Court File and Parties

COURT FILE NO.: CV-16-4387 DATE: 2023 11 03 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ethan Ajayi by his Litigation Guardian Olumuyiwa Ajayi, Olumuyiwa Ajayi and Abimbola Agnes Oyinloye, Plaintiffs AND: Gilbert Miller, Richard Hamat, Joseph Porepa, D. Patel, Sheena O’Connor, also known as Sheena Krafft, Linda Paton, Naresa Ramjohn, Patricia Smith, Sampurna Kanagaraj, Daphne Yu, Sonia Ramsay, Linda Salvati, Aysha Ebrahim, Birgit Mannella and Humber River Hospital

BEFORE: M.T. Doi J.

COUNSEL: Jerome R. Morse, for the Moving Plaintiffs Byron Shaw and Greer Hope, for the Defendants, Gilbert Miller, Richard Hamat and Joseph Porepa Wendy Whelan, for the Defendants, D. Patel, Sheena O’Connor, also known as Sheena Krafft, Linda Paton, Naresa Ramjohn, Patricia Smith, Sampurna Kanagaraj, Daphne Yu, Sonia Ramsay, Linda Salvati, Aysha Ebrahim, Birgit Mannella and Humber River Hospital

HEARD: October 25, 2023

Endorsement

Overview

[1] This is a Rule 7.08 motion for approval of a proposed settlement for a minor, Ethan Ajayi, arising from a medical negligence action. The motion is somewhat unusual as Mr. Morse, counsel for the Plaintiffs, does not support the terms of the proposed settlement despite being instructed by Ethan’s litigation guardian and father, Olumuyiwa Ajayi, to bring this motion for court approval of the proposed settlement.

[2] On October 26, 2023, I released a bottom-line decision which approved the settlement with reasons to follow. My reasons for granting the approval are set out below.

Background

[3] This medical negligence action relates to pediatric care that Ethan received in or around July 2013.

[4] Ethan was born prematurely at 32 weeks gestation with a low birthweight and a deficiency of the glucose-6-phosphate dehydrogenase enzyme (“G6PD”). The deficiency causes red blood cells to break down prematurely under a process known as hemolysis. Being a male of African descent (i.e., as both of his parents were born in Nigeria), Ethan had risk factors for the deficiency.

[5] Within days of his birth on July 17, 2023, Ethan, a dark-skinned child, developed severe jaundice and hyperbilirubinemia, which the Plaintiffs claim should have been monitored, detected, and treated with phototherapy. Jaundice is caused by excess bilirubin in the blood. Bilirubin, an orange-yellow bile pigment, results from a breakdown of hemoglobin in red blood cells. When blood cells break down prematurely, more bilirubin is released into the bloodstream causing the skin and, in some cases, the sclera of the eyes, to yellow. Bilirubin can cross the blood-brain barrier and, when it does, leads to serious and permanent brain damage and neurologic deficits.

[6] The Plaintiffs allege that failure to appropriately monitor, detect and treat Ethan’s bilirubin levels caused him to suffer permanent neurological damage. They allege that this outcome could have been avoided had the Defendants recognized and treated his condition in timely fashion.

[7] Between July 19 and July 21, 2013 (i.e., two to four days after his birth), Ethan’s levels of bilirubin were tested on 3 occasions, the last one revealing that his bilirubin level was 197 µMol/L which was 3 µMol/L below the level at which phototherapy guidelines specify a requirement for phototherapy. No further bilirubin testing was done until July 24, 2013 when his bilirubin level was 421 µMol/L which required treatment, initially with phototherapy and later through a blood exchange transfusion. The lack of testing between July 21 and 24, 2013 makes it impossible to know with certainty whether his bilirubin level continued to rise at a rate for which further timely testing would have revealed the need for treatment to avert a bad outcome, or whether the level suddenly spiked before testing indicated the need for treatment on July 24, 2013. The Plaintiffs contend the former while the Defendants contend the latter. Each position is supported by expert opinions that are conflicting.

[8] G6PD is a known cause of bilirubin levels spiking in newborns. However, without knowing the progression of Ethan’s bilirubin levels at the material times, it cannot be known with certainty whether this actually occurred. A central issue in dispute is whether Ethan’s negative outcome could have been avoided by monitoring his bilirubin levels and managing them with phototherapy, or whether the outcome was unavoidable as a sudden spike to his levels could not have been anticipated.

[9] Once Ethan’ elevated bilirubin levels were known, he was transferred to The Hospital for Sick Children where he underwent an exchange transfusion to replace his blood with donor blood containing normal bilirubin levels. By this point, Ethan had already suffered neurological injury due to the hyperbilirubinemia and consequent kernicterus that led to neurologic sequelae including cerebral palsy, spastic quadriparesis, increased tone peripherally, a bilateral loss of hearing (i.e., for which he wears hearing aids), and coordination issues. Among other things, Ethan has fine motor control issues in his hands that make it hard for him to dress (e.g., to turn clothing right side out, do up buttons or zippers, or perform other such manoeuvres) and to eat (e.g., to cut food, move plated food to his mouth, drink from a cup, or related actions). In addition, Ethan lives with balance and mobility issues due to brain and CNS injury. He has bilateral ankle/foot orthoses and uses a walker on longer walks.

[10] Dr. Erin Warriner, PhD, CPsych, a neuropsychologist, assessed Ethan with a DSM-5 diagnosis of Neurodevelopmental Disorder (Encephalopathy) with risk factors being prematurity, hyperbilirubinemia and associated episodes. Ethan presents as a happy-go-lucky, outgoing and well-adjusted child. However, Ethan has experienced social stresses from other children who do not understand his hearing, speech, motor and learning limitations. On occasion, he has been excluded by peers due to his disability. Dr. Warriner opined that Ethan is at high risk for Learning Disability or Specific Learning Disorder and Attention Deficit/Hyperactivity Disorder (ADHD).

[11] Ethan follows an Individual Education Plan at school. He attends a regular classroom, has daily support from an educational assistant, and gets input from a physiotherapist, an occupational therapist, a special education resource teacher, and the school principal, as required.

[12] Dr. Warriner and Dr. Salia Slonim, PsyD, CPsych, a neuropsychologist, agree that Ethan is presently too young for them to opine with certainty on issues such as what level of education he might achieve, whether he will obtain future competitive employment (i.e., and if so whether on a full or part-time basis), and whether he may eventually live independently in the community. Despite having differing views on these issues, Dr. Warriner and Dr. Slonim agree that Ethan’s future course will be more predictable when he transitions from elementary to secondary school at around 14 years of age. Based on these opinions, the Plaintiffs brought a motion to postpone the trial, set down for the January 2025 trial sittings, to a later sittings in 2028. This was intended to permit Ethan to reach the milestone of transitioning to high school when he could undergo a neuropsychological reassessment for a more accurate or definitive opinion about his permanent disabilities, after which his consequential needs and financial losses could be better ascertained and quantified for trial. While timetabling the motion, the parties agreed to attend mediation.

[13] On August 21, 2023, the parties attended a mediation facilitated by Cliff Hendler. During mediation, various offers to settle were made. After about six hours of mediation, the Plaintiffs and the Defendants made all-inclusive offers to settle of $6 million and $4.85 million, respectively. Late in the day, the Defendants communicated their acceptance of an offer by the Plaintiffs to settle the case for $5 million. There is some conflicting evidence about the offer to settle that was made on behalf of Ethan at mediation. On balance, I accept that the settlement instructions given by the litigation guardian, Mr. Ajayi, were subject to written instructions being given after reading Mr. Morse’s opinion on why he did not recommend the proposed settlement and would not swear an affidavit to support it when seeking court approval.

[14] After the mediation, Mr. Morse wrote an opinion dated September 2, 2023 to Mr. Ajayi and Ms. Oyinloye, Ethan’s mother, to explain his advice regarding the proposed settlement. After reading the opinion, Mr. Ajayi (in his personal and representative roles) and Ms. Oyinloye gave Mr. Morse written instructions to proceed with the proposed settlement and to seek court approval. In doing so, they explained their reasons for their instructions to Mr. Morse who acknowledges without any hesitation that both parents love Ethan and care for him extremely well as various reviewers have observed and reported in assessing the child for this proceeding.

Sealing Order

[15] As set out below, I granted a partial sealing order over parts of the Plaintiffs’ record for the motion to preserve solicitor-client privilege given the potential prejudice to their interests at trial if the proposed settlement were not approved. However, I declined the Plaintiffs’ request for the motion to be heard in camera, as explained further below.

[16] A court may order that any document filed in a civil proceeding be treated as confidential, be sealed, and not form part of the public record pursuant to ss. 137(2) of the Courts of Justice Act, RSO 1990, c. C.43.

[17] The following 3-part test has been established for granting a sealing order or any other exception to the open court principle: a. Court openness poses a serious risk to an important public interest; b. The sealing order is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent this risk; and c. As a matter of proportionality, the benefits of the sealing order outweigh its negative effects. Sherman Estate v. Donovan, 2021 SCC 25 at para 38.

[18] Sealing orders are not routinely granted and require sufficient evidence to be made: Rupp v. Stackhouse, 2018 ONSC 312 at para 11; Dickson v. Kellett, 2018 ONSC 4920 at para 44.

[19] Any potential incursion into privileged information on a Rule 7.08 motion must be weighed against the following: a. The obligations of the court in fulfilling its parens patriae jurisdiction; b. The public interest in knowing that the court supervises settlements reached on behalf of minors and persons under a disability; and c. Transparency in the proceeding, including the settlement approval process. Dickson at para 45.

[20] Where litigation is ongoing, a moving party to a Rule 7.08 motion may seek a sealing order to protect solicitor-client privilege: Lochner v. Callanan, 2016 ONSC 591 at paras 13-14; Ki Ho Kim v. 260 Wellesley Residences Inc., 2017 ONSC 2993 at para 24. The potential prejudice to the moving party if the settlement is not approved after supporting evidence has revealed privileged information may justify a sealing order over some or all of the record: Boone v. Kyeremanteng, 2020 ONSC 198 at paras 78-79.

[21] After hearing submissions on the issue of notice to the media, I exercised my discretion under para 155 to Part H (Publication Bans) of the Consolidated Provincial Practice Direction to dispense with notice to the media. Having regard to the particular circumstances of this case, the privileged nature of the content at issue, the limited public interest in this matter, and my intention to release appropriate information in my published reasons for the motion, I found that it would be just and appropriate to dispense with notice to the media, nunc pro tunc: W.A.C. v. C.V.F., 2021 ONSC 6894 at para 270.

[22] As set out earlier, this motion under Rule 7.08 is somewhat unusual as Plaintiffs’ counsel declined to swear an affidavit in support of the proposed settlement after being instructed to resolve the claim. In these circumstances, I found that portions of the Plaintiffs’ record for the motion should be sealed to prevent the disclosure of solicitor-client privileged information that would have compromised their right to a fair trial if the proposed settlement were not approved. Given the clear need for appropriate candour in the supporting evidence for this Rule 7.08 motion, I found that it was necessary for Mr. Morse to file solicitor-client privileged information in the evidence for the motion to ensure that a sufficiently fulsome record was available to allow for a meaningful assessment of whether the proposed settlement serves the best interests of the incapable child. To this end, I was not persuaded by the Defendants’ position that the Plaintiffs could craft adequate supporting materials without revealing solicitor-client privileged content as the underlying basis of Mr. Morse’s concern with the proposed settlement clearly turned on his opinion of the facts and their application to legal principles and authorities. I also found that a disclosure of the solicitor-client privileged content would seriously compromise the Plaintiffs’ right to a fair trial if the proposed settlement were not approved: Lochner at paras 13-14; Kim at para 24; Boone at paras 78-79. On balance, and to avoid prejudicing the Plaintiffs’ right to a fair trial, I determined that a sealing order was necessary to preserve confidentiality over the solicitor-client privileged content as no alternative measures would reasonably prevent the Plaintiffs’ fair trial rights from being compromised if this content were made public. Having regard to the unique circumstances of this case, I found that the benefits of granting a sealing order outweighed any negative impacts to court openness. Based on this, and after considering the Plaintiffs’ record for the motion, I ordered the unredacted record sealed, directed certain redactions to parts of the publicly-available record to preserve the confidentiality of its solicitor-client privileged content, and declined to redact other portions of the public record that did not implicate solicitor-client privilege. [i]

Exclusion of Public

[23] As set out below, I declined the Plaintiffs’ request to hear the motion in camera.

[24] With certain exceptions, court hearings are generally open to the public: s. 135 of the Courts of Justice Act; Rule 37.11. The court may exclude the public where the possibility of serious harm or injustice to a person justifies a departure from the general principle that court hearings should be open to the public: ss. 135(2) of the Courts of Justice Act; Fehr v. Sun Life Assurance Company of Canada, 2012 ONSC 2715 at para 145. To exclude the public from a hearing, the party seeking the exclusion must satisfy the three-part test under Sherman Estate at para 38.

[25] Given the measures to maintain confidentiality of the privileged content in the supporting record, I was satisfied that the motion could be argued appropriately in open court with a sufficient degree of meaningful transparency without compromising solicitor-client privilege or otherwise seriously risking the Plaintiffs’ right to a fair trial if the proposed settlement were not approved. In my view, this approach balanced the need for court openness and transparency for the settlement approval process while guarding against the risk of serious prejudice or harm to the fair trial rights of the Plaintiffs by preventing privileged information from being revealed to the Defendants.

The Settlement

[26] In my view, an approval of the proposed settlement would serve Ethan’s best interests.

[27] The requirement for court approval on behalf of parties under a disability is derived from the court’s parens patriae jurisdiction and is codified under Rule 7.08(1): Wu Estate v. Zurich Insurance Co. at para 10.

[28] A party seeking approval under Rule 7.08 must submit sufficient evidence to allow for a meaningful assessment of the reasonableness of the proposed settlement for the person under disability. This typically calls for sufficient evidence to show: a) an appropriate investigation into liability and damages; b) an appropriate assessment of liability; c) an appropriate assessment of damages; and d) the fees and disbursements to be charged are reasonable in all the circumstances: Kee Kwok v. State Farm Mutual, 2016 ONSC 7339 at paras 8-9, citing Rivera v. LeBlond (2007), 44 CPC (6th) 180 (SCJ) at paras 23 and 27.

[29] A solicitor may, subject to conditions and restrictions, enter into a variety of agreements with a client in respect of the amount and manner of payment for services provided, including a contingency fee agreement: ss. 16(1) and 28.1 of the Solicitors Act, RSO 1990, c. S.15 (the “Act”): Kwok at para 21. Where the retainer involves a contingency fee agreement, ss. 5(1) of O.Reg. 195/04, Contingency Fee Agreements (the “Regulation”), the retainer must strictly comply with the Act and the Regulation. The solicitor acting for the person under disability through a litigation guardian must either apply to a judge for approval of the agreement before it is finalized, or include the agreement on the motion or application for approval of the settlement or a consent judgment under Rule 7.08: Kwok at paras 7 and 21-26. The factors to consider in assessing the reasonableness of a solicitor’s proposed fees for a party under disability were comprehensively summarized in Aywas v. Kirwan, 2010 ONSC 2278 at para 18, citing Re Solicitor, , [1973] 1 OR 652 (CA), which I adopt on this motion: see also Treleaven v. Kilgour, 2021 ONSC 646 at para 78, citing Mulhall v. Fraser, 2017 ONSC 6551 at para 58.

[30] Having regard to the evidentiary record, I am satisfied that appropriate evidence has been filed to provide sufficient information to make a meaningful assessment of the reasonableness of the proposed settlement.

[31] The record contains expert and other evidence that, in my view, reveals that a reasonable investigation was conducted into liability and damages. Mr. Morse clearly gave fulsome advice to Mr. Ajayi and Ms. Oyinloye about the proposed settlement, including the matter of whether Ethan’s disability could have been avoided by monitoring his bilirubin levels and managing them with phototherapy, or whether a sudden bilirubin spike occurred which was possible given his G6PD deficiency. In addition, I am satisfied that Mr. Morse undertook an appropriate assessment of damages, and explained his fees and disbursements in some detail. I find that Mr. Ajayi, as the litigation guardian, gave Mr. Morse’s advice serious consideration before instructing him to pursue the proposed settlement and bring a motion for court approval.

[32] The proposed breakdown of the $5 million all-inclusive settlement is as follows:

Total settlement amount payable $5,000,000.00 Less Disbursements/HST $105,848.30 $4,894,151.70 Less Payment to OHIP (i.e., 66.67% of $101,014.98) $67,349.69 $4,826,802.01 Less Partial Indemnity Fees (i.e., approx. 14.5%) $600,000.00 Less HST on Partial Indemnity Fees $78,000.00 Damages payable after OHIP payment, partial indemnity $4,148,802.01 Fees + HST Less proposed solicitor/client fees in excess of partial $600,000.00 indemnity fees (i.e., approx. 14.5%) Less HST on this portion of solicitor/client fees $78,000.00 $3,470,802.01 Less unrecoverable disbursements $6,850.82 Net recovery for all Plaintiffs $3,463,951.19 Recommended distribution to Ethan $3,263,951.19 Recommended distribution to Mr. Ajayi $100,000.00 Recommended distribution to Ms. Oyinloye $100,000.00

[33] From the evidence on the motion, I am satisfied that the proposed settlement will serve Ethan’s best interests. On balance, I accept that the proposed settlement will meet his ongoing needs in a manner that is fair, appropriate and responsible. In addition, the settlement as proposed will conclude this proceeding on a full and final basis, avoid the need for a lengthy and difficult trial, and bring closure and stability for Ethan and his family. After everything is considered, I find that the proposed settlement will provide a fair and reasonable basis for resolving his claim in this case. In arriving at this finding, I accept that Ethan’s claim is complex and carries potential risks, particularly with respect to causation and liability. Its potential outcome at trial is uncertain.

[34] I am satisfied that the proposed legal fee is fair and reasonable. The retainer that the Plaintiffs entered into with Mr. Morse provides for a contingency fee payment of 35% of damages, plus HST. The fee as proposed reflects a reduction of the contingency fee to about 29% of the damages, plus HST. In my view, the proposed fee amount is reasonable given the complexity of the case, the monetary value of the issues in dispute, Mr. Morse’s skill and experience, the risk he took in pursuing the claim (i.e., that included a not-insignificant risk of non-payment), the amount of the potential recovery, the negotiated result that was achieved against the risks associated with the claim, and the potential for success in this matter. I accept that the amount of the proposed fee falls within the range of what a client reasonably could have expected to pay in a complicated and challenging tort case of this nature.

Outcome

[35] Based on the foregoing, I granted a partial sealing order (i.e., to preserve solicitor-client privilege and to avoid prejudicing any continuation of the action if the proposed settlement were not approved) and approved the settlement and fees for this case.

[36] Once the time to appeal this decision has expired, and subject to any further submissions the parties may wish to make, my inclination is to lift the sealing order to facilitate the open court principle. By that point in time, the purpose for granting the sealing order (i.e., to avoid prejudicing any continued prosecution of the case) will have lapsed. However, any party wishing to make submissions on lifting the sealing order may contact the Trial Office within 10 days to ask for this matter to be returned before me to be spoken to.

[37] There shall be no costs for the motion.

[38] I thank all counsel for their assistance with this matter.

Date: November 3, 2023 M.T. Doi J.

[i] With respect to Mr. Morse’ affidavit sworn September 19, 2023, the following orders were made in respect of the redacted version of the affidavit that was filed and publicly accessible in the court file: a) the first two sentences to para 8 were ordered unredacted; b) the first four sentences to para 9 were ordered unredacted and the balance of that paragraph was allowed to be redacted; c) the second sentence to para 18 was allowed to be redacted; d) all of the redactions to para 20 were maintained; e) all of the redactions to para 21 were maintained; f) all of para 22 was ordered to be unredacted as this information was already in the public record; g) all of the redactions to para 23 were maintained and Exhibit “J” to the affidavit (i.e., being Mr. Morse’s opinion letter dated September 2 ,2023 which the Defendants appropriately conceded should not be disclosed on the motion) was allowed to be removed from the affidavit; h) the second sentence to para 27 was allowed to be redacted; i) all of the redactions to para 29 were maintained; j) all of the redactions to para 30 were maintained; k) all of the redactions to para 31 were maintained; l) the third sentence to para 32 was allowed to be redacted; m) all of the redactions to para 35 were maintained; and n) all of the redactions to para 36 were maintained. With respect to Mr. Ajayi’s redacted affidavit sworn September 22, 2023 as filed and publicly accessible, the following orders were made: a) para 4 was ordered unredacted as this information was already in the public record; b) all redactions to para 5 were maintained; c) all redactions to para 6 were maintained; d) all redactions to para 7 were maintained; and e) the redaction to the last sentence of para 8 was maintained. Both affidavits, as amended by my orders, were shared with the Defendants before the parties argued the motion to approve the proposed settlement.