Duffy v. McDaniel, 2025 ONSC 3227

Ontario Superior Court of Justice

Court File No.: CV-21-86993
Date: 2025/05/30

B E T W E E N:

Stephen Duffy, by his Litigation Guardian the Public Guardian and Trustee, June Duffy, Tony Duffy, Michelle Duffy, and Adriana Duffy, by her Litigation Guardian the Public Guardian and Trustee
Plaintiffs

– and –

Nicoletta McDaniel and David McDaniel
Defendants

Sophie Luesby, for the Plaintiffs
Thomas v. Ozere, for the Defendants
Heard: In writing

Ruling on Motion
Sylvia Corthorn

Overview

1On February 1, 2021, Stephen Duffy was struck by a car driven by one of the defendants and owned by the other. Stephen was crossing Hazeldean Road, from north to south, at a point slightly west of an intersection at which there was a crosswalk. It was dark at the time of the collision and Stephen was wearing dark clothing. In an interview given to the police shortly after the collision, a witness to the incident described Stephen as running across Hazeldean Road.

2As a result of the incident, Stephen suffered a traumatic brain injury, multiple fractures, soft tissue injuries, and lacerations of his spleen and liver. The Glasgow Coma Scale assessments of Stephen, conducted at the scene of the incident and on his arrival at The Ottawa Hospital, are indicative of a significant traumatic brain injury.

3The plaintiffs are Stephen, and Stephen’s daughter (Adriana), mother (June), father (Tony), and sister (Michelle). The action was commenced in July 2021.

4In May 2023, following the exchange of pleadings and mediation, the parties reached a tentative settlement of the plaintiffs’ claims. Stephen and Adriana are the only plaintiffs who will receive settlement funds. They are both parties under disability; the settlements of their respective claims require approval.

5In late 2023, the plaintiffs brought a motion in writing for the approval of a contingency fee retainer agreement, the settlements of Stephen’s and Adriana’s claims, the management of the net settlement funds payable to Stephen, and the proposed solicitor-client accounts for each of Stephen and Adriana.

6In its March 2024 ruling, the court approved the contingency fee retainer agreement, the quantum of the settlement of both Stephen’s and Adriana’s claims, and the disbursement portion of the two proposed solicitor-client accounts: Duffy v. McDaniel, 2024 ONSC 1479 (“Ruling No. 1”). The court required additional evidence to consider the fee portion of the two proposed solicitor-client accounts and the proposed management of the net settlement funds payable to Stephen.

7Both prior and subsequent to the release of Ruling No. 1, Stephen expressed an interest in having his capacity to manage property re-assessed. In the spring of 2024, Stephen’s Statutory Accident Benefits insurer arranged for such an assessment to be carried out. At or about the same time, the plaintiffs filed additional evidence in support of the approval motion now before the court.

8Shortly after the court received that additional evidence, the plaintiffs asked the court to adjourn the approval motion pending the outcome of the capacity assessment. The plaintiffs informed the court that if Stephen were found to have the capacity to manage property, within the meaning of the Substitute Decisions Act, 1992, SO 1992, c 30, then Stephen would bring a motion for an order removing the Public Guardian and Trustee (“PGT”) as his litigation guardian. At the time, Stephen’s goal was to gain financial independence, including in the context of finalizing the settlement of his tort claim.

9In accordance with the plaintiffs’ request, the court adjourned the approval motion. In April 2025, the court heard the plaintiffs’ motion for an order (a) removing the PGT as Stephen’s litigation guardian, and (b) permitting Stephen to continue the action in his name. That motion was dismissed without costs: Duffy v. McDaniel, 2025 ONSC 2899.

10At the conclusion of the hearing of the motion in April 2025, the plaintiffs asked the court to determine the balance of the approval motion. In May 2025, as requested by the court, the plaintiffs filed additional evidence. That evidence addresses the fee portion of the two proposed solicitor-client accounts.

The Issues

11In this ruling, the court determines the balance of the approval motion. The following issues are determined:

1. Is the fee portion of each of the two proposed solicitor-client accounts reasonable?
2. Is the proposed structure payment schedule for the net settlement funds payable to Stephen reasonable and in his best interests?

Issue No. 1 – The Fee Portion of the Two Proposed Solicitor-Client Accounts

12The plaintiffs’ lawyers propose to deliver an account to each of Stephen and Adriana. The disbursement portion of each account was approved in Ruling No. 1: see paras. 37, 61. I will consider the fee portion of the account the plaintiffs’ lawyers propose to deliver to Adriana and then the fee portion of the account the plaintiffs’ lawyers propose to deliver to Stephen.

a) The Solicitor-Client Account Proposed for Adriana

13The plaintiffs’ lawyers propose to deliver a solicitor-client account to Adriana in the total amount of $7,294.89. The disbursement portion of that account, previously approved, is $514.89. The balance of the account is comprised of fees of $6,000.00 and HST thereon of $780.00. The proposed fees are not based on a contingency fee agreement (“CFA”); they are based on quantum meruit.

14L. Craig Brown is counsel to the plaintiffs’ lawyers. In his June 2024 affidavit, Mr. Brown describes the work done by the plaintiffs’ lawyers in managing and litigating Adriana’s tort claim. Mr. Brown’s evidence is that the time docketed for that work results in fees totalling an amount slightly more than double the proposed fees of $6,000.00.

15The plaintiffs’ lawyers take a reasonable and fair approach to the fee portion of the solicitor-client account they propose to deliver to Adriana. The fee portion of the account is approved.

16In summary, based on Ruling No. 1 and this ruling,

• the settlement of Adriana’s tort claim for the all-inclusive amount of $48,042.94 is approved;
• the proposed solicitor-client account in the amount of $7,294.89 is approved; and
• the net settlement funds payable to Adriana ($40,748.05) shall be paid to the Accountant for the Superior Court of Justice.

17I turn next to the fee portion of the solicitor-client account the plaintiffs’ lawyers propose to deliver to Stephen.

b) The Solicitor-Client Account Proposed for Stephen

The Proposed Fees

18The plaintiffs’ lawyers propose to deliver to Stephen a solicitor-client account in the total amount of $264,365.98. The disbursement portion of that account, previously approved, is $17,625.24. The balance of the account is comprised of fees of $218,354.64 and HST thereon of $28,386.10, for a total of $246,740.74.

19The proposed fees are based on a contingency fee retainer agreement, which was approved in Ruling No. 1, at para. 36. The court therein concluded that a 25 percent contingency fee was fair on the date the agreement was entered into. Pursuant to the contingency fee retainer agreement, the 25 percent calculation is applied to the total recovered for damages, interest, and costs (the latter, inclusive of fees and HST and exclusive of disbursements).

20The total to be paid to Stephen in settlement of his claims for damages, pre-judgment interest, and costs is $901,957.06. That amount is broken down as follows:

• Damages and interest: $789,471.43
• Costs
  • Fees: $83,947.15
  • HST on fees: $10,913.24
  • Disbursements: $17,625.24

21In accordance with the contingency fee retainer agreement, the proposed fees of $218,354.64 are based on 25 percent of $873,418.58 ($789,471.43 + $83,947.15).

The Law

22The court recognizes that CFAs increase access to justice, including for someone like Stephen, whose tort action was rife with challenges and risks. That said, the fact that a CFA has been found to be fair is “not a carte blanche to permit lawyers to charge what the agreement states”: Fairweather v. Davies, 2017 ONSC 7051, para 12.

23At this stage of the proceeding, the issue to be determined is whether the proposed fees are reasonable: Fairweather, at para. 12, item 2. As explained by the Court of Appeal in Raphael Partners v. Lam, 61 O.R. (3d) 417, [2002] O.J. No. 3605, the court must, when determining the reasonableness of the proposed fees, consider a number of factors including the following factors:

• The time expended by the lawyer;
• The legal and factual complexity of the matter;
• The risks assumed by the lawyer, including the risk of non-payment; and
• The results achieved.

24In Aywas v. Kirwan, 2010 ONSC 2278, para 18, Hackland J. lists additional factors to be considered, including the following factors:

• The degree of responsibility assumed by the lawyer;
• The monetary value of the matters in issue;
• The importance of the matters to the client;
• The degree of skill and competence demonstrated by the lawyer;
• The ability of the client to pay;
• The client’s expectation of the amount of the fee; and
• The social objective of providing access to justice for injured parties.

25In the next section of this ruling, I apply these factors to the fee portion of the solicitor-client account the plaintiffs’ lawyers propose to deliver to Stephen.

Application of the Factors to the Proposed Solicitor-Client Account

26I first consider the time spent by the plaintiffs’ lawyers and counsel to the plaintiffs’ lawyers. In his May 2025 affidavit, Mr. Brown sets out in detail the work done on Stephen’s tort claim. Mr. Brown breaks the work down into three segments: (a) work done to the date of the settlement; (b) work done subsequent to the date of the settlement; and (c) work related to the approval process.

27Mr. Brown sets out the total fees based on actual hourly rates (i.e., as of the date of the docket entered) and on current hourly rates (i.e., if applied to all work done). The fees total $117,370 to $120,440, depending on the hourly rates applied. The proposed fees of $218,354.64 represent approximately 1.8 times the fees for work done (whether based on actual or current hourly rates). Considered in that context, alone, the proposed fees are reasonable.

28At para. 22 of his June 2024 affidavit, Mr. Brown summarizes the risks assumed by the plaintiffs’ lawyers in acting for Stephen in this tort action. Mr. Brown describes the risks as “significant”. He does so based on the location and circumstances of the incident, Stephen’s level of impairment at the time of the incident, and the possibility that Stephen was involved in criminal activity at the time of the incident.

29Mr. Brown also highlights the challenges the plaintiffs’ lawyers faced in representing Stephen because of his non-compliance with medical assessments, a mediation date missed, Stephen’s continued unhealthy behaviours, and Stephen’s refusal of recommended rehabilitation and care services.

30Considered collectively, the risks assumed and challenges faced were significant.

31Taking those risks and challenges into consideration, the results achieved were positive. The damages and interest portion of the settlement funds payable to Stephen represent approximately 80 percent of the third party limits available to the defendants pursuant to their policy of motor vehicle insurance.

32Stephen did not have the financial resources to retain a lawyer other than by way of a CFA. With Stephen declared to be catastrophically impaired and unlikely to be able to secure gainful employment, it was important to him that he pursue the tort claim.

33The PGT, in its capacity as Stephen’s litigation guardian, expresses the view that the proposed fees are reasonable.

34I am satisfied that the fee portion of the solicitor-client account the plaintiffs’ lawyers propose to deliver to Stephen is reasonable. That account is approved in its entirety, subject to the adjustment made in the next section of this ruling.

c) The $0.12 Discrepancy

35Somewhere along the way $0.12 of the settlement funds payable to Stephen was not accounted for—either in the proposed solicitor-client account or in the funding of the proposed structure. The plaintiffs’ lawyers propose that the solicitor-client account be approved in the amount of $264,366.10 (i.e. $0.12 over and above the amount of the account originally proposed). I agree with that proposal and approve the solicitor client account in that amount.

Issue No. 2 – The Proposed Structure Payment Schedule

36The final issue to be determined on the approval motion is the proposed management of the net settlement funds payable to Stephen of $637,590.96 ($901,957.06 - $264,366.10). The proposal is for that entire amount to fund a structure.

37In its capacity as Stephen’s litigation guardian, the PGT considered several structure payment schedules. The parameters for the payment schedule chosen are as follows:

• Payments are in the fixed (non-indexed) monthly amount of $2,580.20;
• The payments continue for Stephen’s lifetime;
• The payments are guaranteed for 20 years (with payments in that period totalling $619,248); and
• The cost of the guarantee is approximately $98 per month, which amount represents 3.6 percent of the $2,678.10 payable per month if there were no guarantee.

38Although Stephen requires a litigation guardian, a capacity assessor concluded that Stephen has the capacity to make testamentary decisions. Stephen executed a secondary beneficiary form in which he designates Adriana as his beneficiary for the purpose of the guaranteed portion of the structure. As explained by the PGT’s representative, Justine Poulin, in her June 2024 affidavit, “the structure guarantee may well be the only cost-effective form of life insurance available to [Stephen].”

39In their respective June 2024 affidavits, both Mr. Brown and Ms. Poulin highlight that in deciding upon a non-indexed monthly payment and the amount of that payment, consideration was given to Stephen’s existing entitlement to Ontario Disability Support Program benefits and his potential future entitlement to one or both of Old Age Security and Guaranteed Income Security benefits.

40I am satisfied that the proposed structure payment schedule, including the 20-year guarantee period, is reasonable and in Stephen’s best interests. The proposed management of the net settlement funds payable to Stephen is approved.

Conclusion

41All aspects of the approval motion are now determined. Together, Ruling No. 1 and this ruling address the requests for approval of the contingency fee retainer agreement (as it relates to Stephen only), the settlements, the proposed solicitor-client accounts, and the proposed management of the net settlement funds payable to Stephen. The balance of the claims are dismissed without costs.

Sylvia Corthorn