CITATION: He v. Meloche Monnex, 2022 ONSC 974
COURT FILE NO.: CV-21-87086
DATE: 2022/02/10
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: MIN HE by her Litigation Guardian, Tao Chen, Applicant
-and-
MELOCHE MONNEX INC., Respondent
BEFORE: Madam Justice Sylvia Corthorn
COUNSEL: Brenda Hollingsworth, for the Applicant
No one appearing for the Respondent
HEARD: In Writing
ENDORSEMENT
Introduction
[1] This application is for approval of a settlement negotiated in 2021 of Min He’s claim for Statutory Accident Benefits (“SABS”). The terms of the settlement include that the respondent insurer is to pay $1,450,000 in full satisfaction of Ms. He’s past and future accident benefits entitlement.
[2] Ms. He was the driver of a motor vehicle involved in a collision with another vehicle in December 2014. Meloche Monnex Inc. (“MMI”), carrying on business under the name of Security National Insurance Company, insured the vehicle which Ms. He was driving at the time of the collision. MMI is the insurer contractually obligated to pay Ms. He’s SABS under the Statutory Accident Benefits Schedule, O. Reg. 34/10 (“the Schedule”).
[3] Ms. He suffered a significant brain injury as a result of the collision. MMI accepted Ms. He’s application for designation as “catastrophically impaired”[^1] as a result of the injuries she sustained in the collision. Ms. He has been and remains unable to return to any form of gainful employment, including her pre-accident employment as a registered nurse. Ms. He requires 24-hour supervision.
[4] The related tort action was both commenced and settled in 2016. The plaintiffs in that action were Ms. He, her husband (Tao Chen), and the couple’s now adult daughter and only child (Nina Chen). In the settlement of that action, the at-fault driver’s insurer paid the full amount of the third party limits available for damages and interest ($1,000,000), plus an additional amount towards the plaintiffs’ costs. The settlement of the tort action was approved: see He and Chen v. Senk and Meloche Monnex et al., (23 January 2017), Ottawa 16-69327 (Ont. S.C.).
[5] In March 2018, a settlement was negotiated of Ms. He’s SABS claim (“the 2018 settlement”). Pursuant to the terms of that settlement, MMI was to pay Ms. He the sum of $1,500,000 in full satisfaction of her past and future benefits entitlement (i.e., as of the date of the settlement).
[6] Ms. He applied for court approval of the 2018 settlement (“the 2018 application”). In the same proceeding, her counsel sought approval of both a contingency fee agreement between Ms. He and counsel (“the CFA”) and the solicitor-client account proposed at that time.
[7] For oral reasons given in September 2019, the 2018 settlement was not approved: see He v. Meloche Monnex Inc., (18 September 2019), Ottawa CV-18-77334 (Ont. S.C.) (“the oral reasons”). The 2018 application was dismissed. The request for approval of both the CFA and the proposed solicitor-client account was not addressed in the oral reasons.
[8] Subsequent to the dismissal of the 2018 application, MMI continued to pay SABS to Ms. He.
[9] In 2021, a settlement of Ms. He’s past and future SABS entitlement was negotiated with MMI (“the 2021 settlement”). On the application now before the court, Ms. He requests approval of (a) the monetary amount of the 2021 settlement, (b) the proposed allocation of the settlement funds into structured and lump sum portions, and (c) the proposed use of the lump sum payment.
[10] In the same proceeding, Ms. He’s counsel requests approval of both the CFA and a solicitor-client account. The account includes fees and disbursements which post-date the solicitor-client account proposed on the 2018 application.
[11] Ms. He also asks the court to make an order “dispensing with the requirement that [MMI] be represented by a lawyer” on the application.
[12] The record on this application is comprised of (a) the notice of application issued on July 28, 2021, (b) the affidavit of Brenda Hollingsworth, sworn on July 2, 2021 (“counsel’s affidavit”), and (c) the affidavit of Tao Chen, sworn on June 28, 2021 (“the Chen affidavit”). The record exceeds 300 pages. The application record, although filed in July 2021, did not come before the court until December 2021.[^2]
The 2018 Application
[13] A copy of the court’s single-page, handwritten endorsement dismissing the 2018 application is an exhibit to counsel’s affidavit. A copy of the transcript of the oral reasons is not included in the application record.
[14] At paragraph 30 of her affidavit, counsel states that she (a) was present when the oral reasons were given, and (b) has reviewed the transcript of those reasons. In several other paragraphs, counsel refers to the oral reasons. For example, at paragraph 34, counsel states, “We have also sought to address the issues raised” (i.e., in the oral reasons).
[15] It would have been helpful to the court if a copy of the transcript of the oral reasons had been included in the application record. The court understands that, at this stage of the application in writing, to require the applicant to put the transcript before the court in the form of an exhibit to a supplemental affidavit would result in both additional expense to the applicant and unnecessary delay. There is no prejudice to the parties if the court considers the transcript from the oral reasons when it determines this application.
[16] To expedite the determination of this application, the court relies on the transcript of the oral reasons. That transcript is helpful to (a) understand why the 2018 application was dismissed, and (b) ascertain whether the matters raised by the court in the oral reasons are addressed by the 2021 settlement and by the evidence now before the court.
The Issues
[17] The substantive issues raised on and/or matters to be addressed in determining the application include the following:
• Ms. He’s capacity to manage property;
• Whether the 2021 settlement is in Ms. He’s best interests;
• The proposed allocation of the settlement funds – as between the structured and non-structured portions;
• The payment schedule for the proposed structure; and
• The proposed management of the non-structured portion of the settlement funds.
[18] The court turns first to the issue of Ms. He’s capacity to manage property.
Ms. He’s Capacity to Manage Property
[19] On the return of the 2018 application, the court found that the evidence with respect to Ms. He’s capacity to manage property was “dated and incomplete”.[^3] That evidence was limited to copies of two documents – both of which were prepared by a psychologist. One of the reports is dated June 2015; the other is dated December 2016.[^4]
[20] Those two documents are again before the court on the 2021 application. The June 2015 document is titled, “Psychology Summary of Involvement”. The December 2016 report was prepared by Dr. Amy Moustgaard (“the Moustgaard report”).
[21] In June 2015, Dr. Steve Joncas was a Senior Psychologist and Clinical Leader in the Behavioural Rehabilitation Service at the Rehabilitation Centre Campus of the Ottawa Hospital. He is the author of the Psychology Summary of Involvement. The inclusion of a copy of that document as an exhibit to counsel’s affidavit provides evidence of the existence of the document; it does not make the substantive contents of the document evidence before the court. The Rules of Civil Procedure, R.R.O. 1990, Reg. 194, governing affidavit evidence on an application are discussed in the penultimate section of this ruling (“Procedural Matters”).
[22] The June 2015 document relates to the attorney for property which Ms. He executed in July 2015. A copy of the July 2015 attorney for property is an exhibit to counsel’s affidavit.
[23] At paragraph 6 of her affidavit, counsel states that Ms. He appointed Mr. Chen as her attorney for property “after undergoing an assessment which concluded that she has the capacity to assign Power of Attorney for both personal care and property.” Dr. Joncas concludes his Psychology Summary of Involvement with the following statement: “I am of the opinion that Ms. He is capable of assigning POA for both personal care and property.”
[24] At paragraph 19 of her affidavit, counsel addresses the Moustgaard report as follows: “As a result of the injuries she sustained in the collision, Min suffers from ongoing cognitive impairments. A copy of the [Moustgaard report] is attached” as an exhibit. The Moustgaard report is addressed to Security National Insurance Company.
[25] The inclusion of the Moustgaard report as an exhibit to counsel’s affidavit is evidence of the existence of the report; it does not make the opinions expressed and conclusions reached in the report evidence before this court. It is, however, noteworthy that, at page 9, item 9 of her report, Dr. Moustgaard states that “Ms. He should not be managing finances or making important decisions on a large scale. Ms. He has been using a debit card and can continue to do so under the direct supervision of others.”
[26] Dr. Moustgaard describes her report as a “repeat” assessment report. The intention of the repeat assessment was to “assess for and quantitatively identify any interval change in neurocognitive function in comparison to” an assessment conducted in 2015. Dr. Moustgaard also wished to identify the impact of any areas of deficit on Ms. He’s ability “to engage in instrumental activities of daily living.” In summary, Dr. Moustgaard did not carry out a formal assessment of Ms. He’s capacity to manage property or her capacity to manage her personal care within the meaning of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (“SDA”).
[27] The power of attorney for property executed by Ms. He in July 2015 is a continuing power of attorney. Incapacity to manage property is not a precondition to a continuing power of attorney for property coming into effect. Therefore, no assessment of Ms. He’s capacity to manage property and/or a finding of incapacity in that regard was required for Mr. Chen to begin acting and/or to continue to act as Ms. He’s attorney for property.
[28] In the oral reasons dismissing the 2018 application, the court noted the lack of any first-hand evidence with respect to the issue of Ms. He’s capacity to manage property:
The conclusions reached by Dr. Moustgaard might be sufficient to satisfy the Court that [Ms. He] is a person under disability if (a) the conclusions were based on an assessment that was conducted closer in time to the date on which the [2018] application was heard, and (b) before the court as first-hand evidence from Dr. Moustgaard. In the absence of a recent formal assessment of [Ms. He’s] capacity to manage property, the inclusion of Dr. Moustgaard’s report as an exhibit to the Bielecki Affidavit falls short of the evidentiary requirements on this application, and in that regard I refer to rule 39.01(5) of the Rules.[^5]
[29] The court was not prepared, for the purpose of considering Ms. He’s capacity to manage property, to rely on the Moustgaard report, as an exhibit to an affidavit from someone other than the author of the report.[^6] An up-to-date and formal assessment of Ms. He’s capacity to manage property was required.
[30] Following the dismissal of the 2018 application, Ms. He’s counsel arranged for an assessment of Ms. He’s capacity to manage property (and capacity to manage personal care). Capacity assessor, Leonard Burnstein was retained on Ms. He’s behalf to carry out that assessment. A copy of Mr. Burnstein’s Assessment Report is included as an exhibit to counsel’s affidavit. That report is dated December 6, 2019 (Form C under the SDA, and “the Burnstein report”).
[31] The inclusion of a copy of the Burnstein report as an exhibit to counsel’s affidavit does not make the contents of that report evidence before the court; the exhibit is evidence of the existence of the report. Even if the substantive contents of the Burnstein report were before the court as evidence, they would be insufficient to satisfy the court that Ms. He has the capacity to manage property.
[32] The court’s concerns with respect to the substantive contents of the Burnstein report include the following:
• In the Form A attached to the report, Mr. Burnstein identifies as the purposes of the assessment, s. 72 of the SDA and “to provide a statement to accompany an application for appointment of guardian of property by summary disposition under section 77”. Given that Ms. He granted a continuing power of attorney to Mr. Chen, an application of the kind described by Mr. Burnstein is not required. There is no evidence that such an application was or is being pursued;
• The court questions whether, in the circumstances of this case, the completion of Form A is required. The assessment of Ms. He’s capacity could have proceeded on the basis of a letter of instruction from counsel. In that letter, counsel could have provided Mr. Burnstein with the requisite background information including, for example, a summary of the concerns expressed by the court in the oral reasons and context for Ms. He’s SABS claim and a potential settlement of that claim;
• In Section 3 of Form C, “Background Information”, Mr. Burnstein states that the assessment of Ms. He’s capacity to manage property is required because Mr. Chen intends to apply to the court for a guardianship appointment. Based on that statement and as addressed in the first bullet point, above, it is not clear that Mr. Burnstein understood the reason why an assessment of Ms. He’s capacity to manage property was required;
• Nowhere in Form C does Mr. Burnstein refer to either the June 2015 report of Dr. Joncas or the December 2016 report of Dr. Moustgaard. Mr. Burnstein refers to a 2013 psychiatry consultation – a consultation carried out before Ms. He was involved in the subject motor vehicle collision. Mr. Burnstein also refers to a June 30, 2015 Discharge Summary from the Ottawa Hospital;
• At page 4 of Form C, Mr. Burnstein concludes that “Min He is able to appreciate the consequences of financial decisions even though her husband is the primary manager of the family finances” (emphasis added). Mr. Burnstein does not review the extent, if any, to which Ms. He is involved in the management of the family finances;
• Mr. Burnstein does not refer at all to the July 2015 power of attorney for property. It is unclear whether Mr. Burnstein was aware that Mr. Chen has been acting and continues to act as Ms. He’s attorney for property; and
• Mr. Burnstein does not refer at all to Ms. He’s SABS claim, to the potential value of a settlement of that claim (i.e., a seven-figure number), or to Ms. He’s ability to make decisions about how to manage a seven-figure sum of money.
[33] Mr. Burnstein’s conclusion with respect to Ms. He’s capacity to manage property stands in contrast to his conclusion with respect to her incapacity to manage personal care. At page 5 of Form C with respect to personal care (also an exhibit to counsel’s affidavit), Mr. Burnstein concludes that “Ms. He has lost memories from prior to the accident, and she cannot take in and process new health care information. Min He requires the appointment of a guardian for health care needs and to protect her physical well being.”
[34] As noted in counsel’s affidavit, but for Mr. Burnstein’s conclusion that Ms. He requires a substitute decision-maker with respect to personal care, court approval of the settlement would not otherwise have been required.
[35] How does Mr. Burnstein reconcile Ms. He’s inability to take in and process new health information with an ability to take in and process information with respect to property, including the management of a seven-figure amount from the 2021 settlement?
[36] In summary, even if the substantive contents of Mr. Burnstein’s report were before the court as evidence (which they are not), the contents would not support a finding that Ms. He is capable of managing property. Better evidence with respect to Ms. He’s capacity in that regard is required.
[37] Ms. He’s ability to manage property is relevant to her future care needs and whether the settlement of her SABS claim is approved. For example, if Ms. He is determined to be incapable of managing property, then either an attorney for property or guardian of property must manage her property. That individual is entitled to compensation under the SDA.
[38] There is no evidence and no factum addressing whether the compensation to which an attorney for property or a guardian of property is entitled falls within the scope of the rehabilitation benefits to which Ms. He is entitled. In that regard, the court refers to ss. 16(1), (3)(d) and (3)(l) of the Schedule. Pursuant to s. 16(1), rehabilitation benefits to which a claimant is entitled are those which,
pay for all reasonable and necessary expenses incurred by or on behalf of the insured person in undertaking activities and measures described in subsection (3), that are reasonable and necessary for the purpose of reducing or eliminating the effects of any disability resulting from the impairment to facilitate the person’s reintegration into his or her family, the rest of society, and the labour market.
[39] The “activities and measures” referred to in s. 16(1) include “financial counselling” and “other goods and services that the insurer agrees are essential for the rehabilitation of the insured person, and for which a benefit is not otherwise provided” in the Schedule (ss. 16(3)(d) and (3)(l), respectively). The services of a case manager, housekeeping services, and caregiver services are excluded from the “other goods and services” that fall within the scope of s. 16(3)(l).
[40] Regardless of whether or not the compensation to which an attorney for property or guardian of property falls within s. 16 of the Schedule, the compensation to which a person acting in either capacity is statutorily entitled is relevant to (a) the assessment of the expenses that Ms. He will incur for her future care, and (b) calculation of the present value of the expenses she will incur to meet all of her future care needs (i.e., without consideration for the monetary restrictions on hourly rates payable or the overall limit of $1,000,000 in medical and rehabilitation benefits).
[41] If the substitute decision-maker’s compensation falls within the scope of s. 16 rehabilitation benefits, then that compensation is also relevant to the calculation of the present value of her future SABS entitlement.
[42] In any event, the substitute decision-maker’s compensation is relevant to calculating the shortfall between the present value of the injured person’s future care expenses and the financial resources available to the injured person from which to pay those expenses. That shortfall calculation is discussed in detail in a later section of this ruling.
[43] Mr. Chen is presently managing Ms. He’s finances as her attorney for property. He may be doing so without compensation. Regardless of whether Mr. Chen is being compensated for fulfilling that role, when addressing Ms. He’s future care needs, consideration must be given to a scenario in which the individual managing Ms. He’s property is someone, a family member or otherwise, who seeks the compensation to which they are statutorily entitled for their work. For the purpose of calculating both the present value of Ms. He’s future care needs and, potentially, the present value of Ms. He’s remaining SABS entitlement, it is unreasonable to assume that Ms. He will never incur an expense with respect to the management of her property.
[44] Better evidence with respect to Ms. He’s capacity to manage property is required. Given the court’s historical and continuing concern with respect to the issue of Ms. He’s capacity to manage property, the inclusion of a capacity assessor’s report as an exhibit to an affidavit from either Ms. He’s counsel or litigation guardian is not sufficient. If this application is continued or in the event of a further application for approval of a settlement of Ms. He’s SABS entitlement, an affidavit from a capacity assessor is required. The court will then be in a position, if necessary, to ask questions of the capacity assessor, as a witness, at an oral hearing of the application.
Analysis of a Settlement of a SABS Claim
[45] The parameters for the court’s determination of an application of this kind, for a catastrophically injured person, include the following:
• Evidence of the injured person’s future care needs[^7] (i.e., as set out in a life care plan or a report that is equivalent to such a plan). Future care needs are not limited to services, devices or items that fall within a benefits category within the SABS regime. Future care needs include services, devices, or items for which the injured person is not entitled to reimbursement from their SABS insurer;
• Expenses that the injured person will incur – at market rates – to pay for the services, items, etc. identified in a life care plan or an equivalent to such a plan;
• The funds, if any, available from a settlement of related litigation (such as a tort action) to assist the injured person in meeting their future care needs;
• Collateral benefits that the injured person may have available to them, for example from an employee benefits plan;
• The income otherwise available to the injured person from which funds may be applied towards payment of future care expenses;
• The shortfall, if any, after settlement funds from other litigation, collateral benefits, and income are applied towards payment for future care expenses;
• The extent to which 100 percent of the injured person’s remaining SABS entitlement would serve to further reduce that shortfall; and
• The shortfall, if any, remaining after 100 percent of the injured person’s remaining SABS entitlement is applied, in theory, towards future care expenses.
[46] If, once the arithmetic described above is done, there remains a shortfall in the funds the injured person requires to meet their future care needs, it is incumbent upon counsel and the litigation guardian to provide additional evidence. The additional evidence should address why, given the anticipated shortfall in the funds needed to pay for their future care, any discount – and specifically the proposed discount – from 100 percent of the injured person’s full SABS entitlement is reasonable and in the best interests of the injured person.
[47] The arithmetic calculations and additional evidence discussed in the preceding paragraphs provide the court with a picture of the injured person’s financial future. The calculations and additional evidence also assist the court in determining whether the proposed discount from 100 percent of the injured person’s SABS entitlement is reasonable and in the best interests of the injured person.
[48] Without a complete picture of the injured person’s financial future, the evidence falls short of that required on an application for approval of a settlement of the past and future SABS entitlement for a catastrophically impaired person.
[49] The court deals next with several of the bullet points listed in paragraph 45, above.
Evidence of Ms. He’s Future Care Needs
[50] The record on the 2018 application did not include a life care plan. The court expressed “significant concern that neither [Mr. Chen] nor counsel fully appreciate[d] the significance of [Ms. He’s] future care needs.”[^8] The court found that the evidence on the 2018 application was “entirely qualitative, [ran] contrary to the findings and conclusions of Dr. Moustgaard, and [was] without arithmetic or actuarial basis.”[^9]
[51] Subsequent to the dismissal of the 2018 application, Clae Willis of Western Service Centre in Vancouver, B.C., was retained on Ms. He’s behalf to consider Ms. He’s future care needs. Included as an exhibit to counsel’s affidavit is a “Consultive – Future Care Analysis” dated March 9, 2021 (“the Willis report”).[^10]
[52] The record does not include a copy of Mr. Willis’ curriculum vitae. Mr. Willis’ credentials are listed following his name on the cover page of the report as follows: “MSc CRTWC FAAPM CLCP CCVE CVRP (F)”. Those credentials are explained in the introductory portions of Mr. Willis’ report. Mr. Willis is a Certified Life Care Planner.
[53] The inclusion of the Willis report as an exhibit is evidence of the existence of the report; the substantive opinions and conclusions, to the extent they are expressed in that report, are not evidence on the application.
[54] The record does not include a Form 53, acknowledgement of expert’s duty, executed by Mr. Willis. The Willis report includes, at item 2, an “Expert Statement”. Mr. Willis therein identifies that in his report he is providing an objective opinion, and that he is prepared to testify at a hearing.
[55] The Willis report is not a life care plan. The report addresses only those services, devices, and items which fall within the scope of a benefits category, including medical and rehabilitation, attendant care, and housekeeping. The report does not address Ms. He’s future care needs in the ‘real world’ setting. As a result, the report does not provide the starting point for the calculation of Ms. He’s complete future care needs (i.e., including those which do not fall within the scope of a benefits category).
[56] For example, the Willis report considers attendant care needs only on the basis of the $6,000 per month maximum payable by the respondent insurer under that category. The Willis report does not consider Ms. He’s attendant care needs as historically assessed – at an amount in excess of $8,000 per month.
[57] The only Form 1, Assessment of Attendant Care Needs, included in the record is undated. It is, however, on a form said to be effective as of October 1, 2016. Regardless of when the form was completed, the individual completing the form assessed Ms. He’s attendant care needs at $8,194.19 per month – based on the rates permitted under the SABS (not the market rates). That form is intended for a specific purpose; it is not intended to provide the market rate cost of Ms. He’s attendant care needs.
[58] The Willis report does not consider how Ms. He’s requirement of 24-hour supervision will be met over time. Where will she reside and how will that supervision requirement be met in the event Mr. Chen is no longer able to support Ms. He? For example, how will Ms. He’s supervision needs be met if Mr. Chen were to become disabled through illness or accident or if he were to predecease Ms. He?
[59] These matters may not be of concern to MMI given the limitations on its exposure for medical and rehabilitation benefits and for attendant care benefits. The extent of the shortfall created by those limitations is, however, relevant when determining whether the 2021 settlement is approved.
[60] Other examples of Ms. He’s future care needs that were not considered by Mr. Willis include the following:
• The expenses that Ms. He will incur for transportation to anything other than a medical appointment for treatment by a health-care professional. Activities of daily living that require transportation to/from Ms. He’s home are not addressed in the Willis report; and
• As noted in an earlier section of this ruling, the expenses that Ms. He will incur for the management of her property – whether by an attorney for property or a guardian of property, both of whom are entitled to compensation.
[61] In summary, the Willis report is not a life care plan or an equivalent to such a plan. The Willis report does not fully address one or more of the deficiencies in the evidence that contributed to the dismissal of the 2018 application.
[62] Even though the Willis report is not a life care plan and does not address all of Ms. He’s future care needs, the opinions expressed in that report would, if they were before the court in the form of admissible evidence (which they are not), provide a basis upon which to calculate the present value of some of Ms. He’s future care needs. As will be seen from the arithmetic in the next section of this ruling, the present value of Ms. He’s future care needs may exceed $7,000,000 and may possibly even exceed $8,000,000.
Evidence of the Present Value of Ms. He’s Future Care Expenses
[63] The second bullet point, listed at paragraph 45, above, deals with the expenses that Ms. He will incur to meet all of her future care needs – not only expenses which fall within the scope of her SABS claim.
[64] The record on the 2018 application did not include a report setting out the present value of Ms. He’s future care expenses. A report of that kind is not before the court on this application.
[65] Subsequent to the dismissal of the 2018 application, ADS Forensic Accounting (“ADS”) was retained on Ms. He’s behalf to “calculate present value numbers”.[^11] Included as an exhibit to counsel’s affidavit are a series of charts prepared by ADS (“the ADS charts”). The inclusion of the ADS charts is evidence of their existence; the information set out in the charts is not evidence.
[66] The record does not include a copy of a report from ADS with a narrative to explain the information set out in the ADS charts. There is minimal, if any evidence, from either counsel or Mr. Chen as to their respective understanding of the information set out in the ADS charts.
[67] Based on the court’s review of the ADS charts, it appears that those charts are an attempt to provide evidence of certain present value calculations, as of April 2021, including the following calculations:
• The present value of Ms. He’s future care expenses, as identified in the Willis report, pursuant to the SABS, and relying on SABS rates, is $1,531,202;[^12]
• The present value of Ms. He’s future medical and rehabilitation needs as identified by Mr. Willis, calculated without reference to the monetary cap ($1,000,000) in the SABS, and based on SABS rates, is $2,719,940;[^13]
• The present value of Ms. He’s future medical and rehabilitation needs as identified by Mr. Willis, calculated in the context of the $1,000,000 monetary cap, based on the SABS rates, and with inflation as a factor, is $570,190;^14
• The present value of Ms. He’s attendant care needs at $72,000 per year, when calculated for life and without reference to the monetary cap ($1,000,000) in the SABS, is $4,382,640;[^15]
• The present value of Ms. He’s attendant care needs at $72,000 per year, when calculated in the context of the $1,000,000 monetary cap and without inflation as a factor, is $850684;[^16] and
• The present value of Ms. He’s housekeeping needs at $100 per week for life is $110,328.
[68] The court has done its best to interpret the information set out in the ADS charts. Regardless of potential misinterpretation on the court’s part, the future financial picture that the information in the ADS charts portrays is that of an individual whose future care expenses, based only on the contents of the Willis report, have the potential to exceed $7,100,000.[^17]
[69] For several reasons, $7,200,000 may be less than the actual present value of Ms. He’s potential future care expenses:
• First, that figure does not include the present value calculated based on market rates – as opposed to rates prescribed in the Schedule and related regulations;
Second, that figure does not include the present value of the expenses that Ms. He will incur for services, devices or items that Mr. Willis did not address because those items fall outside the scope of the categories of benefits covered by the SABS;
• Third, that figure does not take into account the apparent shortcomings in Mr. Willis’ identification of expenses that Ms. He may or will incur and which fall within the scope of the category of medical and rehabilitation benefits (i.e., transportation costs – other than those for healthcare appointments and going to the gym);
• Fourth, that figure does not take into account expenses associated with the management of Ms. He’s property (whether or not those expenses fall within the scope of s. 16 of the Schedule); and
• Fifth, that figure does not take into consideration that Ms. He requires 24/7 supervision and that such supervision may, in the future, have to be met in a setting other than her family residence.
[70] There is an additional reason why $7,200,000 may not represent the actual present value of Ms. He’s potential future care expenses. That figure is based on Ms. He’s entitlement to a maximum of $6,000 per month ($72,000 per year) for attendant care benefits.
[71] As has already been noted, the limited evidence before the court is that Ms. He’s attendant care needs are in an amount in excess of $8,194 per month (based on SABS rates, not market rates). By the court’s rough arithmetic, if $8,194 is substituted for $6,000 in the calculation of the present value of Ms. He’s attendant care expenses for life, the present value is $5,985,225.[^18] Rounding that total to $6,000,000 and adding it to the present value of $2,719,940, for medical and rehabilitation expenses, and of $110,328, for housekeeping expenses, results in a total of $8,830,268 for the present value of Ms. He’s potential future care expenses.
[72] The court emphasizes that it is not making a finding that the present value of Ms. He’s potential future care expenses is in the range of $7,200,000 to $8,830,000. Given the lack of evidence as to the present value of Ms. He’s future care expenses based on market rates, the present value of those expenses may even exceed $8,830,000. The point is that the information before the court – some of which is inadmissible as evidence – serves to highlight the magnitude of the expenses that Ms. He may incur to meet her future care needs.
[73] With some understanding of the magnitude of the present value of Ms. He’s potential future care expenses, the court turns next to the funds Ms. He will have available to her over time to pay the expenses associated with her future care needs. Following the order in which subjects are listed in the bullet points at paragraph 45, above, the court first considers the funds available from the tort settlement.
Funds Available from the Tort Settlement
[74] The tort settlement included $1,000,000 for damages and interest. The additional all-inclusive amount paid for costs was $84,699.90. The solicitor-client account approved on the settlement approval motion was in the total amount of $248,550.21.[^19]
[75] The plaintiffs’ net recovery from the tort settlement was therefore $836,149.69.[^20] From that amount, $500,000 was used to fund a structure and $289,571.38 was paid to Ms. He in a lump sum. When the lump sum and principal amount of the structure funding are subtracted from the plaintiffs’ net recovery in the tort action, the balance remaining is $46,578.31.[^21]
[76] The order approving the settlement of the tort action provides that $15,526.11 was to be invested in a RESP for Nina Chen or paid into court on her behalf. The order also provides that $31,052.20 was to be paid to Tao Chen. The payments made to or on behalf of Nina Chen and Tao Chen were in satisfaction of their respective claims pursuant to the Family Law Act, R.S.O. 1990, c. F.8.
[77] The structure purchased for $500,000, provides for,
• monthly payments of $2,501.14 commencing in December 2017;
• the payments to be indexed annually at one per cent per year, compounded annually;
• the monthly payments to cease in October 2037 (by which time they will have increased to $3,021.65); and
• all payments to be guaranteed.
[78] There is no evidence as to the cost of the guarantee. There is also no evidence as to who the beneficiary of the guarantee is – Ms. He’s estate or one or more named individuals. Last, there is no evidence about who paid the cost of the guarantee.
[79] Was the cost of the guarantee paid by Ms. He from the $500,000 principal funding amount for the structure? If so, then the cost of the guarantee reduced the monthly payments that would otherwise have been available to Ms. He from the structure.
[80] If, for example, Mr. Chen and/or Nina Chen are the beneficiaries of the guarantee (as an estate protection mechanism), did Mr. Chen personally fund the cost of the guarantee so as to avoid a reduction in the monthly payments to be made to Ms. He during the time-limited payment period?
[81] The manner in which estate protection was addressed through the structure from the tort settlement is relevant to the court when considering the request, on the current application, to approve a structure which also includes an element of estate protection.
[82] Evidence is required as to the extent, if any, to which funds from the monthly structure payments (which end when Ms. He is 65 years old) will be applied towards Ms. He’s future care expenses – assuming that those expenses are not fully met from other financial resources to which Ms. He has access. By “available”, the court means after Ms. He has paid for the necessities of life.
[83] The $261,845.38 paid to Ms. He as a lump sum was used as follows. The balance then owing ($21,000) on Ms. He’s line of credit was paid. The sum of $60,000 was placed in a savings account in Ms. He’s name. There is no evidence as to the current balance in that savings account. There is also no evidence as to whether money in that account will be applied towards payment of Ms. He’s future care expenses and, if so, when it will be necessary for Ms. He to begin dipping into her personal savings for that purpose.
[84] The remainder of the lump sum ($180,000) was applied towards the purchase of what Mr. Chen describes as an income property. Mr. Chen’s evidence does not include the purchase price for the income property or the amount of the mortgage on it, the latter if any. In his Form C, Assessment Report, Mr. Burnstein refers to a jointly-owned income property. Mr. Burnstein describes that property as valued at $500,000 and with a mortgage of $300,000.[^22] Again, that information is not admissible as evidence with respect to the ownership interest in and financing of the matrimonial home.
[85] Evidence as to the manner in which title to the income property is held is relevant on this application. Evidence explaining Ms. He’s ability to liquidate her interest in the income property will assist the court in understanding what funds may be available from the tort settlement, even if now indirectly, to apply towards payment of Ms. He’s future care expenses.
[86] Mr. Chen’s evidence is that the income property “provides monthly net income to us of a total of $420.00.” To what portion of that monthly income is Ms. He entitled on a regular basis? What does the couple do with the net monthly income? Do they apply it towards necessities of life, re-invest it in the income property, or use it for some other purpose?
[87] Is there an agreement in writing between Ms. He and Mr. Chen which protects Ms. He’s interest in the property based on her contribution of $180,000? For example, is there an agreement between the couple which excludes Ms. He’s interest in the income property from inclusion in net family property in the event of a marriage breakdown? If such an agreement exists, is there evidence that Ms. He’s capacity to enter into the agreement was assessed before she executed the relevant document(s)?
[88] Mr. Chen’s evidence is that in 21 years, when Ms. He is 70, the income property will have a value of $1,030,000. Mr. Chen’s estimated value of the property is said to be based on “an anticipated 2% market rate”. There is no evidence to support a finding that Mr. Chen has expertise in the area of market value of income properties. Evidence is lacking as to the starting point for Mr. Chen’s estimate of the value of the income property – the purchase price and/or the current fair market value of the property.
[89] In summary, there is insufficient evidence with respect to the funds potentially available to Ms. He from the tort settlement, to be applied towards payment of future care expenses.
Collateral Benefits and Other Sources of Income
[90] There is no evidence to support a finding that Ms. He has access to collateral benefits for medical or dental expenses. In their respective affidavits, neither counsel nor Mr. Chen makes any mention of Ms. He having access to collateral benefits. It would be helpful for the court to know whether Ms. He has access to such benefits through her own employment or through any benefits plan under which Mr. Chen is covered and Ms. He, as his spouse, is also covered.
[91] The court therefore considers the evidence with respect to Ms. He’s other sources of income.
[92] The record includes evidence as to the income that Ms. He is receiving and is expected to receive in the future. For example, in 2021, Ms. He received monthly CPP Disability benefits ($971.58). As another example, at age 65, she will be entitled to a pension through her previous employer (estimated at $1,350 per month), CPP benefits (estimated at $1,200 per month), and Old Age Security (“OAS”, estimated at $600 per month). Evidence is required as to whether, based on current criteria, Ms. He will be at risk of having any of her OAS clawed back.
[93] Based on the estimates of Ms. He’s future pension and CPP entitlements, it appears that when Ms. He is 65, her monthly income from those two sources will be $2,550. Depending on whether Ms. He is subject to having her OAS clawed back, her monthly income could be as high as $3,150.
[94] Ms. He is currently receiving $400 per week in IRBs. Ms. He’s entitlement to IRBs remains at $400 per week until she reaches age 65. At that time, Ms. He’s entitlement to IRBs is gradually reduced to zero over several years. If the 2021 settlement is approved, the stream of income from Ms. He’s IRBs will be replaced by the structure payments.
[95] It appears that when Ms. He reaches age 65, if not at an earlier age, and without considering her interest in the income property and other assets, her income will be insufficient to cover all of the expenses for her necessities of life and future care needs.
[96] There is no evidence about Ms. He’s current residence. The Form C, Assessment Report prepared by Mr. Burnstein, refers to a jointly-owned family home valued at $580,000, with a mortgage of $300,000, and monthly payments of $1,700 (all figures are as of 2019, when the capacity assessment was conducted). To what extent, now and in the future, will Ms. He be required to apply a portion of her monthly income, regardless of the amount of that income, to cover her share of expenses for accommodation (whether in the family home or elsewhere)? Is Ms. He now and will she, in the future, be in a position to apply any portion of her monthly income towards future care expenses?
[97] In summary, it is incumbent upon counsel and the litigation guardian to analyze the information available with respect to the injured person’s collateral benefits and other sources of income. Analysis of that information is required to address the third of the six bullet points listed in paragraph 45, above.
The Three ‘Shortfall’ Calculations
[98] The fourth, fifth and sixth bullet points listed in paragraph 45, above, address the shortfall the injured person may face in funds from which to pay potential future care expenses.
[99] The record does not include the evidence required to address the shortfall calculations. It appears, however, that even if Ms. He was paid the full amount of her remaining SABS entitlement, there will be a shortfall, in a magnitude of millions of dollars, in the funds available to pay for her future care expenses. As a result, additional evidence is required in support of the request to approve a settlement which represents approximately 79 per cent of the annuity-cost funding of Ms. He’s past and future SABS entitlement.
Additional Evidence to Support a Discount from 100 Percent of SABS Entitlement
[100] At paragraph 66 of her affidavit, counsel states that $1,450,000 represents 79 per cent of “the available remaining policy limits, based on the annuity rate” cost of funding a structure from which to pay the full amount of Ms. He’s benefits entitlement.
[101] Counsel’s evidence is that MMI allocates the $1,450,000 as follows:
Income replacement benefits ($400 per week) $ 350,000
Medical and rehabilitation benefits $ 490,000
Attendant care benefits $ 558,342
Housekeeping benefits $ 51,658
[102] At paragraph 64 of her affidavit, counsel includes a chart setting out the following information (“the Chart”):
• The amount said to remain available to Ms. He under each benefits category;
• Where relevant, the information set out in the Willis report;
• The cost of funding the full amount of Ms. He’s remaining benefits entitlement through a structured settlement. The figures in this section of the Chart are based on information provided to counsel by a representative of the structured settlement company;
• The present value of Ms. He’s remaining benefits entitlement without a structure; and
• Based on MMI’s allocation of the settlement funds, the percentage discount from Ms. He’s remaining benefits entitlement that the 2021 settlement represents on a category-by-category basis.
[103] Counsel’s evidence focuses on the respondent insurer’s approach to settlement negotiations of a SABS claim as a significant factor in support of the reasonableness of the settlement of Ms. He’s SABS claim. As the court understands that approach, the insurer (a) considers only the annuity-cost funding of the remaining benefits entitlement, and (b) will settle the claim only if Ms. He is prepared to accept something less than 100 per cent of the annuity-cost funding.
[104] The insurer’s approach to the settlement negotiations may well serve its best interests. The insurer’s best interests are not the measure by which the court determines whether the 2021 settlement is in Ms. He’s best interests and should be approved.
[105] It is only when all of the relevant evidence is considered that the court is in a position to determine whether a settlement is reasonable and in the best interests of the person under disability. If, when all of the relevant evidence is considered, the proposed discount from 100 per cent of the present value of the injured person’s SABS entitlement is not in the injured person’s best interests, then the court is not in a position to approve the settlement.[^23]
[106] The evidence before the court from counsel and from Mr. Chen in support of their respective beliefs that the proposed discount of 21 percent from the annuity-cost funding of 100 per cent of Ms. He’s SABS entitlement is reasonable and in her best interests falls short of the evidence required to support granting the relief requested. The settlement is not approved at this time.
[107] Without making specific findings or reaching specific conclusions, the court makes the following observations about the foundations for the beliefs expressed by Mr. Chen and the beliefs or opinions expressed by counsel in their respective affidavits.
▪ Medical and Rehabilitation Benefits
[108] Counsel’s evidence is that the benefits remaining available to Ms. He under this category are in the amount of $752,687.05. At paragraph 52 of her affidavit, counsel states that as of June 2021, MMI had paid $247,312.95 in medical and rehabilitation benefits. The source of this information is not identified.
[109] Evidence in writing from MMI with respect to the benefits paid to date on a category-by-category basis is required. That evidence could be in the form of a letter addressed to or email communication with Ms. He’s counsel. Counsel could rely on such a letter as the source of evidence, based on information and belief, with respect to benefits paid to date.
[110] The court is concerned that, in support of the application for approval of the settlement, both counsel and Mr. Chen rely on the premise that Ms. He’s treatment needs will decrease in the future. That premise was relied on by both Ms. He’s (then) counsel and Mr. Chen in support of the 2018 application. Reliance on that premise was one of the reasons why the 2018 application was dismissed.
[111] In dismissing the 2018 application, the court referred to item 11 of the recommendations set out in the Moustgaard report: “Ms. He requires ongoing, multidisciplinary rehabilitation and care. There is note of decline in her areas of function when she was not receiving therapy while travelling (e.g. as per Ms. Tan). Ms. He may require lifelong therapies once she has reached a plateau in order to maintain gains.”
[112] The Moustgaard report is before the court again as part of the record on the 2021 application.
[113] There is no evidence to support a conclusion that Ms. He’s treatment needs will decrease over time. There is, however, the reference in the Willis report to an opinion expressed by Dr. Shawn Marshall, a physiatrist with The Rehabilitation Centre. According to the Willis report, Dr. Marshall expressed the opinion that Ms. He is 4.5 times more likely to develop early onset dementia.
[114] There is no evidence that Ms. He’s future care needs with respect to the potential early onset of dementia were considered by Mr. Willis. For example, what additional medical, rehabilitation, or attendant care expenses might be associated with the early onset of dementia?
[115] The court recognizes that it is impossible to predict with accuracy when Ms. He may begin to experience dementia, if she experiences such symptoms at all. The court also recognizes that it is impossible to predict with certainty what dementia-related future care expenses Ms. He may incur. Some consideration must, however, be given to the expenses that Ms. He may incur because of the early onset of dementia. For example, dementia-related future care expenses might be addressed as a positive contingency which balances out a negative contingency.
[116] Simply put, the premise that Ms. He’s treatment needs will decrease in the future is not supported by the evidence; if anything, the evidence suggests precisely the opposite.
[117] The proposed structure payments are premised on Ms. He’s treatment needs decreasing over time. In light of all of the above, the court is concerned about the proposed payment schedule.
▪ Attendant Care Benefits
[118] At paragraph 52 of her affidavit, counsel states that the attendant care benefits paid by the respondent insurer, since Ms. He’s discharge from hospital in 2015, total $204,461.81. Once again, the source of that information is not identified and there is no exhibit to substantiate that figure.
[119] In his report, Mr. Willis states that Dr. Marshall expressed the opinion that Ms. He “now has severe cognitive impairments and requires 24/7 supervision [and] can’t live independently”.[^24] The Willis report identifies that numerous other health care professionals also expressed the opinion that Ms. He requires 24/7 attendant care.[^25]
[120] Despite the fact that Ms. He’s attendant care needs are assessed at, or above, the $6,000 monthly maximum, and that Ms. He requires 24/7 supervision, the proposed settlement is premised on (a) historical payments of $3,400 per month for attendant care, (b) 74 per cent of Ms. He’s future attendant care benefits entitlement based on annuity-cost funding, and (c) 66 per cent of the present value of Ms. He’s future attendant care benefits entitlement if funded by a lump sum payment.
[121] Mr. Chen’s evidence is that he does not expect the future attendant care costs to be as high as $6,000. At paragraph 16 of his affidavit, Mr. Chen says, “While I am alive and able, I will be with Min to provide as much of the attendant care as I can.” The court must, however, consider the possibility that Mr. Chen will not always be available to continue to support and care for Ms. He. In doing so, the court does not intend any disrespect to Mr. Chen. Mr. Chen’s devotion to Ms. He is admirable. The court must look beyond that devotion and consider Ms. He’s best interests.
[122] It is possible that Mr. Chen will, for reasons beyond his control and/or because of marital breakdown, not always be available to meet at least some of Ms. He’s attendant care needs. There is no evidence as to his age or his overall health. That evidence is relevant to the court’s consideration of Mr. Chen’s ability to provide care to Ms. He, both at present and in the future.
[123] The evidence is that should Mr. Chen no longer be available to assist in meeting Ms. He’s needs – attendant care and otherwise – the couple’s daughter would step in to fulfill the roles that Mr. Chen has been fulfilling to date. Ms. Chen is currently a student in a science program at the University of Ottawa. Her future plans, including where she may complete her post-secondary education and pursue her career, are not in evidence. In any event, the court must consider the possibility that there will be no family member to assist Ms. He with her future care.
[124] The proposed discount of the settlement of Ms. He’s entitlement to attendant care benefits – ranging from 26 to 34 per cent – does not adequately take into consideration the cost of fulfilling Ms. He’s attendant care needs in the event a family member is no longer available to fulfill those needs (including up to 24 hours per day).
▪ Summary
[125] Counsel’s evidence is that when the proposed settlement is considered as a whole, it represents 79 per cent of Ms. He’s future SABS entitlement. Even if a discount of 21 per cent is considered (as opposed to the 26 to 34 per cent range discussed immediately above), the court is unable to conclude that the proposed discount from 100 per cent of Ms. He’s future SBS entitlement is in her best interests.
[126] Even though the 2021 settlement is not approved, it may be of assistance to the parties for the court to address the proposed allocation and management of the settlement funds.
Allocation and Management of the Settlement Funds
[127] Without making specific findings or reaching conclusions, the court makes the following observations about the proposed allocation and management of the settlement funds:
• The court has already expressed concern about the lack of evidence to support a finding that the proposed decrease over time of the monthly payments from the structured settlement is in Ms. He’s best interests. That concern is based on the lack of evidence to support a conclusion that Ms. He’s future care needs will decrease over time.
• For the structure proposed at this time or any structure proposed in the future, evidence is required with respect to (a) the cost of the guarantee, (b) who is paying that cost – Ms. He or someone else, and (c) if paid by Ms. He, the impact that funding the cost of the guarantee has on the amount of the monthly payments.
• The guaranteed portion of the structured settlement is intended as an estate protection mechanism. Given that there is an element of estate protection available from the structure purchased with funds from the tort settlement, why is additional estate protection required for the structure now proposed?
• The information available about the couple’s assets is that they include two properties, each valued at a six-figure amount. The couple may have other assets, about which there is minimal, if any, evidence before the court. Why is estate protection necessary (a) at all, and (b) if it serves to reduce the money that would otherwise be available to Ms. He from the structured portion of the SABS settlement?
• Have other options for estate protection been considered? For example, another option is for the individual(s) seeking the estate protection to pay for a life insurance policy on Ms. He. Is Mr. Chen in a position to purchase a life insurance policy on Ms. He and fund the premiums from the damages he recovered in the tort action (or from another source)? Evidence is required to explain why it is in the best interests of the injured person that they bear the cost of the proposed estate protection mechanism (i.e., assuming this to be the case with respect to the proposed structure);
• The annuity-cost of funding Ms. He’s remaining IRB entitlement is said to be $377,051.09. The Chart includes that figure and two figures for the present value of Ms. He’s remaining IRB entitlement based on non-structured funding. First, the present value is identified in terms of “Market rates”, at $318,192. Second, the present value is identified in terms of “Discount [r]ates”, at $362,551. Neither of the terms, “Market rates” or “Discount [r]ates”, is explained in counsel’s affidavit. In addition, the source of the present value calculations in the Chart relating to Ms. He’s IRB entitlement based on market rates and discount rates is not clear;
• For the non-structured portion of the 2021 settlement, specific evidence with respect to the management of the funds is required. For example, an affidavit from the financial advisor with whom it is proposed $120,000 will be invested should be provided. First-hand evidence from that individual is required to assist the court in understanding why the proposed investment is in the injured person’s best interests and how that asset will be protected and/or utilized over time.
• Better evidence is required with respect to the proposal to invest $100,000 in Ms. He’s RRSP. For example, what are the plans for that money? How will it be invested? Will any portion of it be accessed before it is mandatory for Ms. He to make withdrawals from her RRSP? Regardless of when Ms. He will need to withdraw funds from her RRSP, at what rate is it anticipated that she would do so? For how many years will there remain capital from which to make those withdrawals?
• Better evidence is also required with respect to the $18,000 to be deposited into an RDSP for Ms. He. What are the parameters for withdrawal of funds from such a plan? When will Ms. He begin drawing down on the capital in that plan and by what amount each year? For how many years will Ms. He be able to make withdrawals before the capital is depleted?
[128] The bulleted points above are not intended as an exhaustive list. They are intended to assist counsel and Mr. Chen when addressing the deficiencies in the evidence before the court.
▪ Summary
[129] It is not a simple task to collate and present the court with the evidence required on an application for the approval of a settlement of the SABS claim for an individual who is catastrophically impaired. The type of evidence required is similar to that required on an application for the appointment of a guardian of property or when approval of an amended management plan is requested by a guardian of property.
Approval of the CFA and of the Proposed Solicitor-Client Account
[130] In the circumstances, the court does not determine the request for the approval of the CFA or of the proposed solicitor-client account.
[131] The CFA for which approval is sought is based on a 20 per cent contingency fee. Counsel’s affidavit highlights that the fee portion of the proposed solicitor-client account represents approximately 17 per cent of the $1,450,000 settlement.
[132] Included as an exhibit to counsel’s affidavit are the dockets for the work done by the various timekeepers who worked on Ms. He’s claim for accident benefits. The fees in the proposed solicitor-client account represent approximately four times the fees docketed by counsel.
[133] One of the factors to be considered by the court when approving a solicitor-client account is the client’s ability to pay. Does an injured person who is anticipated to face financial challenges in meeting their future care needs have the ability to pay a premium of 400 percent?
[134] There is no factum filed in support of the request for approval of either the CFA or the proposed solicitor-client account. Regardless of the fact that the application was submitted in writing, counsel seeking approval of fees that represent a significant premium on docketed time would be well-advised to file a factum in support of the request for approval of their solicitor-client account.
[135] Before concluding the ruling, the court deals with three procedural matters.
Procedural Issues
[136] The three procedural matters addressed are (a) representation of MMI in this proceeding, (b) representation of Ms. He in this proceeding, and (c) affidavit evidence on an application.
a) Representation of MMI
[137] The relief requested by Ms. He includes an order “waiving” the requirement that MMI be represented by a lawyer on the application. The manner in which the relief is framed leaves the court with the impression that Ms. He and, for that matter, MMI, believe that it is possible for MMI to be unrepresented and yet, in some way, still be considered to have responded to the application.
[138] There is nothing in the record to indicate that MMI delivered a notice of appearance in response to the notice of application. MMI did not deliver a responding record to the application.
[139] The grounds upon which Ms. He relies in support of her request for the aforementioned order are limited to r. 15 and the following statement: “The Respondent has indicated that it is aware of Rule 15 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and wishes to waive the requirement to be represented by Counsel at the hearing of this application”.
[140] Rule 15.01(2) provides that, “[a] party to a proceeding that is a corporation shall be represented by a lawyer, except with leave of the court.” The factors considered by the court on a motion under r. 15.01(2) stem from the case law. Those factors were recently reviewed by this court in Tash Benson Group Inc. v. Back-Bone Gear Inc. et al., 2021 ONSC 7667.
[141] At paras. 29-31 of Tash Benson, the court summarized the factors[^26] to be considered on a motion under r. 15.01(2), by an individual seeking leave to represent a corporation:
• The internal situation of the corporation – is the person seeking leave to represent the corporation a senior representative of the corporation who has been duly authorized by a duly elected board of directors?
• Will the proposed corporate representative be able to carry out the duties of a litigant under the Rules?
• What is the nature of the action and of the issues? Will it be seriously unfair to the opposite party for the case to be presented or defended by a non-lawyer?
• Are the interests of shareholders, officers, directors, employees, creditors and other potential stakeholders adequately protected if leave is granted?
• Will the proposed representative be reasonably capable of comprehending the issues and articulating the case on behalf of the corporation?
• Is the corporation financially capable of retaining counsel?
[142] With respect to the final bullet point, one line of cases supports consideration of the financial capability of the corporation regardless of the nature and size of the corporation.[^27]
[143] On a motion under r. 15.01(2), the court must also consider the general principles set out in r. 1. First, r. 1.04 requires that the Rules be construed liberally in order to secure the just, most expeditious, and least expensive determination of the matter. Second, pursuant to r. 1.1, the court is required to make orders and give directions that are proportionate to the importance and complexity of the issues.
[144] In neither of the affidavits filed in support of the application is there any evidence addressing the request for an order waiving the requirement for MMI to be represented by counsel. There is no evidence as to who MMI proposes will represent it on the return of the application. In the absence of any evidence in that regard, the court is unable to address this aspect of the relief requested.
[145] It is unusual to find the request for relief under r. 15.01(2) made by the party adverse to the corporation named as a party in the proceeding. Typically, the non-lawyer seeking to represent a corporation in a proceeding files a motion record in support of the requisite relief.
[146] How is counsel’s work with respect to the relief requested on behalf of MMI being treated in the context of the proposed solicitor-client account? Is Ms. He paying the expenses associated with that work and, if so, is that reasonable?
[147] Is there any reason why MMI should not incur the expenses associated with a motion for leave to be represented by a non-lawyer on the return of the application?
[148] The request for an order waiving the requirement for MMI to be represented by a non-lawyer on the return of the application is one of the matters that will be addressed at the case conference to be scheduled as the next step in this proceeding.
b) Representation of Ms. He
[149] The notice of application issued in June 2021 identifies Ms. Hollingsworth as the lawyer of record for Ms. He. Pursuant to r. 7.08(4)(b) of the Rules of Civil Procedure, Ms. Hollingsworth was, in that capacity, required to provide an affidavit in support of the application.
[150] Section 5.2-1 of the Law Society of Ontario, Rules of Professional Conduct[^28] deals with the submission of evidence and provides that, “[a] lawyer who appears as advocate shall not testify or submit their own affidavit evidence before the tribunal unless (a) permitted to do so by law, the tribunal, the rules of court or the rules of procedure of the tribunal, or (b) the matter is purely formal or uncontroverted.” The Commentary to that rule states that, “the lawyer who is a necessary witness should testify and entrust the conduct of the case to another lawyer.”
[151] It matters not whether a motion or an application for approval of a settlement is made in writing. Section 5.2-1 of the Rules of Professional Conduct applies to both types of proceedings.
[152] The factors which the court will consider in determining whether to permit counsel, who is also a witness, to remain as the lawyer of record are set out in the Divisional Court decision in Essa (Township) v. Guergis; Membery v. Hill (1993), 1993 CanLII 8756 (ON SCDC), 52 C.P.R. (3d) 372 at p. 382. Those factors include the stage of the proceeding, the likelihood that the lawyer will be called as a witness, and the significance of the evidence to be led.
[153] It may be a longstanding practice for the injured person’s counsel to be both an affiant and the lawyer of record on a motion or an application for approval of a settlement. That practice, however, runs contrary to the Rules of Professional Conduct.
[154] A lawyer of record who provides an affidavit on a motion or an application under r. 7.08 requires leave of the court to remain as lawyer of record for the motion or application. It would be prudent for counsel for the moving party to (a) include in the notice of motion a request for relief in that regard, and (b) include in their affidavit, evidence related to that request.
[155] The evidence required in support of leave to be both affiant and lawyer of record will, in many cases, be minimal and not result in significant additional expense to the moving party. For example, consideration could be given to the factors addressed in rr. 1.04(1) and (1.1) of the Rules of Civil Procedure – cost-effectiveness, efficiency, and proportionality.
[156] For motions or applications submitted in writing and for which an oral hearing is required by the court, there may be circumstances in which the court does not grant leave to the lawyer of record to be an affiant and appear as counsel on the return of the motion or the application. In some cases, the court may wish to pose questions of the individuals who provide the supporting affidavits.
c) Affidavit Evidence on an Application
[157] Evidence on an application is governed by r. 39.1(5). Pursuant to that rule, an affiant may include statements of their “information and belief, if the source of the information and the fact of the belief are stated in the affidavit.” In an affidavit delivered in accordance with r. 7.08(4)(b), the injured person’s lawyer is required to set out their position with respect to the proposed settlement. To fulfil that obligation, the injured person’s lawyer frequently relies on the contents of medical records and experts’ reports.
[158] It is important that the lawyer be specific in identifying (a) when their evidence is based on information and belief, and (b) the source of that information. For example, in the Chart at paragraph 64 of her affidavit, counsel lists various present value figures – presumably as calculated by ADS – without either identifying the source of the information or stating her belief as to the truth of the present value calculations.
[159] It is not sufficient to identify an accounting firm as the source of the information. The name of the individual who carried out the present value calculations is required.[^29] In addition, it is important that the lawyer be specific in stating when their evidence is based on a “belief” as to the truth of the information. By doing so, the lawyer not only complies with r. 39.01(5), but also allows the court to distinguish between evidence of that kind and evidence of the lawyer’s opinion related to the issues to be determined.
[160] At several points in this ruling, the court highlights that the attachment of an expert’s report as an exhibit to counsel’s affidavit does not make the substantive contents of the report evidence on the application. For the substantive contents of the report to be evidence on the application, the applicant must file an affidavit from the author of the report (a) summarizing the contents of the report, and/or (b) stating that their opinions are expressed in the report and attaching it as an exhibit.
[161] That said, first-hand evidence from expert witnesses, health-care practitioners who created medical records, and life-care planners is not required. It is the lawyer’s analysis of the contents of those documents that is important. The type of detailed analysis required is discussed throughout this ruling. The manner in which the analysis is presented in the lawyer’s affidavit must comply with r. 39.01(5).
Disposition
[162] The application is adjourned to a case conference, the purpose of which is to address next steps in the application. Counsel shall communicate with the Trial Co-ordinator’s Office to arrange a case conference. I remain seized of the matter and the case conference shall proceed before me.
Madam Justice Sylvia Corthorn
Released: February 10, 2022
CITATION: He v. Meloche Monnex, 2022 ONSC 974
COURT FILE NO.: CV-21-87086
DATE: 2022/02/10
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MIN HE by her Litigation Guardian, Tao Chen, Applicant
-and-
MELOCHE MONNEX INC., Respondent
COUNSEL: Brenda Hollingsworth, for the Applicant
No one appearing for the Respondent
HEARD: In Writing
ENDORSEMENT
Madam Justice Sylvia Corthorn
Released: February 10, 2022
[^1]: "Catastrophically impaired" as defined within the Schedule and related regulations.
[^2]: The reasons why there was a five-month delay from the date of filing until the matter was brought before the court are unknown. The court does not cast aspersions on either counsel or the court’s administrative staff. In this era of electronic filing it is possible for materials to be missed.
[^3]: Transcript of oral reasons given on September 18, 2019 (“Transcript”), at p. 5.
[^4]: Transcript, at p. 5.
[^5]: Transcript, pp. 9-10.
[^6]: Transcript, p. 10.
[^7]: The descriptor “future care” is used, even though the injured person’s needs may extend beyond “care” in the strictest sense of the word to include rehabilitation services, transportation, financial management, housekeeping, etc.
[^8]: Transcript, p. 12.
[^9]: Transcript, p. 12
[^10]: Counsel’s affidavit, exhibit “M”.
[^11]: Counsel’s affidavit, para. 62.
[^12]: Counsel’s affidavit, exhibit “O”, record p. 202. This amount includes the present value of medical and rehabilitation benefits, attendant care benefits, and housekeeping benefits. It does not include the present value of Ms. He’s remaining IRB entitlement.
[^13]: Ibid, record p. 204.
[^15]: Ibid, record p. 205.
[^16]: Ibid, record p. 205.
[^17]: $7,102,580 = $2,719,940 + $4,382,640.
[^18]: $5,985,225 = ($4,382,640 / $6,000) x $8,194.
[^19]: The account was for $211,371.96 in fees, HST thereon of $27,478.35, and disbursements, including HST, of $9,699.90.
[^20]: $836,149.69 = $1,000,000 + $84,699.90 – $248,550.21.
[^21]: $46,578.31 = $836,149.69 - $500,000 - $289,571.38.
[^22]: Both figures are as of 2019 when the capacity assessment was done.
[^23]: This will be the case whether the settlement is funded by an annuity, a lump sum payment, or a combination of the two.
[^24]: See pp. 10 and 11 of the Willis report.
[^25]: See p. 11 of the Willis report and the references to the views expressed by Ms. He’s family physician, social worker, and occupational therapist.
[^26]: The factors summarized are based on the decisions in Ward v. 1121720 Ontario Ltd. o/a Havcare Investments Inc., 2015 ONSC 3873 and 419212 Ontario Ltd. v. Astrochrome Crankshaft Toronto Ltd. (1991), 1991 CanLII 7163 (ON SC), 3 O.R. (3d) 116 (Master).
[^27]: See Ward, at para. 5; Astrochrome at p. 118.
[^28]: Toronto: Law Society of Ontario, 2000 (as amended), ch. 5.
[^29]: See Gordon v. Gordon et al., 2022 ONSC 550, at paras. 10-13 and the decisions cited therein.