Court File and Parties
Court File No.: CV-21-00658500 Date: 2021-12-22 Superior Court of Justice – Ontario
Re: Aldhen Karl Garcia by his litigation guardian Rodalyn Pinera Garcia, Plaintiff And: Alois G. Ledinek, Defendant
Before: Stinson J.
Counsel: Yalda Aslamzada, for the Litigation Guardian for the Plaintiff Katherine Antonacopoulos, for the Office of the Children’s Lawyer
Heard at Toronto: by written submissions
Reasons for Decision
[1] These reasons concern a motion under rule 7.08 of the Rules of Civil Procedure for judicial approval of a proposed settlement of a tort action. The claim arose from a collision that occurred on September 4, 2019, between a motor vehicle driven by the defendant and a bicycle ridden by the minor plaintiff, Aldhen Garcia. Aldhen was born on November 27, 2004, and thus he was 14 years of age on September 4, 2019.
[2] Aldhen suffered significant injuries in the collision, requiring emergency treatment and ongoing medical care. On his behalf, his mother Rodalyn Garcia retained Yalda Aslamzada of Affinity Law Professional Corporation as legal counsel, to represent his interests in relation to the accident, both for purposes of a tort claim against the driver as well as a claim for Statutory Accident Benefits.
[3] In relation to the tort claim, a Statement of Claim was issued on March 10, 2021. It included a claim for general damages and for Aldhen’s loss of income and loss of earning capacity, as well as healthcare expenses. His litigation guardian is his mother. By July of 2021, the parties reached a settlement of the tort action for the total sum of $195,000. In mid-August 2021, Ms. Aslamzada filed a motion in writing for Court approval of the proposed settlement.
[4] In turn, on August 27, 2021, the Rule 7 approval motion was referred to me for review. I concluded that the materials submitted in support of the request for approval were inadequate and I declined to approve the settlement. I conveyed my concerns to Ms. Aslamzada by email message on September 13, 2021. Specifically, I listed the following enumerated deficiencies:
There is no description whatsoever of the injuries suffered by the minor plaintiff. Given the quantum of the proposed settlement ($195,000) this was not a minor accident and I assume the injuries were significant. Yet apart from your opinion as to the settlement being a fair and reasonable one, there is no information that would enable the court to assess it. The entire point of the Rule 7 approval process is to enable the court to exercise its parens patriae jurisdiction over persons who are under a legal disability. That can only be done if there is a body of evidence that can be reviewed and evaluated properly.
Rule 7.08(4)(a) requires an affidavit from the litigation guardian “setting out the material facts and the reasons supporting the proposed settlement and the position of the litigation guardian in respect of the settlement.” The affidavit of litigation guardian filed on this motion says virtually nothing about the material facts and the reasons supporting the proposed settlement. Why not? This omission must be remedied by way of a proper and compliant affidavit from the litigation guardian.
There is no medical evidence at all regarding the minor plaintiff’s pre- and post-accident health and most importantly, his present and future condition and circumstances. There are no medical records or reports that would enable the court to assess the extent of his injuries and their long-term effects, and thus the adequacy of the settlement. Have his future prospects been adversely affected? Have his physical or mental abilities been impaired? Has he experienced physical or mental pain and suffering? Where is the input of the health professionals? Note that merely attaching bulky or unreadable or illegible medical records to an affidavit is equally unacceptable. The deponent (ideally a health professional) must carefully review, analyze and summarize the information in a fashion that will permit the court to understand the nature of the injuries, the course of treatment, and their long-term impact.
There is no evidence regarding the minor plaintiff’s schooling and the impact of the accident on his past or ongoing education, grades and performance.
What are the minor plaintiff’s future care needs and how will they be covered by the tort settlement? Although mention is made of an ongoing accident benefits claim, no further information is provided. What is the current status of the AB claim? Has/will the minor plaintiff been declared catastrophically impaired? What amounts have been/may be recovered on the AB side to address the minor plaintiff’s future medical, rehabilitation and other needs? How has this been factored into the adequacy of the tort settlement?
Has there been or is there likely to be a claim on account of loss of income or loss of competitive advantage? Did the minor plaintiff have a part-time job? Has he made or might he have an AB claim for IRBs? Are his future employment prospects affected by his injuries?
Is there any issue as to liability or is there a basis upon which the defendant might dispute responsibility, and thus submit that a discount is appropriate? Counsel’s bare opinion as to negligence is not enough information to enable the court to perform its function.
How was the $195,000 settlement number arrived at? What negotiations took place and when, and what offers were exchanged? How does the proposed settlement compare to decided cases found in the law reports and case digests for similar personal injuries?
Where is the fee agreement? Why should it be approved by the court?
What fees and disbursements will be paid out of the settlement funds? What will the plaintiff’s net recovery be? Why should the fees be approved? How much time and effort was expended by counsel to warrant approval of the account? What (if any) risk was assumed by counsel in undertaking the case? Part of the function of the court on a Rule 7 motion is to assess the propriety of the lawyer’s account and to determine whether it is warranted, and this information is required to enable the court to do so.
The minor plaintiff is over the age of 16 years, yet there is no consent from him as required by Rule 7.08(4)(c). Why not?
Rule 7.09 requires settlement funds for a claim of a person under legal disability to be paid into court unless a judge orders otherwise. Is there a valid reason to depart from that requirement?
[5] Despite my specific concerns and requests for answers to detailed questions, the next round of materials submitted by plaintiff's counsel failed to answer many of my concerns. Notwithstanding my clearly enumerated list of issues and the specific questions posed, no attempt was made to address my questions in an orderly or responsive fashion. Some points were ignored entirely; others were answered only obliquely, if at all. The failure of counsel to review and respond clearly to specific questions is not only poor advocacy, but it is discourteous and disrespectful of the Court’s time spent trying to discharge its function in reviewing the adequacy of the settlement.
[6] Mindful of the need to determine whether the settlement should be approved, and in the face of the inadequate response from plaintiff’s counsel, I decided to invoke rule 7.08(5)(b) of the Rules of Civil Procedure. That provision empowers a judge to “direct the Children’s Lawyer … to make a written report stating any objections he or she has to the proposed settlement and making recommendations, with reasons, in connection with the proposed settlement.” Although I have reviewed and approved dozens of Rule 7 settlement applications over the past two decades, this is the first time I have needed to invoke that provision.
[7] My request to the Office of the Children’s Lawyer was sent on October 6, 2021. That office then undertook a thorough review of the matter and engaged with plaintiff's counsel on a variety of points, requesting and reviewing considerable additional material and evidence. On December 9, 2021, the Children’s Lawyer submitted a 23-page report containing a detailed review of the claim and the proposed settlement.
[8] The Report of the OCL addresses the 12 topics identified in my initial correspondence with plaintiff’s counsel and raises several additional issues. It concludes with five specific recommendations as follows:
Better evidence is required, preferably directly from the litigation guardian, setting out Aldhen’s current circumstances, including whether Aldhen’s post-secondary education, employment prospects and plans have been impacted by the injuries he sustained in the bicycle-motor vehicle accident, and whether he wishes to have non-OHIP funded surgery on the scar. Depending on the evidence the litigation guardian provides and, whether there are any concerns about a loss of competitive advantage, it may not be necessary to obtain an expert report quantifying pecuniary damages.
The reasonableness of the contingency fee sought should be fully assessed once the evidence set out above is provided. However, a contingency fee of 25% is at the high range for this type of claim and there was a lack of fairness surrounding the signing of the CFA, as it did not comply with the requirements of the Solicitors Act and Contingency Fee Agreements, O. Reg. 195/04, as they were in effect on October 2, 2019. I would accordingly recommend that the 25% fee be calculated on the settlement amount, excluding the amount identified by counsel for the Plaintiff and Defendant that is in respect of the cost contribution, plus HST, and disbursements.
Aldhen’s affidavit states that he understands he is receiving a settlement sum of $195,000. As that is the gross amount of the settlement, it is not clear that he has been advised of the net amount it is proposed he receive and a revised consent should be obtained.
I recommend that the settlement funds not be paid to the litigation guardian in trust. This is not an option at law. I recommend that the settlement funds be paid into Court or, if Ms. Garcia brings a guardianship Application, on notice to the Children’s Lawyer, she could seek an Order appointing her as the guardian of Aldhen’s settlement proceeds. Given the guardianship would last less than one year, Ms. Garcia could instead use the alternate process of my Office’s Minors’ Funds Program for payments out of Court for Aldhen’s treatment needs, if they arise before he reaches the age of 18 years.
A Judgment paying the funds into Court should provide Aldhen’s contact information required under rule 59.03(5) of the Rules of Civil Procedure.
[9] Given the contents of the Report, including the foregoing five specific recommendations, I am still not prepared to approve the proposed settlement. Before I am willing to consider doing so, I will require all outstanding points to be addressed in a suitable fashion. So that there is no ambiguity regarding what is needed from the plaintiff and from plaintiff’s litigation counsel, I will return to the original list of 12 concerns set out in my initial email to counsel dated September 13, 2021, as discussed by the Report of the OCL. To be clear, I expect and require counsel to respond to each of the following topics in detail and by number:
Description of the injuries suffered by the minor plaintiff. To what extent does the scarring on Aldhen’s face remain noticeable or has it become less prominent? Is there a current photograph? Does the scarring currently bother him? Is remedial surgery required or contemplated and, if so, how much will it cost and who will bear the expense? To what extent does Aldhen continue to suffer residual back and foot pain and headaches and what are the future expectations regarding these complaints? This information must come in the form of a current affidavit from the Litigation Guardian [see item 2, below].
Affidavit from the Litigation Guardian. As noted in the Report, most of the evidence concerning Aldhen’s current condition comes from the lawyer, not the Litigation Guardian. This is uncceptable. Unless there is some proper explanation for not doing so, “the material facts and the reasons supporting the proposed settlement” should be contained in an affidavit from the litigation guardian, not in a double-hearsay affidavit from a lawyer. One specific point mentioned in the Report is that “it does not appear that there is going to be a significant impact on his education, career choice or job prospects after he graduates from high school. However, the lawyer goes on to note that a loss of competitive advantage claim was considered and included in the settlement amount. Details as to the quantification are not set out, nor are particulars provided about the nature of the loss or about Aldhen’s specific post-secondary education plan or job prospects and how they have or have not been altered due to the motor vehicle accident.” This seeming contradiction must be addressed by the Litigation Guardian and additional explanatory information provided.
Medical evidence. Most of the relevant medical records have been provided now. The most recent affidavit from the lawyer states that “Some funds have been apportioned to cosmetics (or plastic surgery, if needed) for facial scarring, as well as for physiotherapy, chiropractic care and psychology care,” However, no evidence quantifies the amount required. This information should be provided in the further affidavit of the Litigation Guardian.
Evidence regarding the impact of the accident on the minor plaintiff’s ongoing education, grades and performance. This topic has been addressed satisfactorily and no additional information is required.
The minor plaintiff’s future care needs and how will they be covered by the tort settlement. Given the denial of the SAB claim (so far) how much money from the tort settlement will be required to fund Aldhen’s physiotherapy, and future psychological care, future chiropractic care and cosmetic care (or plastic surgery, if needed) for facial scarring?
Claim on account of loss of income or loss of competitive advantage. The lawyer’s affidavit of November 19, 2021, states that, from Aldhen’s medical records and school records, it does not appear that there is going to be a significant impact on his education, career choice or job prospects. Yet the same affidavit states that such a claim was considered and included in the settlement amount. As stated above (in item 2) this apparent contradiction must be explained.
Issue as to liability. No additional information is required.
Adequacy of the proposed settlement. As the Report notes, Minutes of Settlement are required pursuant to rule 7.08(4)(d) of the Rules of Civil Procedure. They must be prepared and should include a breakdown of the allocation of the proposed settlement among the various categories, including general damages, cost of future care, costs, taxes, and disbursements.
The fee agreement. As the Report further notes, the Fee Agreement does not comply with the requirements under the Solicitors Act, R.S.O. 1990, c. S. 15, s. 28.1(8) that applied to such agreements when it was signed, since it calculated the fee payable by including costs obtained as part of a settlement. Given this prohibition, how does plaintiff’s counsel propose to calculate the fees properly recoverable under the Fee Agreement?
Why should the fees and the fee agreement be approved? In addition to item 9, further explanation regarding the propriety of the fee payable out of the tort settlement is required. The Report states as follows: “In her affidavit of November 19, 2021, the litigation guardian’s lawyer advises that the contingency fee applies to both the Tort and Accident benefits claim (although the retainer provides that it is for work on the “Tort or Accident Benefit claim”). The dockets … show work done on both the tort and Accident benefits files totaling 158 lawyer hours, with the lawyers charging $350 per hour. The dockets provided show the time billed totaled $59,795.49, plus HST, for a total of $67,568.90, plus disbursements of $1,022.87, plus HST of $44.70. However, as this settlement is only in respect of the tort claim, the work in respect of the Accident Benefits claim should not be included here and I note that the work on the Accident Benefits claim is a significant part of the docketed time.” Considering those comments, what is the correct calculation of the docketed time and fees incurred in relation to the tort claim alone? Does plaintiff's counsel have any other submissions in support of the requested fees, having regard to the other comments regarding fees set out in the Report?
Consent from the minor plaintiff. The signed consent filed recites that the minor plaintiff is to receive $195,000. No mention is made of the Fee Agreement or any other deductions from the gross settlement. A revised consent must be filed, setting out the prospective deductions and their amounts, so that it is clear he is aware of the net amount he may expect to receive.
Is there any valid reason to depart from the requirements of rule 7.09? To date, none has been identified. If funds are required for the needs of the minor plaintiff before he attains his majority, an application for the release of the required funds may be submitted to the Children’s Lawyer. The formal judgment paying the funds into Court should provide Aldhen’s contact information as required under rule 59.03(5) of the Rules of Civil Procedure.
[10] In addition to the foregoing topics, counsel for the plaintiff should review the five recommendations made in the Report and ensure that they are addressed in the supplementary materials she will be filing. Given the intervening holiday period, I will allow plaintiff’s counsel until January 31, 2022, to do so. I am hopeful that by responding fully to all the foregoing matters, plaintiff’s counsel will provide me with such additional information and evidence that will enable me to determine whether to approve the proposed settlement.
[11] I further direct the Office of the Children’s Lawyer to review the additional material from plaintiff’s counsel and to prepare a supplementary report for my consideration.
Stinson J.
Date: December 22, 2021