Court File and Parties

Court File No.: 1893/18 Date: 2021-12-20 Superior Court of Justice – Ontario

Re: S.E.C. (also known as S. C.) by his Litigation Guardian, A.C.M., A.S.C.M., N.R.C.M., S.A.C.M. and M.B.C., Plaintiffs And: M.P. and 794805 Ontario Ltd., carrying on business as Arcon Electric Ltd., Defendants

And in the matter of Intact Insurance Company Settlement of Statutory Accident Benefits Entitlement of S.E.C.

Before: Justice S. Nicholson

Counsel: Barbara Legate, for the Plaintiffs

Heard: In Writing

Reasons

Nicholson J.:

[1] The plaintiffs bring this motion/application to approve the settlement of both the tort and accident benefits claims arising out of a motor vehicle accident that occurred on November 21, 2017. The total settlement was for $8.5 million.

[2] At the time of the motor vehicle accident, the adult plaintiff, S.E.C., was 63 years of age. He is now 67. As a result of the accident he suffered a traumatic brain injury. He was determined to be incapable of managing his property by order of Justice I. Leach, dated December 18, 2017.

[3] Counsel for the plaintiffs also seeks approval of her fee, pursuant to a contingency fee agreement entered into with the plaintiff’s adult children. She seeks to charge a total of $2,241,612.53, which sum includes HST and $132,000 for disbursements. After deducting the amount of 25% for fees in relation to the adult Family Law Act claimants, counsel seeks approval of the sum of $1,814,293.57 for fees, plus HST, charged to S.E.C..

[4] The plaintiffs also seek an order sealing from the public all materials filed in support of the motion/application.

Sealing Orders:

[5] The plaintiffs claim that a sealing order is necessary to:

(a) Protect the adult plaintiff under a disability, his dignity and control over his personality;

(b) Protect his medical and psychological condition from exposure thereby protecting his dignity;

(c) Protect commercial information about a company owned by the plaintiff under disability and to protect its position in the market place;

(d) Protect solicitor and client privilege. Counsel argues that there is no compelling reason to expose either the settlement or solicitor and client advice to the public.

[6] Sealing orders run afoul of the open court principle.

[7] Corthorn J., in Carroll v. Natsis, 2020 ONSC 3263 addressed the request for a sealing order in respect of the approval of a settlement for an infant. She stated as follows at paras. 5-7:

[5] The administration of justice includes the oversight of settlements reached on behalf of persons under disability, including minors. These matters do not fall within the scope of the exceptions to the open court principle referred to above. The court’s jurisdiction to oversee settlements of this kind was historically based in its parens patriae jurisdiction. In more recent times, this jurisdiction is anchored in statute and/or regulation.

[6] When seeking court approval of a settlement, plaintiffs in personal injury matters frequently request a sealing or redaction order. Most approval proceedings are, however, not subject to a sealing or redaction order.

[7] This court has the discretion, under statute, to grant a sealing or redaction order. The test to be applied when exercising that discretion is, however, found in the common law. There is no statute or procedural rule mandating that court proceedings involving parties under disability be subject to confidentiality or sealing orders. Absent an express statutory test, the court must be guided by the common law.

[8] Earlier this year, the Supreme Court of Canada released Sherman Estate v. Donovan, 2021 SCC 25. Therein, Kasirer J. described that the open court principle serves an important function. Justice Kasirer thus stated, at para. 30:

[30] Court openness is protected by the constitutional guarantee of freedom and is essential to the proper functioning of our democracy (Canadian Broadcasting Corp. v. New Brunswick (Attorney General), 1996 184 (SCC), [1996] 3 S.C.R. 480, at para. 23; Vancouver Sun (Re), 2004 SCC 43, [2004] 2 S.C.R. 332, at paras. 23-26). Reporting on court proceedings by a free press is often said to be inseparable from the principle of open justice. “In reporting what has been said and done at a public trial, the media serve as the eyes and ears of a wider public which would be absolutely entitled to attend but for purely practical reasons cannot do so” (Khuja v. Times Newspapers Limited, [2017] UKSC 49, [2019] A.C. 161, at para. 16, citing Edmonton Journal v. Alberta (Attorney General), 1989 20 (SCC), [1989] 2 S.C.R. 1326, at pp. 1326-39, per Cory J.). Limits on openness in service of other public interests have been recognized, but sparingly and always with an eye to preserving a strong presumption that justice should proceed in public view (Dagenais v. Canadian Broadcasting Corp., 1994 39 (SCC), [1994] 3 S.C.R. 835, at p. 878; R. v. Mentuck, 2001 SCC 76, [2001] 3 S.C.R. 442, at paras. 32-39; Sierra Club, at para. 56). The test for discretionary limits on court openness is directed at maintaining this presumption while offering sufficient flexibility for courts to protect these other public interests where they arise (Mentuck, at para. 33).

[9] As recognized in Sherman Estate, at para. 31, some degree of privacy loss—resulting in inconvenience, even in upset or embarrassment—is inherent in any court proceeding open to the public. The open court principle thus overrides discomfort and embarrassment of individuals who participate in the justice system. There are, however, exceptional circumstances that do arise where competing interests justify a restriction on the open court principle. Thus, “the right of privacy is not absolute; the open court principle is not without exceptions.”

[10] Kasirer J. explicitly recognized that where the dissemination of highly sensitive personal information results in more than just discomfort or embarrassment, but is an affront to the affected person’s dignity, there is an important public interest at stake. At para. 33, he states:

[33] Personal information disseminated in open court can be more than a source of discomfort and may result in an affront to a person’s dignity. Insofar as privacy serves to protect individuals from this affront, it is an important public interest relevant under Sierra Club. Dignity in this sense is a related but narrower concern than privacy generally; it transcends the interests of the individual and, like other important public interests, is a matter that concerns the society at large. A court can make exception to the open court principle, notwithstanding the strong presumption in its favour, if the interest in protecting core aspects of individuals’ personal lives that bear on their dignity is at serious risk by reason of the dissemination of sufficiently sensitive information. The question is not whether the information is “personal” to the individual concerned, but whether, because of its highly sensitive character, its dissemination would occasion an affront to their dignity that society as a whole has a stake in protecting.

[11] Kasirer J. further described that this “public interest will only be seriously at risk where the information in question strikes at what is sometimes said to be the core identity of the individual concerned; information so sensitive that its dissemination could be an affront to dignity that the public would not tolerate, even in service of open proceedings (para.34)”.

[12] In determining whether the court ought to exercise discretion in a way that limits the open court presumption, the person seeking a sealing order must establish that:

(1) Court openness poses a serious risk to an important public interest;

(2) The order sought is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent this risk; and,

(3) As a matter of proportionality, the benefits of the order outweigh its negative effects.

Important Public Interest:

[13] As described in Sherman Estate, this part of the test is a high bar for the applicant seeking to interfere with court openness. Discomfort and embarrassment of a justice system participant is insufficient. There must be an important public interest. For a privacy interest to be recognized as an important public interest, the disclosure of sensitive information must amount to an affront of the affected person’s dignity and go to a person’s “biographical core” (see Sherman Estate, paras. 7, 33, 75).

[14] In Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, [2002] 2 SCR 522, the Supreme Court of Canada described that the “risk in question must be real and substantial, in that the risk is well grounded in the evidence, and poses a serious threat to the commercial [or other] interest in question.”

[15] In essence, the plaintiffs argue that S.E.C.’s lack of capacity creates a privacy interest that ought to be recognized as an important public interest. It is described that S.E.C. lacks insight into his injuries and speaks freely to persons outside his family about the lawsuit. It is thought that S.E.C. will brag about the amount of his settlement, which will facilitate victimization at the hands of the unscrupulous. I do not understand, however, how a sealing order will prevent him from bragging.

[16] Plaintiffs’ counsel provides anecdotes from her own personal experience. She advises that there are websites that copy judgments and that these sites can be used to extract money from litigants. She also advises that Lexis Nexis allows counsel to access facta, motions, affidavits and orders from court files.

[17] In her submission, information such as findings of incompetency, the identities of relatives, income streams, birthdates and addresses are personal information, access to which can place those under a legal disability with “unusual exposure to the public that competent adults do not endure”.

[18] In reviewing the very well-presented affidavit evidence proffered on the motion/application, the information contained therein is not sufficiently sensitive to warrant a sealing order under the Sherman Estate test. Ms. Legate sets out the evidence with respect to liability, how she assessed the plaintiffs’ damages, the expert opinions on the issue and the considerations that she made when assessing the risks of proceeding. There are many substantial figures discussed in relation to the plaintiffs’ various heads of damages, but these do not constitute sensitive information, but merely assessments. S.E.C.’s injuries and resulting impairments are described, but not with such specificity as to cause an affront to his dignity. His business is described, but not with enough detail as to expose any commercial secrets. There is concern raised that clients of the plaintiff’s business may read about his injuries online, creating risk to the company. The reality is that the company has now operated without the plaintiff for several years. I do not accept that its clients are unaware of his status.

[19] Other than plaintiffs’ counsel’s assessment of the risks involved with proceeding to trial, all of this evidence would have been required to be presented at a publicly held trial.

[20] I have reviewed the income loss reports with a view to determining whether they contain such commercially sensitive information that would warrant some form of non-disclosure order. The reports contain sales and expense information for various years pre and post accident. The reports do not include the type of sensitive information, for example, that was part of the concern in Sierra Club. In Sierra Club, the documents in issue were described as “confidential documents containing thousands of pages of technical information”. The economic loss reports in this case fall far short of containing sensitive information of that nature. There are no proprietary, commercial or scientific interests that appear to be disclosed in the reports. Again, this evidence was intended to be presented at a public trial.

[21] Finally, I note that no sealing order or publication ban was sought or made in respect of the declaration of incapacity culminating in Leach J.’s order dated December 18, 2017. That information contained substantial financial information and information about the plaintiff’s impairment.

[22] In my view, the above information that is purportedly contained within the material is not so intimate and personal about the plaintiff, his lifestyle or his experiences as to strike at his “biographical core”. In this case, the affront to the plaintiff’s dignity is not apparent to me. There is not information that is “so sensitive that its dissemination could be an affront to dignity that the public would not tolerate, even in service of open proceedings” (Sherman Estate, at para. 34).

[23] In Carroll, supra, Corthorn J. refused to grant a sealing or redaction order. In doing so, she noted that “in the absence of other grounds, one or more of media attention, the avoidance of publicity, and unwanted solicitation or inquiry are not sufficient bases for a sealing or redaction order”.

[24] In Dickson v. Kellett, 2018 ONSC 4920, an earlier decision of Corthorn J., she noted that an assertion that the disclosure of supporting materials would infringe upon solicitor-client privilege is generally insufficient to support a sealing order, at para. 34.

[25] The request for a sealing order also must fail because the plaintiffs have not provided the evidentiary basis for establishing that there is a “serious risk” present in this case. The anecdoctal evidence of plaintiffs’ counsel is comparable to the assertions of the Estate Trustees in Sherman Estate, which were soundly rejected by the Supreme Court of Canada. As noted by Kasirer J. at para. 97:

[97] At the outset, I note that direct evidence is not necessarily required to establish a serious risk to an important interest. This Court has held that it is possible to identify objectively discernable harm on the basis of logical inferences (Bragg, at paras. 15-16). But this process of inferential reasoning is not a licence to engage in impermissible speculation. An inference must still be grounded in objective circumstantial facts that reasonably allow the finding to be made inferentially. Where the inference cannot reasonably be drawn from the circumstances, it amounts to speculation (R. v. Chanmany, 2016 ONCA 576, 352 O.A.C. 121, at para. 45).

[26] Having reached the conclusion that there is not a serious risk to an important public interest, I need not engage in steps two or three of the Sherman Estate analysis. The request for a sealing order is denied.

[27] Plaintiffs’ counsel had requested an opportunity to make further written or oral submissions should I not be prepared, at first instance, to grant the sealing order. I decline her invitation for such further submissions.

[28] Respectfully, I do not see this as a “close call”. This case is very much on all fours with Sherman Estate. Other than the very large settlement involved in this case, it is difficult to see how the grounds advanced by plaintiffs’ counsel, if they were deemed sufficient to trump the open court principle, would not apply in all cases where judicial approval is required for a settlement. In every single case where judicial approval is required, the plaintiff/applicant is either a minor or under disability. They are all vulnerable. Yet, sealing orders are not, and should not, be routinely made in approval motions.

[29] For an example of another recent case in which a request for a sealing order was rejected, I note Mother 1 v. Solus Trust Company Limited, 2021 BCCA 461, released on December 9, 2021. The risks to children in that case were identified as “bullying, stigmatization, physical violence, identity theft and fraud”. The denial of a sealing order in that case demonstrates that such orders are very much the exception, not the norm.

[30] I will, however, grant a temporary sealing order for 60 days from the date of this decision, to allow the plaintiffs to appeal my order dismissing their request for a sealing order, should they wish to do so. At the expiration of the 60-day period, this temporary sealing order shall automatically expire, unless renewed by subsequent court order of the court.

[31] The temporary sealing order shall apply to all materials filed on the plaintiffs’ motion/application.

Settlement Approval:

[32] The requirement of judicial approval for settlements on behalf of minors or persons under disability serves a protective function. Accordingly, a judge’s responsibility in reviewing a proposed settlement has three components. These include:

(1) Ensuring that the proposed settlement is reasonable and in the best interests of the person under disability;

(2) That the proposed plan for the management of the settlement funds is in the best interests of the person under disability; and

(3) That the proposed legal fees are reasonable.

[33] Rule 7.08 (4) of the Rules of Civil Procedure sets out the material required on a motion/application for approval of a settlement. The material provided in this case not only meets those requirements but is exemplary of the material that a court requires in such motions/applications.

Reasonableness of the Settlement:

[34] The action settled for the sum of $8,500,000 for all damages, interest, costs, disbursements and HST. The settlement also resolved the plaintiff’s entitlement to Statutory Accident Benefits (“SABs”). This offer was made by the plaintiffs and accepted by the defendants and the SABs insurer, a few days following a mediation.

[35] It should be noted that the defendants and SABs insurer were represented by capable and experienced counsel, as one would expect on a file of this magnitude.

[36] The material filed describes that the plaintiff was struck by a motor vehicle while crossing a city street near his home. The defendant motor vehicle was a full-sized SUV owned by the corporate defendants. As observed, the plaintiff sustained a severe and catastrophic brain injury.

[37] The plaintiff’s claims were for non-pecuniary general damages, past and future care costs not covered by his SABs, lost profitability of the plaintiff’s company and claims for loss of care, guidance and companionship under the Family Law Act, R.S.O. 1990, c. F. 3, as amended (“FLA”).

[38] The plaintiff is currently 67 years of age.

[39] The plaintiff’s injuries are well documented in the material. He was comatose following the accident and hospitalized for ten months. He continues to have physical, cognitive and psychological impairment. He is unemployable, cannot live alone, requires constant supervision and care and continues with treatment and therapy. S.E.C.’s non-pecuniary general damages claim would be significant.

[40] It is described that from a damages’ perspective, the most contentious issue was the potential income losses of the plaintiff’s company. There were competing economic loss reports. There was disagreement as to the age at which the plaintiff would have retired had the accident not occurred. The plaintiffs’ report generated income loss scenarios ranging from approximately $10,700,000 to $14,835,000. The defendants’ report was critical of the assumptions made by the plaintiffs’ expert. The defendants’ report provided a countervailing range of $435,000 to $850,000.

[41] There was also a considerable disagreement with respect to the plaintiff’s future care needs. There was an issue with respect to the plaintiff’s ordinary life expectancy and his rehabilitative needs. Furthermore, the plaintiff was reluctant to engage with some of his treatment.

[42] Both sides had very different views with respect to liability. The accident occurred shortly before 8 am. The defendant motorist was making a left-hand turn at the time that the plaintiff was struck. There were no witnesses to the accident and given the nature of the plaintiff’s injuries, his own evidence would not be particularly reliable. Of course, the defendant motorist had the burden of disproving his negligence given that the accident involved a pedestrian under the Highway Traffic Act, R.S.O. c. H. 8, as amended (“HTA”). He did plead guilty to a HTA charge. Nonetheless, this does not foreclose a finding of contributory negligence.

[43] Both sides had opposing accident reconstruction experts on liability. The defendants’ expert placed the blame upon the plaintiff. The plaintiffs’ expert, unsurprisingly, placed the blame upon the defendant motorist. The police report, necessarily completed based upon how the scene presented itself after the accident, was not particularly valuable in determining liability.

[44] The analysis conducted by plaintiffs’ counsel in arriving at the conclusion that the above settlement offer was appropriate was thorough and well-reasoned, both with respect to liability and damages. At trial, with judge or with jury, any outcome is unpredictable and fraught with risks. In this case there were several variables with respect to damages and liability. Plaintiffs’ counsel exercised sound judgment and, in my view, this settlement was a good one from the perspective of the plaintiff under disability. I am also mindful of the current difficulty in securing a trial date. Overall, I conclude that the settlement was clearly in S.E.C.’s best interests.

[45] The SABs claim was included as part of this global settlement. The contribution by the SABs insurer was not known to the plaintiffs until they received the Settlement Disclosure Notice. The SABs insurer contributed the sum of $700,000, all-inclusive.

[46] The plaintiff was not receiving income replacement benefits, as his business did not show a loss following the accident. He received from the SABs insurer $175,000 in medical and rehabilitation benefits, and $38,000 in attendant care benefits prior to the settlement. As the plaintiff was catastrophically impaired, the upper limit of medical/rehabilitation and attendant care benefits was $1 million combined. The sum of $700,000 reflects a reasonable discount to be applied in resolving the outstanding accident benefits from the plaintiff’s perspective.

[47] Accordingly, I approve the quantum of the settlement, both with respect to the tort claim and the accident benefits claim. This is a very large sum of money that provides substantial protection for the plaintiff going forward, whatever his future care needs prove to be. It also is likely to provide a substantial legacy for his children.

Proposed Distribution of the Settlement Funds:

[48] There were three FLA claimants, who amongst them will recover the total sum of $210,480.71, although not equally shared. They are all adults and approval of those settlements is not required, unless the court feels that a portion of those sums should be paid to the person under disability because his settlement is inadequate. I am content that those funds be so distributed among the FLA claimants. The assessments of their claims are appropriate.

[49] The defendants are described as having contributed the sum of $900,345.01, inclusive of HST, towards the legal fees of the plaintiffs, as well as $132,000 towards disbursements. It is not exactly clear that this is the case. Nowhere are fees broken out in the Minutes of Settlement. The defendants simply accepted an all-inclusive offer made by the plaintiffs. In her affidavit, counsel for the plaintiffs describes how this sum might have been arrived at, based on a formula often agreed to by plaintiffs and insurers.

[50] This leaves the sum of $7,257,174.27 payable to the injured plaintiff prior to paying any further legal fees on top of the defendants’ contribution to fees. If the amount proposed by plaintiffs’ counsel is approved, S.E.C.’s “share” would be reduced to $6,081,990.74.

[51] It is noted that the plaintiff receives Canada Pension Plan Old Age Security benefits on a monthly basis.

[52] Pursuant to the order of Justice I. Leach, dated December 18, 2017, the plaintiff’s son is the guardian of the property. There is a guardianship and management plan in place as a result of the order. A bond was ordered in the amount of $1,150,000.00 to be posted as security.

[53] It is proposed that the portion of the settlement funds allocated to the plaintiff are to be paid to his guardian of property, his son. A structure broker has been contacted and it is proposed to pay the sum of $5,000,000 into a structure, generating monthly payments in excess of $25,000, payable on a tax-free basis. The precise structure plan has not been provided with the material.

[54] This arrangement will allow the plaintiff to continue to reside in his own home. A nanny suite is proposed to be constructed. From the court’s perspective, the structure also ensures that the plaintiff’s settlement is not misappropriated or improvidently depleted. The son/guardian has included with his affidavit a detailed plan showing how he intends to spend the funds for his father’s benefit as they are paid from the annuity.

[55] I am content with the proposed plan, subject to my comments below regarding legal fees.

Approval of Legal Fees:

[56] Pursuant to section 5 of Ontario Regulation 195/04 to 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. That section requires a solicitor for a person under disability represented by a litigation guardian to either apply to a judge for approval of the agreement before the agreement is finalized or include the agreement as part of the application for approval of the settlement.

[57] Plaintiffs’ counsel had the plaintiff’s adult children sign a contingency fee agreement dated January 25, 2018. That agreement is produced. It is not clear to me that the contingency fee agreement covers the accident benefits file.

[58] A contingency fee agreement will only be approved on behalf of a person under disability if the court is satisfied that the agreement is fair and reasonable between the parties pursuant to s. 24 of the Solicitors Act. The onus is on the solicitor to prove that the agreement was fair at the time it was made and the fees were reasonable under the circumstances assessed as of the date of the settlement (see: Raphael v. Lam, 2002 45078 (ONCA)).

[59] As described in Henricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496, this is a two-step process. The court must first determine whether the agreement was fair as of the date it was made. The court must then determine the reasonableness of the agreement as of the date of the approval hearing.

[60] 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” (see: Jorisch v. Toronto Catholic District School Board, 2017 ONSC 784, affirmed, 2017 ONCA 845).

[61] Furthermore, it is appropriate for the court to consider that legal fees in respect of settlements of accident benefits claims must be examined differently than those in respect of settlements of tort claims (see: St. Jean v. Armstrong, 2017 ONCA 145).

[62] In assessing the issue of fairness, the court is 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 or she executed (Raphael, supra, at para. 37).

[63] In assessing the reasonableness of the proposed fees, the factors are well established. They include the time expended by the solicitor, the legal complexity of the matter at issue, the results achieved and the risk assumed by the solicitor. In assessing the risk to the solicitor, the court should consider the risk of non-payment where there is a real risk of an adverse finding on liability in the client’s case (see: Raphael, supra, at para. 50).

[64] In the within case, the circumstances of how the contingency fee agreement was reached is adequately described in the motion/application material. It is clear that the plaintiff’s adult children are intelligent, high achieving individuals. The plaintiff’s son/guardian now runs a multi-million-dollar international company. He negotiates contracts with large mining companies. As counsel points out, there were other lawyers involved with handling the guardianship application.

[65] The contingency fee agreement called for a flat fee of 30%. Plaintiffs’ counsel describes that this was negotiated with the plaintiff’s son/guardian. Plaintiffs’ counsel indicates that her usual contingency fee agreement would be higher than 30%.

[66] Contingency fee agreements are about risk and access to justice. They can and should be used to allow a litigant to prosecute a risky claim by incentivizing the lawyer to accept the case by a substantial reward in the event of a successful outcome. However, contingency fee agreements are often resorted to by counsel despite the absence of any real appreciable risk. Prospective clients, even sophisticated ones, are not in the same position to understand whether or not their case is truly risky from a litigation perspective. Thus, personal injury claimants, in my view, often enter into contingency fee agreements where the percentage agreed upon does not accurately reflect the amount of risk to the law firm.

[67] I view this as such a case. The defendant motorist had a reverse onus and pleaded guilty to a HTA charge. While this does not preclude a finding of contributory negligence, some liability was assured. The defendants had policy limits of $10 million. The plaintiff had a catastrophic brain injury and was clearly a very high-income earner. Quite simply, there would be no shortage of lawyers within the province eager to take such a case on. There was minimal risk of non-payment of legal fees and disbursements.

[68] Notwithstanding those comments, I am satisfied that the manner in which the contingency fee agreement was obtained was fair at the time that it was entered. The concerns that I have articulated are best addressed when dealing with the reasonableness of the proposed fees. I further acknowledge that there was considerable uncertainty with respect to liability and the survival of the plaintiff at the time the agreement was reached.

[69] I also note the son/guardian’s description of being “delighted” with the amount of legal fees that are sought. Court approval involves an assessment of what is fair and reasonable to the person under disability and the expressed view of the litigation guardian of the proposed fee is but a minor consideration. Despite the son/guardian’s apparent sophistication, his view of what a reasonable legal fee should be is, respectfully, uninformed.

[70] Having concluded that the contingency fee agreement was fairly negotiated, I must now turn to whether the amount of the fees sought are reasonable.

[71] Plaintiffs’ counsel seeks fees in the amount of 25% of the total recovery, which she describes as having been reduced to encourage settlement. This amounts to a total fee of $1,814,293.57. As noted, the defendants are stated to have contributed the sum of $900,000 inclusive of HST towards legal fees. This is the equivalent of $796,765 plus HST of approximately $103,580. I reiterate that it is not clear to me whether the defendants actually allocated that portion of the settlement to legal fees or if plaintiffs’ counsel has estimated that sum. The correspondence indicates simply that the defendants accepted the all-inclusive offer made by the plaintiffs. The Minutes of Settlement do not specify the legal fees. Within counsel’s affidavit, she sets out a formula often used by insurers to calculate the fees that they are willing to pay. I am familiar with that formula, although it would not typically apply to accident benefits settlements. I also doubt it is routinely paid on such high settlements.

[72] In any event, my task is to determine what is a reasonable sum for the plaintiffs’ lawyers to charge in relation to an all-inclusive settlement of $8.5 million. The amount contributed by the defendants is not determinative.

[73] I cannot agree that the proposed fee is reasonable, even in the face of such a large and favourable outcome to the plaintiffs. One must consider that money paid towards legal fees does not go to the benefit of the family, who have actually sustained the loss. According to the plaintiffs’ experts, the plaintiffs compromised their claims and may have suffered damages exceeding this recovery. A balancing is required. If the fees were to be allowed, it would constitute quadruple the amount of fees based on the time claimed to have been expended by counsel. In the circumstances, this fee is, quite simply, too much.

[74] I shall now review the applicable factors, including:

• Time expended

• Complexity of the matter

• Outcome achieved

• Access to justice

• Risk to the law firm.

[75] The law firm for the plaintiffs expended considerable effort and money in proving the plaintiffs’ claims, both in terms of damages and liability. The firm’s disbursements totalled $132,000. The firm claims to have approximately $410,000 in time spent on the file.

[76] Plaintiffs’ counsel sets out her experience and the accolades that she has received over her career. She has over 40 years experience and her reputation is well known to this court, and hard-earned. Nonetheless, her hourly rate of $900 is considerable for this region. The use of a high hourly rate results in correspondingly high notional legal fees.

[77] I have reviewed the dockets provided with the material. It is described that no time was charged for managing the accident benefits file and that some time was excluded as it was conducted prior to the retainer being established. To my eye, at least some of the docketed time does clearly and specifically relate to accident benefits matters, but that does not impact my decision. This was a file the nature of which justifies the considerable time expended. The court’s role is not to examine the dockets with a fine-tooth comb.

[78] I accept that this file involved greater complexity than a typical motor vehicle accident case and was handled by plaintiffs’ counsel with considerable expertise. The case involved many contentious issues, including liability, income loss and future care. The engineering reports with respect to liability demonstrate the complexity in reconstructing an accident with no witnesses and a plaintiff with limited or no memory of what transpired. The business valuation was complicated. It also sounds like the plaintiff, himself, presented with some unique challenges. The accident benefits file, however, was not likely complicated to administer, given that the plaintiff was quite clearly catastrophically impaired from the outset.

[79] Plaintiffs’ counsel also demonstrated considerable responsibility and the importance of the issues to the plaintiff and his family is obvious.

[80] I have previously described this result as a good one from the plaintiffs’ perspective. There was a path to a larger award following a trial, largely due to the efforts of plaintiffs’ counsel, but proceeding to trial was not without risk. Certainly, a worse outcome was also a possibility. The file was also handled in a timely manner, especially in light of the delays caused by the current pandemic. In my view, the results achieved merit a very large fee. Ultimately, the lawyers obtained a favourable outcome for their clients. Plaintiffs’ counsel describes the result as “exceptional”. That is perhaps too strong a description, in my view, given the figures noted in the plaintiffs’ economic loss report. I suspect the defendants can live with this settlement as well and do not feel taken advantage of, but this is clearly a good outcome for the plaintiffs.

[81] Plaintiffs’ counsel attempts to describe this claim as being risky from a solicitor’s perspective. That assertion, respectfully, is betrayed by the facts of this case. Given the severity and nature of the plaintiff’s injuries, the fact that there is a reverse onus on a motorist who pleaded guilty to a charge under the Highway Traffic Act of “lane change not in safety” and the fact that under the no-fault SABs the plaintiff was clearly catastrophically impaired, this was not a claim in which a negligible recovery, or adverse outcome, was ever likely to occur. The defendants had $10 million in insurance limits available to them to pay a large settlement, or judgment. Accordingly, there was minimal risk that the substantial efforts in terms of work and financial investment would prove entirely fruitless. Perhaps there was a risk that the result would be less than what was ultimately recovered, but I cannot conclude that this was a risky file from the law firm’s perspective. They were always likely to be paid, even had the plaintiff died, as suggested was a possibility. They also had not yet expended much time or money when his life hung in the balance.

[82] Plaintiffs’ counsel raises the risk of going to trial. That does not assist, in my view. Had they gone to trial and been awarded a comparable sum, then the risk would have materialized and such large fees may have been justified. However, given the amount that the defendants ultimately paid to resolve this case, the risks that a trial might have presented did not emerge.

[83] Any risk is fairly accounted for by the substantial sum I am ultimately allowing for legal fees, which far exceeds the amount of actual time expended on the file.

[84] I reiterate that this is not a case in which a contingency fee agreement is necessary to give the plaintiffs access to justice. The plaintiff’s injuries are such that I have no doubt that there would have been many competent personal injury lawyers willing to take on this case had this law firm been unwilling.

[85] Having determined that the proposed fees are not reasonable, I am permitted to fix the fees in an amount that is just and reasonable in the circumstances (see Jorisch, supra, at para. 59). I have given very considerable thought on what a reasonable fee in this matter should be, including reviewing several other cases.

[86] Counsel for the plaintiffs provided me with the decision of Belobaba J., Cannon v. Funds for Canada Foundation, 2013 ONSC 7686, in which he approved a contingency fee agreement in the context of a class action. I consider there to be a substantial distinction between approving fees in a class action and on behalf of a party under disability. Even in Cannon, Belobaba J. notes that the presumption of the validity of a contingency fee agreement would be rebutted where the legal fees award is so large as to be unseemly or otherwise unreasonable.

[87] In Cogan v. M.F., 2007 50281 (ON SC), the court upheld a contingency fee agreement of 33% in an infant settlement of approximately $12 million in a case involving cerebral palsy caused by medical negligence. The risk in that case was substantially greater than in the present case. Smith J., noted that 98% of cases of that nature fail entirely. The unpaid solicitors’ time was in excess of $1 million. In contrast, in the within case, I have found that the risk of recovering very little was negligible.

[88] I am not prepared to approach this exercise on the basis of a percentage. The role of the court is to determine reasonable fees, not a reasonable percentage. The settlement figure is so high that any application of a “traditional” percentage results in fees that significantly dwarf the claimed fees actually incurred on the matter. Therefore, reviewing the percentages awarded in other personal injury settlement approvals is not helpful, where the awards were in the range of $1 to $2 million.

[89] I note the case of Batalla v. St. Michael’s Hospital, 2016 ONSC 1513, a decision of Wilson J.. That case involved a much riskier compromised baby case. The settlement was for an all-inclusive sum of $6,625,000, subject to court approval. In that case, the defendant contributed approximately $500,000 plus HST towards fees (this amount was asserted to be $720,000 by counsel but Wilson J. disagreed). In that case, plaintiff’s counsel, who had far less docketed time than in the present case, was similarly suggesting that he reduce his fees to 25% from the 30% set out in the contingency fee agreement. Wilson J. ultimately fixed fees of $1,000,000. I recognize that there was also a concern about the quantum of the settlement not being sufficient to cover the infant’s needs for the remainder of his life expectancy, an issue that does not exist for S.E.C.

[90] In Choi v. Choi, 2010 ONSC 4800, the 9-year-old plaintiff suffered catastrophic injuries as a result of a motor vehicle accident. The settlement totalled $14,350,000. The law firm sought legal fees of $2,600,000 and disbursements, inclusive of GST. A total of $2 million was awarded, inclusive of GST by Fuerst J. This would amount to a fee of approximately of $1,646,000.

[91] In E.B. v. Basi, 2012 BCSC 1169, an infant claim was settled for $13 million. The child had been assaulted while in foster care and sustained severe traumatic brain injuries. The solicitors sought legal fees of $3,045,205 in accordance with a contingency fee agreement. The law firm had spent over $500,000 in day to day expenses for the benefit of the plaintiff. The court concluded that a reasonable fee was $2.4 million.

[92] In Renaerts v. Korn, 1998 4979, a medical malpractice case again involving cerebral palsy in which the court noted that the case settled on the weekend prior to trial and there was a “very high” risk that there would be no recovery, counsel was awarded fees of $1.8 million on a settlement of $8.5 million.

[93] Taking all of the above into consideration, I conclude that fair and reasonable legal fees are $1,150,000 plus HST of $149,500.

[94] In my view, this considers the favourable outcome, the amount of time expended by counsel, the complexity of the matters, and the risks inherent in this case. It reflects that a significant portion of the settlement is in respect of accident benefits, which attract lesser fees than a tort settlement. It rewards the lawyers fairly for their considerable efforts, including a substantial premium, while recognizing that the plaintiff and his family are the ones who have sustained great loss. It is a higher proportion than was awarded in Choi, which I view to be the most comparable case in terms of complexity and risk.

[95] I have also reviewed the disbursements listed at Exhibit 32 of the material. On my review (x2), they add up to $119,595.95. I assume that the difference between this figure and the $132,000 presented by counsel represents taxes on some of the disbursements. I am prepared to approve the figure of $132,000.

[96] Thus, the total legal fees, inclusive of HST and disbursements, charged to S.E.C. is fixed at $1,431,500.00. This does not include the fees charged to the FLA claimants, whom are all adults. Plaintiffs’ counsel is entitled to charge those claimants as per their agreement in addition to the amount fixed for S.E.C..

Revisiting the Management Plan:

[97] In light of the reduction that I have made from the proposed fees, I calculate that the plaintiff now has a further $750,651.73 available to him. I believe that this brings his total recovery to $6,832,642.47, net of legal fees.

[98] As noted above, the plan was to structure the sum of $5 million. No structure quotes were submitted with this motion/application. I presume that counsel did not want to assume approval and that rates fluctuate. I am required to review the structure quotes as part of the approval process. I would like to see the difference between structuring $5 million and $5.5 million and direct plaintiffs’ counsel to provide me with quotes in the preferred structure for both amounts.

[99] I would also entertain very brief written submissions as to which of the two structures is preferred. I am mindful of the bond that is in place such that I would consider freeing up additional cash on hand for the guardian to use for the benefit of his father.

Disposition:

[100] Accordingly, the settlement of S.E.C.’s lawsuit and accident benefits file is approved.

[101] Plaintiffs’ counsel’s fees are fixed in the amount of $1,431,500.00, inclusive of all fees, disbursements and taxes with respect to S.E.C.. The FLA claimants may be charged on top of that figure.

[102] The plaintiffs are to submit proposed structure quotes for $5 million and $5.5 million (or such other amount as they may advise) along with written submissions no longer than two pages in length, double-spaced, setting out their preference. This is not an invitation to revisit any of the other issues already decided.

[103] The request for a sealing order is denied. However, the motion/application material shall be temporarily sealed for 60 days from the date of this decision to permit the plaintiffs to appeal should they wish to do so. Upon the expiration of 60 days the temporary sealing order shall automatically be lifted unless renewed by further order.

"Justice S. Nicholson"

Justice Spencer Nicholson

Date: December 20, 2021