Court File and Parties

COURT FILE NO.: CV-14-506797 DATE: 2022-06-13 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SABRINA RAMCHARRAN by her Litigation Guardian, JAGDAI RAMCHARRAN Plaintiff

AND:

DORIS FUCHS and THE PERSONAL INSURANCE COMPANY Defendants

BEFORE: J. WILSON J.

COUNSEL: George A. Bougadis, for the Plaintiff

HEARD: IN WRITING

ENDORSEMENT

The Application

[1] This is an application pursuant to section 7.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to approve a combined tort and accident benefits settlement on behalf of the Plaintiff, who is not capable of representing herself in this proceeding. Her mother Jagdai Ramcharran has been named as her litigation guardian.

[2] The combined proposed settlement inclusive of costs, disbursements and HST for both the tort and the accident benefit claim is $1,525,000.00. There was also a payment previously made for retroactive income replacement benefits in the amount of $77,209.68.

[3] Counsel requests payment of fees and disbursements in the amount of $499,635.73 based upon the contingency agreement leaving the Plaintiff with a net recovery of $975,364.27. She has already received the payment for the income replacement benefits noted above.

[4] This is yet another case where the lengthy materials, close to 700 pages, were deficient and were initially filed in CaseLines without being hyperlinked.

[5] Counsel did not provide the dockets. After I requested the dockets, counsel suggested that they could not be filed on CaseLines as they were privileged. Alternatively, if they were to be filed, counsel asked that the file should be sealed from the public pursuant to s. 137(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43. I did not accept these suggestions by counsel and ordered that the dockets be filed in the usual course.

[6] Finally, the dockets were produced along with a hyperlinked file.

[7] Production of dockets for both the accident benefits and tort files is part of the required production in all cases for approval of a settlement of a person under disability. If there is anything prejudicial in the docket entries, they can be redacted with an unredacted copy produced to the judge reviewing the file.

Requirements for Approval of a Settlement for a Minor or a Person Under Disability

[8] In my experience it is the norm, not the exception, that the materials filed in these applications are deficient causing delays and requiring the judge to become a pen pal with Plaintiff’s counsel to obtain the required documentation.

[9] The materials filed in these motions are often a dumping ground of largely irrelevant materials that are not helpful in addressing the reasonableness of the settlement, and the proposed fees sought by counsel.

[10] In this case all the pleadings were attached as exhibits, originally not hyperlinked. In many cases counsel attach voluminous hospital records. Generally the masses of hospital records are not required. Obviously, a critical finding with respect to the injury is appropriate to include in the materials.

[11] Also, I note that generally it is not necessary to attach numerous entire medical reports which include pages of history. It is the findings and conclusions in the medical reports that are important for the judge to review.

[12] To streamline matters I have developed a standard letter that I now send to counsel as a checklist of the required materials before I review the file to assess the reasonableness of the proposed settlement and proposed legal fees. I attach that letter as follows:

SUPERIOR COURT OF JUSTICE

Dear Counsel,

Your file has been assigned to Justice Janet Wilson to review the status of a proposed settlement for the infant / person under disability pursuant to rule 7.08 of the Rules of Civil Procedure.

Before reviewing your file, Her Honour requires you to ensure that all the required material is uploaded to CaseLines with the Index and Affidavit hyperlinked within the next 15 days.

This letter has been prepared to avoid the necessity of delays and various back and forth communication if the materials filed are deficient. Ensuring that the materials include the following will enhance fairness to both the Plaintiff and counsel alike.

The following must be included in your materials:

1. Affidavit of counsel – exhibits including all of the relevant expert reports to be indicated but filed at the end of the affidavit and hyperlinked (see below). The Affidavit of counsel and associated exhibits should include the following:

a. A description of the accident

b. The Plaintiff’s background – age, education, lifestyle, work history (if a person under disability), etc

c. An outline of the Plaintiff’s injuries and issues initially and currently, with pertinent excerpts from expert reports filed as exhibits (please note it is generally not necessary to file hospital records). It is important to include the treatment records of family doctors, as well as any treating doctors, as well as the Rule 53 or accident benefits experts. The full expert reports should be filed as per instructions below

d. An outline of the circumstances when the contingency agreement was signed confirming the fairness of the agreement at time it was signed

e. An outline of the steps taken in the proceeding

f. An outline of the proposed substantive settlement (including settlements of other parties if applicable) and an outline of the proposed fees and disbursements to be charged to the Plaintiff and if applicable to other co-Plaintiffs

g. An outline from the solicitor why he or she is recommending the settlement as fair and reasonable in the present circumstances. Counsel should refer to issues in the case including questions of liability and likely outcomes and ranges of damages

h. If a structured settlement is being considered, what options were canvassed and why was the structure chosen. Please illustrate how the suggested structured settlement meets the Plaintiff’s future needs.

i. It is not appropriate to simply recommend that the capital sums be paid into court. For a minor I will now approve a capital payout at age 18. The litigation guardian needs to set up a separate trust account, with periodic accounting, to access capital funds for the Plaintiff’s needs, with a proposed plan. Generally, I approve access to these funds for the purpose of education, programmes or treatment. For a minor any remaining capital should not be paid out until age 25

j. Information and status of the companion action – i.e., tort or accident benefits claim as well as copies of any prior order made and breakdown of any settlement in the companion action

k. Copies of all dockets to be filed for both tort and accident benefits claim and a list of all disbursements

l. Disclosure of fees and disbursements paid in any companion action as well as summary of time docketed, and fees or disbursements already paid in the matter before the court

m. Copy of any retainer agreement

n. An outline from the solicitor why he or she submits that the proposed fee is reasonable and fair having regard to the applicable factors including risk assumed, degree of difficulty of the case, stage when proceeding resolved, time spent, result, and any other factors that the solicitor views as relevant

2. Affidavit of the Litigation Guardian with exhibits to be indicated but filed separately at the end of the affidavits hyperlinked (see below). The Affidavit of the Litigation Guardian and associated exhibits should include the following:

a. Description of the Plaintiff’s present circumstances

b. Description of the Litigation Guardian’s relationship to the Plaintiff and his or her background (age, education, etc)

c. The Litigation Guardian’s views on the proposed settlement and proposed fees requested by counsel referring to the elements of the two-part test that the solicitor must meet of reasonableness and fairness at the time any contingency agreement is signed, as well as at the time the quantum of fees is considered

d. A confirmation that the affiant understands that just because a contingency fee agreement has been signed, that it is not determinative of the fees to be charged

e. An up-to-date and clear management plan for the infant or person under disability and explanation of how the proposed settlement fulfills the management plan

f. In complex cases a case manager should provide a management plan and ongoing case management services with a budget illustrating that the Plaintiff’s needs will be met by the proposed settlement, and that appropriate supervision will be provided

g. Structured settlements should be considered and any quotations received should be provided as an exhibit. If a structured settlement is being considered, what options were canvassed and why was the structure chosen. Please illustrate how the suggested structured settlement meets the Plaintiff’s present and future needs.

h. It is not appropriate to simply recommend that the capital sums be paid into court. For a minor I will not approve a capital payout at age 18. The litigation guardian needs to set up a separate trust account, with periodic accounting, to access capital funds for the Plaintiff’s needs, with a proposed plan. Generally, I approve access to these funds for the purpose of education, programmes or treatment. For a minor any remaining capital should not be paid out until age 25

i. The affiant needs to understand his or her duties to the Plaintiff, and that the funds must be held in a separate trust account, subject to an accounting to the court if the settlement funds are not structured

The exhibits attached to each Affidavit are to be organized separately for ease of access with an index, including hyperlinks and pages within each tab numbered.

Please upload the requested information to CaseLines within 15 days and confirm when the materials have been uploaded, to allow this matter to be dealt with promptly and efficiently.

Yours very truly,

The Accident

[13] The Plaintiff was rear-ended by the defendant on August 30, 2012 when she was stopped at a flashing pedestrian crossing.

[14] In the circumstances there is no issue as to liability.

[15] The Plaintiff was 41 years old at the time of the accident and is now 51 years old. She was off work at the time of the accident on disability leave from her employment with Bell as a call operator. She will not work again. She is in receipt of Canadian Pension Plan disability benefits. She is living in her home in Brampton with her parents. Her mother is her primary caregiver.

[16] Following the accident, the Plaintiff was assessed by a number of her treating health practitioners as well as medical experts retained by both sides. According to the Plaintiff's experts the Plaintiff suffered the following injuries and impairments as a result of the accident:

• Soft tissue injuries, as initially diagnosed in the emergency room after the accident
• Physical impairments and complications stemming from those injuries that emerged later on, including cervical, thoracic, and right sacro-iliac joint dysfunctions, upper extremity right fascia and adverse neurodynamics, moderate iliotibial band syndrome secondary to gain compensations and weight gain, and chronic pain syndrome
• Associated psychological/psychiatric diagnoses including major depressive disorder, panic disorder, and agoraphobia

[17] In September 2016 the Plaintiff’s experts concluded that she was catastrophically injured based upon a combination of physical and psychological/psychiatric injuries. They made findings that she met the threshold stipulated in s. 3.1(1) of the Statutory Accident Benefits Schedule, O. Reg. 34/10 (“SABS”), under criteria 7 and 8.

[18] In January 2017, the Defendant’s insurer assessment confirmed the findings in the Plaintiff’s catastrophic assessment pursuant to criteria 7 and 8 after conducting defence medicals.

The Proposed Settlement

[19] The combined proposed settlement inclusive of costs, disbursements and HST for both the tort and the accident benefit claim is $1,525,000.00.

[20] The breakdown of the proposed settlement is as follows:

• Tort Settlement: $425,000.00 inclusive of costs and disbursements. No information was provided as to the breakdown
• Accident Benefits Settlement: a total of $1,100,000.00

[21] In the accident benefits settlement there is no provision for payment of fees or disbursements, as per the usual practice. The accident benefits settlement for $1,100,000.00 is broken down as follows:

• Income loss benefits $275,000.00
• Medical rehabilitation benefits $375,000.00
• Attendant care benefits $360,000.00
• Housekeeping benefits $90,000.00

Retainer Agreement and Request for Fees

[22] The Plaintiff signed a contingency retainer agreement with counsel on August 19, 2013. This retainer agreement was replaced by the second governing contingency retainer agreement dated March 15, 2017 (the “Second Contingency Agreement”).

[23] The Second Contingency Agreement provides for payment to counsel of 25% of all payments received regardless of the source plus HST. That agreement also provides that the client will pay the law firm “any amount recovered” to reimburse disbursements and applicable taxes:

In consideration of the professional services provided, I agree to pay the Firm twenty five percent (25%) of all payments and/or amounts for damages, benefits and interest, regardless of the source of said recovery (except for legal costs, if any, which will be paid to me, i.e. the client, in their entirety) in partial or full settlement of these claims.

In addition, I also agree to pay to the Firm any amount recovered to reimburse (in part or in whole) my disbursements and applicable taxes (including HST (13%), as applicable).[Emphasis added]

[24] The Second Contingency Agreement confirms that any disbursements not recovered from the insurer are not payable by the client. This is an excerpt from the agreement:

Disbursements from insurer:

• This amount is unknown and it depends on each specific file.
• We seek to recover all of the expenses paid by our Firm, on your behalf, to build and advance your case.
• Any disbursements not paid by insurer, we lose this amount [Emphasis added]
• Example: investigation / reconstruction / medical reports, generally, cost between $1,200.00 to $5,000.00 (or more) each.
• Client does not pay for disbursements not recovered from the insurer. [Emphasis added]

Fees Claimed by the Law Firm

[25] From the $1,525,000.00 joint tort and accident benefit settlement counsel requests payment of fees and disbursements in the amount of $549,635.73 based upon the Second Contingency Agreement leaving the Plaintiff with a net recovery of $975,364.27.

[26] The basis of the claim for fees and disbursements based upon the Second Contingency Agreement was a jumble in the materials and was not clearly outlined early on in the lengthy materials. It should have been.

[27] None of the math suggested by counsel adds up.

[28] I am endeavoring to be fair to both counsel and to the client, but to achieve fairness the facts need to be clearly succinctly outlined early in the affidavit not buried, or not presented at all.

Payment for Income Replacement Benefits

[29] The request for present payment for legal fees includes a deferral for a partial settlement from April 2017. Once the insurer agreed on the catastrophic designation, the Plaintiff received a retroactive settlement for past loss of income replacement benefits in the amount of $77,209.68.

[30] Due to the Plaintiff’s impecuniosity, no fees were paid to counsel at the time. The Plaintiff signed a direction that fees would be paid in the amount of $21,811.73 inclusive of HST representing 25% of that recovery, once the claim was resolved or concluded at a hearing based upon the contingency arrangement from any funds she is to receive.

[31] This amount is payable from any recovery of the Plaintiff.

Advance Payment

[32] The Defendant agreed to make a $50,000.00 advance payment from the proposed settlement funds due to the Plaintiff’s dire financial circumstances pending review of the settlement.

[33] These funds were used by counsel to pay disbursements in the accident benefit file incurred by counsel in the amount of $36,177.55 plus $210.00 for transportation.

[34] As a result of these disbursements already paid, the Plaintiff only received the sum of $11,107.45 from the $50,000.00 advance.

[35] Again, it is clear by the terms of the Second Contingency Agreement that the disbursements not recovered from the insurer are not payable by the Plaintiff and this payment of $36,387.55 should not have been made.

Fees and Disbursements Claimed

[36] Counsel claims total fees and disbursements for both the tort and accident benefit files in the amount of $549,675.33. According to his calculation, the Plaintiff would receive the sum of $975,364.27.

[37] The breakdown as best I can ascertain from counsel’s request is as follows:

• $21,811.73 in deferred fees inclusive of HST for recovery of the income replacement benefits in the accident benefit claim in 2017 as per the agreement with his client.
• Fees are requested in the amount of $364,869.68 plus HST in the amount of $47,433.05 for the joint tort and accident benefit settlement of $1,525,000.00. This represents 24% of the total settlement.
• Disbursements in the total amount of $65,521.27 for both the tort and the accident benefit claim.

[38] I have inquired what disbursements, if any, were paid in the tort settlement by the insurer. I was provided with a global number in the amount of $425,000.00 inclusive of costs and disbursements, with no breakdown on whether any disbursements were recovered from the insurer in the tort settlement.

Reasonableness of the Legal Fees Claimed

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

[40] I have no issue with respect to the reasonableness of the agreement at the time it was signed.

[41] As outlined in Henricks-Hunter, the factors to consider in determining the reasonableness of a contingency fee arrangement at the time that costs are addressed include the results achieved, the time expended on the file, the complexity of the case, and the risk assumed by the solicitor in accepting the file.

[42] This was a relatively complex case and initially there was some risk in counsel assuming the file. However, relatively early in the retainer, in January 2017 the insurer accepted the designation of a catastrophic injury. Once that designation was accepted, there was little or no risk to counsel in continuing to act in both the tort and accident benefit file.

[43] The settlement of the accident benefit claim appears to be on the low end of what is reasonable, given the Plaintiff’s documented needs. Counsel confirms somewhat oddly in his affidavit at paragraph 76 that in his view the proposed settlement is “rather adequate”.

[44] Although initially claiming privilege, and a request for a sealing order, counsel finally produced dockets confirming that the docketed time, at generous hourly rates, somewhat exceeds the fees requested as a percentage of the settlement.

[45] I do note that the dockets produced are combined dockets for both the tort and the accident benefit files.

[46] As a matter of practice, it is important to keep separate dockets on these two interrelated but discrete matters. Often approval of one of the two claims comes before the court, and it is essential that the court have the dockets applicable to the relevant matter.

Conclusions re: Fees

[47] I am prepared to accept the proposed fees claimed in the amount of $21,811.77 inclusive of HST for fees for recovery of the retroactive income benefits in the accident benefit claim in 2017.

[48] I also accept the request for fees for both the accident benefit file and the tort file combined in the amount of $364,869.68 plus HST in the amount of $47,433.05 in the total amount of $412,302.73 representing 24% of the total recovery of the proposed combined settlement of $1,525,000.00. These amounts were supported by dockets for time spent.

[49] Total fees recoverable are therefore $434,114.50 inclusive of HST.

Disbursements

[50] By the terms of the Second Contingency Agreement, the Plaintiff is liable only for disbursements recovered from the insurer.

[51] Counsel had claimed disbursements in the amount of $65,521.27 for both the accident benefit and tort settlement: in the amount of $36,387.55 from the accident benefit file, and $29,133.72 incurred for the tort settlement.

[52] In fact, the sum $36,387.55 has already been paid to counsel from the $50,000.00 advance on the settlement for the accident benefit disbursements. These funds were not recovered from the insurer, and by the terms of the Second Contingency Agreement these funds are not payable by the Plaintiff and must be deducted from any recovery by counsel.

[53] In the tort file, in response to my inquiry, the list of disbursements provided confirms that the sum of $722.62 was paid by the Defendant Fuchs in the tort disbursements totaling $29,133.72.

[54] Therefore, by the terms of the Second Contingency Agreement, the balance of the disbursements claimed in the tort claim are not payable by the Plaintiff.

Conclusion re: Fees and Disbursements

[55] I accept the request of counsel for payment for total fees for services rendered in the amount of $434,114.50 and disbursements in the amount of $722.62 recovered from the Defendant in the tort claim, for a total recovery of $434,837.12.

[56] From this sum must be deducted the sum of $36,367.55 paid by counsel to the firm for the disbursements in the accident benefit file from the $50,000.00 advance, leaving the amount outstanding for fees and disbursements of $398,469.57.

[57] I conclude that this represents payment for reasonable fees for services rendered taking into account all of the relevant criteria from the perspective of both counsel and the client, and taking into account disbursements paid on behalf of the Plaintiff by the firm.

Plaintiff’s Circumstances and Concerns about the Proposed Structure

[58] The balance of the joint settlement funds in the amount of $1,076,530.43 is payable to the Plaintiff (settlement of $1,525,000.00 less the $50,000.00 advance less the $398,469.57 for fees outstanding).

[59] I have concerns about the proposed structure of the settlement.

[60] Counsel and the guardian make a proposal to purchase an annuity in the amount of $975,364.27 with a structure paying out at the flat rate of $4,334.96 per month, not indexed, to age 65, guaranteed only to age 65, with no payments thereafter. The Plaintiff will have available government benefits after age 65.

[61] The Plaintiff is now 51 years of age and will not work again. She lives in her home in Brampton and her mother is her primary care giver.

[62] A case manager has prepared a present budget showing the Plaintiff’s present needs can be met with this monthly amount with her mother taking care of her, but does not canvass the future.

[63] I note that the Plaintiff has a modest mortgage registered on her house in the amount of $17,902.88. It would be appropriate to pay that off from the capital received when it comes due to reduce her monthly expenses. The mortgage payment in the case managers’ budget is listed as $947.77 per month.

[64] The Future Care Report confirms that the Plaintiff is expected to require assistance into the future including professional services and therapies, medication, assistive devices, transportation and housekeeping assistance.

[65] There is no provision for future attendant care in the present budget, which the Plaintiff clearly needs for the future as her parents may not be able to continue to look after her as they age.

[66] There needs to be a report from a case manager suggesting how the funds should be structured and confirming that the proposed structure meets the Plaintiff’s present and future needs. Without this essential information I cannot approve the structure of the proposed settlement.

[67] Counsel will promptly obtain the case manager report at his own expense to be filed with the Court by no later than June 30, 2022. It should have been filed as part of the materials to approve the settlement.

Justice J. Wilson

Date: June 13, 2022