Court File and Parties

Court File No.: CV-19-139707-00 Date: 2025-09-29

Superior Court of Justice – Ontario

Re: Kevin Garnett by his Litigation Guardian Amanda Foster, Plaintiff

And: The Estate of Joseph Eldon Deceased by its Executor Cecil James Eldon and Economical Insurance, Defendants

Western Assurance Company, Third Party

Before: Regional Senior Justice M.L. Edwards

Counsel: Michael Brill, Counsel for the Plaintiff mbrill@barapplaw.com

Heard: In Writing

Endorsement

Overview

[1] Settlements involving parties under disability are, like all settlements, to be encouraged. However any settlement involving a party under disability must first be approved by the court.

[2] The requirement for court approval is codified in Rule 7.08(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and is historically derived from the court's parens patriae jurisdiction. As Regional Senior Justice Firestone noted in Spicer v. The Wawanesa Mutual Insurance Company, 2023 ONSC 3221, at para 10:

[10] The requirement for court approval derives from the court's parens patriae jurisdiction. The purpose of court approval is to protect the best interests of parties under disability. In Wu Estate v Zurich Insurance Co. (2006), 268 D.L.R. (4th) 670 (Ont. C.A.), the court states at para.10:

The requirement for court approval of settlements made on behalf of parties under disability is derived from the court's parens patriae jurisdiction. The parens patriae jurisdiction is of ancient origin and is "founded on necessity, namely the need to act for the protection of those who cannot care for themselves…to be exercised in the 'best interest' of the protected person…for his or her 'benefit' or 'welfare''": Eve, Re, [1986] 2 S.C.R.388 (S.C.C.) at para. 73. The jurisdiction is "essentially protective" and "neither creates substantive rights nor changes the means by which claims are determined": Tsaoussis (litigation Guardian of) v. Baetz (1998), 41 O.R. (3d) 257 (Ont.C.A.), at 268. The duty of the court is to examine the settlement and ensure that it is in the best interests of the party under disability: Poulin v. Nadon, [1950] O.R. 219 (Ont. C.A.). The purpose of court approval is plainly to protect the party under disability and ensure that his or her legal rights are not compromised or surrendered without proper compensation.

[3] The issue that this court must decide arises out of a settlement of the plaintiff's accident benefit claim as well as his tort claim. The settlement of the accident benefit claim has already been approved by way of an endorsement dated February 16, 2023. The primary issue that engages this court is the totality of the combined legal fees of the tort and accident benefit claims for which plaintiff's counsel seeks approval of this court.

The Facts

[4] The plaintiff was involved in a motor vehicle accident on July 27, 2017.

[5] As a result of injuries suffered in the accident the plaintiff's medical condition appears to have deteriorated to the point that he required a litigation guardian. Amanda Foster is the plaintiff's girlfriend. Ms. Foster swore an affidavit dated March 19, 2019, agreeing to act as the plaintiff's litigation guardian.

[6] On July 31, 2017, the plaintiff executed a retainer and authorization directed to Barapp Law Firm Professional Corporation (hereafter "Barapp"). The retainer and authorization agreement provided that the plaintiff agreed to what can only be described as a contingency fee agreement pursuant to which Barapp would be entitled to fees of 35% with respect to both the accident benefit and tort claims.

[7] The plaintiff's claim for statutory accident benefits was settled on May 9, 2022. The terms of the settlement required the plaintiff's statutory accident benefits insurer to pay an all-inclusive sum of $500,000.

[8] On December 2022 Michael Brill (Mr. Brill) of Barapp issued a notice of application on behalf of the plaintiff. The respondent was the plaintiff's statutory accident benefits insurer, Economical Insurance. The application sought approval of the accident benefit settlement.

[9] The application seeking approval of the accident benefit settlement came before the assigned judge hearing "basket" motions (the application judge) on February 16, 2023. An endorsement was released which stated:

"OTG on consent"

[10] The application record before the application judge included an affidavit of the litigation guardian Amanda Foster as well as an affidavit of Mr. Brill. As it relates to the fees and disbursements approved by the application judge, I reproduce paras 10 through 16 inclusive:

10. Approval of fees and disbursements paid to Applicant's counsel: The fees and disbursements sought by Barapp Law Firm are permitted by the contingency fee retainer agreement. The Applicant fully understood the terms and nature of the contingency fee agreement he entered into the agreement with Barapp Law Firm in July 31, 2017.

11. The settlement duns are broken down as below:

Kevin Garnett:

• Paid to Barapp Law Firm: $173,635.14
• Paid to HST on Fees: $ 22,572.57
• Disbursements: $ 3,899.61
• Paid to Functional Ability $ 3,309.91
• Paid to Advanta Health $ 8,395.28
• Paid to All Health Medical $ 2,366.00
• Paid to Kevin Garnett $285,821.50

Attached hereto and marked as Exhibit "E" to this Affidavit is a true copy of the Authorization and Direction from Barapp Law firm, List of Disbursements and Retainer Agreement.

12. After giving a full consideration of the question of liability, medical benefits and the nature and extent of the injuries suffered by the Applicant, Kevin Garnett, I am of the opinion that settlement of this action on the following terms is a good settlement, in the best interest of the party under disability, and I recommend it.

13. Pursuant to our retainer agreement, Barapp Law Firm Professional Corporation is willing to accept from the Applicant the sum in full satisfaction of its fees of $173,635.14 which represented 35% of the gross settlement, the sum of $3,899.61 which represents the disbursements charged and a sum of $22,572.57 representing the Applicable taxes.

14. Barapp Law Firm funded all disbursements for the Accident Benefits claim following its retainer, and bore the risk of non-payment of any fees if the accident benefit claim did not settle or was not successful in Arbitration.

15. This Affidavit is made in support of an Application for court approval of a settlement of the accident benefits file and for no improper purpose.

16. I do verily believe that this is fair and proper amount of fees to receive given the amount of work our office as performed on behalf of the Applicant, including extensive file review, insurer assessment preparation, preparation for Arbitration, complexity of the claim, years since the accident, multiple telephone and email correspondence with the accident benefits adjuster, and calls with Amanda Foster, the results achieved, the monetary values in issue and the client's expectation of the amount of fees.

[11] The application record before the application judge contained no details with respect to the docketed time incurred by Barapp and Mr. Brill as it relates to the handling of the accident benefit claim for the plaintiff. The application record also contained none of the jurisprudence as it relates to the application of contingency fee agreements related to the appropriate fee to be charged in the context of a statutory accident benefit claim.

[12] In June 2024 I received the plaintiff's motion materials seeking court approval for the settlement of the tort claim. The total settlement was $390,000. I raised concerns in an endorsement about the quantum of fees that had been charged by Barapp and Mr. Brill arising out of the resolution of the accident benefit claim. I have now received additional material from Mr. Brill, which I have taken into account as it relates to the approval of the tort settlement.

Legal Principles

[13] There is a recognized difference in the jurisprudence between a contingency fee charged by counsel as it relates to the conduct of a tort action versus the conduct of an accident benefit claim. This distinction was reviewed in significant detail in the decision of Wilkins J. in Adler v. State Farm Mutual Automobile Insurance Company, 92 O.R. (3d) 266 beginning at paragraph 35 and following.

[14] In Norwegian v. Royal & Sunalliance Insurance Company of Canada, 2020 ONSC 3559, Mew J. observed at para 32:

[32] It is generally not appropriate to apply the same contingency fee rate to both the statutory accident benefits settlement as well as the tort settlement: Aywas (Litigation guardian of) v. Kirwan, 2010 ONSC 2278.

[15] In Norwegian Mew J. noted that there is a significantly different degree of risk undertaken by lawyers with respect to an accident benefit claim versus the degree of risk undertaken in a tort claim. It is noteworthy in Norwegian that counsel who were seeking the approval of the court had reduced their fees reflected in the contingency fee agreement from 33% to 22.5%. Even with that reduction Mew J. at para 41 of his reasons concluded that a fee based on 22.5% of the amount recovered was not reasonable and substituted a fee of 16.5%.

[16] In Spicer the contingency fee agreement that was before Regional Senior Justice Firestone had been reduced by the lawyer for the plaintiff who was seeking court approval from 25% to 15%. In the context of a resolution of an accident benefit claim Regional Senior Justice Firestone approved the reduced contingency fee of 15%.

[17] In Halimi v. Certas Home and Auto Insurance Company, 2023 ONSC 432, D. Wilson J. (as she then was) had before her for approval a proposed settlement of an accident benefit claim in which the plaintiff's lawyer sought fees calculated at 33.3% of the settlement amount. At para 9 of her reasons, D. Wilson J. held:

[9] Simply because a CFA provides for a certain percentage of the settlement amount as fees to be paid does not mean that is the proper fee to be charged. Similarly, the fact that the Litigation Guardian agrees with the proposed fee does not mean that is the proper fee to be charged. The fee must be both fair and reasonable in the circumstances and the Court must find it to be so. In the instant case, I do not find a fee calculated at 33% of the recovery is fair or reasonable and I decline to approve it. In my view, on accident benefits cases in which there is little in dispute, and where a settlement offer is made which counsel for the Plaintiff recommends be accepted without further steps being taken, a fee in the range of 10-15% is fair and reasonable.

[18] Ultimately, in Halimi D. Wilson J. approved fees based on 15% of the settlement amount.

[19] In Treleaven v. Kilgour, 2021 ONSC 646, the court was called upon to approve the settlement of the plaintiff's tort and accident benefit claim. The court was also called upon to address the appropriateness of the percentage charged by plaintiff's counsel for fees in the accident benefit claim. Plaintiff's counsel in Treleaven was seeking approval for his fees as reflected in a contingency fee agreement of 30%. Ultimately in his reasons Trimble J. approved a fee of 17% in the accident benefit claim.

[20] In St. Jean v. Armstrong, 2017 ONCA 145, the Court of Appeal dealt with an appeal by the solicitors who had represented the plaintiff with respect to the plaintiff's tort and accident benefit claims. The plaintiff had entered into a contingency fee agreement which provided for a one-third contingency fee on any settlement as it relates to either or both of the tort or accident benefit claims.

[21] Factually in St. Jean the global settlement of the tort and accident benefit claim inclusive of costs was $1,719,510. As such, in accordance with the contingency fee agreement plaintiff's counsel sought fees in the amount of $466,000. The motion judge who was called upon to deal with the Rule 7 approval of the tort and accident benefit claim approved the one-third contingency fee as it related to the tort claim but reduced the legal fees in relation to the accident benefit claim from $280,500 to $170,000. In making that deduction, the motion judge accepted the distinction in the jurisprudence between tort and accident benefit claims and contrasted the risk assumed by the plaintiff's firm in the tort claim compared to the relative lack of risk in the accident benefit claim.

[22] The Court of Appeal in St. Jean dismissed the lawyer's appeal. In doing so, at paras 22 through 24 the Court of Appeal endorsed the approach reflected in the jurisprudence that an accident benefit claim does not entail the sort of risk and complexity that a tort claim does.

[23] The Court of Appeal in Krukowski v. Aviva Insurance Company of Canada, 2020 ONCA 631, again had an appeal from the law firm that had represented a plaintiff. The appeal related to the quantum of fees that had been ordered in connection with the resolution of the plaintiff's accident benefit claim. The proposed settlement that had been before the application judge related to a settlement in the total amount of $1,200,000 of which plaintiff's counsel sought to receive fees in the amount of $205,691.91. These fees were calculated on the basis of a contingency fee agreement of 15%. The fees that were approved by the application judge were in the amount of $60,000 which represented 5% of the settlement amount. As observed by the Court of Appeal even 5% was three times the docketed time invested in the file.

[24] The Court of Appeal in Krukowski dismissed the solicitor's appeal as it relates to the quantum of fees that had been approved. In doing so, the Court of Appeal stated at para 36:

[36] It is clear from the above that the application judge addressed and weighed all of the appropriate factors to be considered in deciding whether it would be fair and reasonable to approve the legal fees sought.

[25] One of the governing principles from a review of the jurisprudence is that in approving the fees sought by plaintiff's counsel in an accident benefit settlement, the court must fix a fee that is fair and reasonable. The jurisprudence supports a range from a low of 5% to a high of 20%. A fee of 35% is most definitely not fair; it is not reasonable; nor is it a fee that protects a party under disability.

[26] There is no evidence in the application record suggesting that the plaintiff's claim for accident benefits was a high risk case. There was also no evidence the accident benefits claim involved any legal issues that might have required additional work than would normally be associated with such a claim. Absent such evidence the court should not contemplate endorsing a contingency fee agreement anywhere close to 35% of the settlement amount. The appropriate range is anywhere from the 5% implicitly endorsed by the Court of Appeal in Krukowski to the 10%-20% endorsed in the other cases referred to above.

Analysis

[27] I am confident that if Mr. Brill had provided the application judge with the jurisprudence reviewed above that he would not have approved legal fees based on 35% of the accident benefit settlement.

[28] It is incumbent upon this court to ensure that the best interests of a plaintiff who is a party under disability are protected as part of the Rule 7 approval process. In doing so this court must look at the totality of the settlement of the tort and accident benefit claim. This court must scrutinize the totality of the legal fees sought by counsel in the combined accident benefit and tort claims.

[29] The accident benefit claim settled for the all-inclusive amount of $500,000. The tort claim settled for the all-inclusive amount of $390,000. I take no issue with respect to the totality of either settlement and both settlements are approved.

[30] The legal fees that Barapp will recover pursuant to the judgment of the application judge amount to $173,635. The fees that are sought in the tort claim total $121,480. The combined fees sought in the accident benefit and tort claims amount to $295,115, or approximately 33% of the total settlement of $890,000.

[31] The contingency fee agreement allows Barapp to charge 35% of the agreed-upon settlement of $390,000. This would generate fees of $136,500.

[32] The jurisprudence which I have reviewed above, in my view, makes clear that in a claim for statutory accident benefits the court will, absent extenuating circumstances, generally approve a contingency fee in the range of 10% to 20%. Using the midpoint of 15% the legal fees that should have been charged to the plaintiff in the accident benefit settlement amounts to $75,000. The total fees, therefore, as it relates to the accident benefit and tort claims would amount to $211,500 ($136,500 for the tort claim and $75,000 for the accident benefit claim).

[33] The court, through the endorsement of the application judge, has approved fees of $173,635.14 in the accident benefit claim. The totality of the fees that this court will approve for the tort and accident benefit claim amounts to $211,500. As the Barapp firm has already received $173,635 this court will only approve $37,865 on the tort claim as fees to be paid to Barapp ($211,500-$173,635). It is worth noting that the total fees of $211,500 still represents 24% of the total global settlement of $890,000.

[34] Counsel is directed pursuant to these reasons to draft up the appropriate judgment reflecting the aforesaid determination of this court together with whatever amendments are required for HST.

[35] As it relates to the remainder of the funds to be paid to the plaintiff, plaintiff's counsel has sought an order of this court that the monies be paid to the plaintiff's litigation guardian, Amanda Foster. There is no management plan as to how these funds will be disbursed for the benefit of the plaintiff. In the absence of a management plan as to how the funds will be disbursed to the benefit of the plaintiff, in my view, the appropriate means to protect the best interests of the plaintiff is to have the remainder of the funds net of legal costs and disbursements paid into a structure. Mr Brill is directed to provide the court with an updated structure printout together with any additional fees that might be attributable to giving effect to these Reasons.

Regional Senior Justice M.L. Edwards

Date: September 29, 2025