son and nephew. One can only feel compassion for Kevin Treleaven and his circumstances.
[92] For reasons described in my 19 January 2021 endorsement, I hope that Mr. Treleaven’s mother and aunt understand why I cannot address them directly.
[93] As to the timing of the delivery of this judgement, it has been delayed by the onset of the Covid-19 pandemic and its effect on the courts. The Superior Court shut down for March and April 2020. The work of the court, once it recommenced, was focused on urgent matters. Gradually, the court expanded the business that it was doing. The courts, since Christmas, have been closed to all in person hearings.
[94] From the outbreak of the pandemic through to July 2020, no judge or court staff member was permitted to handle paper files because of the risk of transmission of Covid-19. A notice to the profession was sent out advising the profession of this and advising that they needed something addressed, they could re-file their paper materials, electronically. That did not occur in this case.
[95] Since July, judges have had access to written files if requested. In September, I made the request and obtained the file once Sokoloff Lawyers provided their response to the PGT’s report.
[96] In their correspondence to me, Mr. Treleaven’s aunt expressed concerns about the relationship between Sokoloff Lawyers, the Litigation Guardian, Monique Treleaven, and the aunt. While I receive those comments as expressing genuine concern by Mr. Treleaven’s aunt, her communications in this respect raise issues with which I cannot help her. They are not issues in the litigation before the court.
Order
[97] In light of the foregoing, the settlements are approved with fees adjusted on the following basis:
1. Accident Benefits File
Total settlement $400,000.00
Natural touch $13,238.22
MLR services $4,310.22
Cairo med $5,981.51
Carrying rehab Inc. $5,059.63
Monique Treleaven $16,600.00
Sokoloff Lawyers’ fees[^1] $70,000.00
HST on fees $9,100.00
Subtotal $124,289.53
($139,989.53)
To Kevin Treleaven $275,710.42
2. Tort Claim
Total settlement $300,000.00
Monique Treleaven FLA $15,000.00
Sokoloff Lawyers’ fees[^2] $50,000.00
HST on fees $6,500.00
Disbursements and outstanding accounts $85,887.03
Subtotal $157,387.03
($157,387.03)
To Kevin Treleaven $142,612.97
[98] The totals payable to Kevin Treleaven are subject to any reasonable fee that the PGT may charge. If that amount cannot be agreed upon, I may be spoken to. Any amounts payable to Kevin Treleaven shall be paid into court.
[99] The totals payable to Mr. Treleaven are also subject to the $35,000.00 payable to Bridgeport Financial Services.
[100] Echelon Insurance Company is released and discharged from any and all claims for past, present, and future statutory accident benefits.
[101] Only the PGT is required to approve the judgement as to form and content.
[102] There should be no costs of the motion.
Trimble J.
Released: January 27, 2021
COURT FILE NO.: CV-14-0169
DATE: 2021 01 27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
KEVIN TRELEAVEN by his Litigation Guardian Raphael Budd, and MONIQUE TRELEAVEN
Plaintiffs
- and -
MARK THOMAS KILGOUR and ECHELON INSURANCE COMPANY, added by order pursuant to section 258 open paragraph 14) of the Insurance Act, RSO 1990, c. I.8, as amended
Defendants
Counsel: Wendy Sokoloff, for the Plaintiffs
Bruce Arnott, for the Public Guardian and Trustee
REASONS FOR JUDGMENT
Trimble J.
Released: January 27, 2021
[^1]: $400,000 x 17%= $68,000 rounded to $70,000.00. [^2]: 25% of $200,000.000, inclusive of $3,300.00 for Rochon Genova LLP.