Rops v. Intact Insurance Company, 2013 ONSC 7366

CITATION: Rops v. Intact Insurance Company, 2013 ONSC 7366 COURT FILE NO.: 1416/13 DATE: 20131209 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ) ) Aaron Christopher Rops, by his Litigation Guardian Michael Rops ) ) ) B. Legate and K.

Finley, for the Applicant ) Applicant ) ) - and - ) ) ) Intact Insurance Company ) ) ) Respondent not participating ) Respondent ) ) ) ) HEARD: In writing LEITCH J. [ 1 ] An application was filed on behalf of the plaintiff for an order approving the Contingency Fee Retainer Agreement between Legate & Associates, LLP and Michael Rops, Linda Rops, and Michael Rops as Litigation Guardian, for their son, Aaron Christopher Rops, dated November 23, 2011; an order that the approval granted for the Contingency Fee Retainer Agreement in this application is effective in the civil law suit of the applicant; an order approving a proposed settlement of the infant plaintiff’s accident benefits claim; an order sealing this court file from the public in its entirety, including without limitation, the affidavits sworn in support of the proposed settlement, the Contingency Fee Retainer Agreement, dated November 23, 2011, the signed Settlement Disclosure Notice, dated September 9, 2013, and the Sealing Order itself; and, an order otherwise dismissing this application on a without costs basis.

Background Facts [ 2 ] Michael Rops acts as Litigation Guardian for his son Aaron who is now 15 years of age. Aaron was injured when he was aged 11 in an all-terrain vehicle crash. He suffered what are described as significant injuries that required three surgeries.

The materials state that after diligently pursuing rehabilitation, he continues to suffer from a limp, scarring, numbness in his left thigh, pain, loss of mobility, instability, fatigue and loss of stamina. [ 3 ] As previously set out, the application relates to the accident benefits claim of the infant plaintiff, which has been settled on a full and final basis. [ 4 ] The investigation of a tort claim on behalf of the infant plaintiff is in process.

According to the application materials, a vigorous opposition to his claim and a protracted litigation process is anticipated with no guarantee of a successful outcome. [ 5 ] The Contingency Fee Retainer Agreement that has been signed, which is in issue on this application, contemplates a base

contingency of 30% and “increases according to the stage of the litigation to reflect the greater risk and vastly increased costs going forward to trial”, capping at 40% if the claim settles any time after the pretrial. Issue #1 – Should the settlement of the accident benefits claim be approved? [ 6 ] The affidavit of counsel for the infant plaintiff filed in support of the application stated that counsel recommended and submitted a treatment and assessment plan (OCF-18) to the respondent insurer, seeking an occupational therapy assessment and treatment for the infant plaintiff.

They also submitted an application for accident benefits (OCF-1) on October 11, 2012. [ 7 ] The OCF-18 was denied pending an independent medical examination. Thereafter, the infant plaintiff attended three independent medical examinations (a neurology, physiatry and occupational therapy assessment) and counsel assisted his parents in explaining the process and preparing the infant for each assessment. [ 8 ] A multi-disciplinary independent medical examination executive

summary was presented to the respondent insurer on April 13, 2013, which concluded that the proposed treatment was both unreasonable and unnecessary.

As a result of this decision, counsel applied to mediate the dispute with the Financial Services Commission of Ontario and mediation was scheduled for July 26, 2013. [ 9 ] Ultimately, the accident benefits claim was settled and the respondent insurer will pay $14,500 to resolve the infant plaintiff’s accident benefits claim. [ 10 ] The affidavit sworn in support of the application sets out counsel’s position that the infant plaintiff would require ongoing treatment and supervision, physiotherapy, massage therapy, orthotics and supervised membership at a gym with a personal trainer in order to maintain his current level of function through the course of his adolescence and to educate him so that he would be able to avoid re-injury.

The affidavit also includes a statement that counsel and the Litigation Guardian established his expectations for the infant plaintiff in relation to the accident benefits claim. However, the affidavit material does not include anything further in relation to the merit of the settlement or how it was arrived at.

The only information provided is the Settlement Disclosure Notice from the respondent insurer indicating its offer to settle by paying $13,500 for all past and future medical benefits, and $1,000 for all past and future rehabilitation benefits. [ 11 ] The Litigation Guardian’s affidavit indicates that on the advice and recommendation of his lawyer, and upon due consideration and discussion with his wife, he believes that the amount offered is reasonable, that it represents adequate compensation under the circumstances, and that the settlement is in his son’s best interests.

He has accepted his lawyer’s recommendation. [ 12 ] Unfortunately, the affidavit filed in support of approval of the settlement does not state that this is a settlement that the lawyer recommends as being in the best interests of the infant. Rule 7.08(4) requires an affidavit from the lawyer acting for the Litigation Guardian setting out the lawyer’s position in respect of the proposed settlement, and an affidavit from the Litigation Guardian setting out the material facts, the reasons supporting the proposed settlement, and the position of the Litigation Guardian in respect of the settlement.

Here, the affidavit of the Litigation Guardian only states that he is acting on the recommendation of his lawyer. The affidavits of the lawyer and litigation guardian should be more fulsome than what was filed on this application. [ 13 ] Therefore, further affidavit material is required before the settlement can be approved. [ 14 ] In addition, I draw to counsel’s attention that the order presented to the court for signature should set out what has been approved and not simply state, as this draft order does, that the proposed settlement is approved.

Issue #2 – Approval of legal fees and disbursements relating to the accident benefits settlement [ 15 ] The affidavit filed in support of this application asserted that: Legate has invested significant amounts of time and resources into the pursuit of Aaron’s accident benefits settlement, including approximately 12.3 billable hours in the amount of $3,690, and further costs and disbursements will be incurred in the course of this application.

As a result, the contingency fee represents a fair and reasonable remuneration on the accidents benefit claim. [ 16 ] I draw to counsel’s attention that the order presented to the court for signature did not include any statement in relation to the requested fees. Again, an order simply stating that the proposed settlement is approved, and that the application is otherwise dismissed on a without costs basis, is inadequate. [ 17 ] The approval of the legal fees and disbursements to be paid out of the settlement will be revisited when further materials are filed in relation to the settlement.

Issue #3 – Approval of the Contingency Fee Retainer Agreement and the requested order that the approval in this application “persists and is effective in relation to the civil law suit of the applicant identified as court file number 1692/13 [the tort action]” [ 18 ] The only comment on this aspect of the application is in para. 35 of the affidavit sworn in support of the application, which reads as follows: It is in the interest of justice to approve the CFRA for the tort litigation at this time, as it avoids duplication of materials and unnecessary time and expense to prepare and speak to the matter again in that lawsuit.

As set out above, the Rops were properly instructed in the nature of the CFRA and accepted its terms as reasonable on behalf of Aaron and themselves. The arguments in favour of approval are substantially the same. [ 19 ] Counsel on this application referenced no case authority. [ 20 ] Counsel did reference s. 5(1) of O. Reg. 195/04 under the Solicitors Act , R.S.O. 1990, c. S.15, which requires a solicitor for a

person under disability represented by a Litigation Guardian, with whom the solicitor is entering into a Contingency Fee RetainerAgreement, to apply to a judge for approval of the agreement before the agreement is finalized, or include the agreement as part of themotion or application for approval of a settlement or a consent judgment under rule 7.08 of the Rules of Civil Procedure. [21] As the Solicitors Act makes clear, agreements between solicitors and clients as to compensation may be enforced if it appears tothe court that the agreement is in all respects, fair and reasonable between the parties.

The Court of Appeal in Raphael Partners v.

Lam(2002), (ON CA), 61 O.R. (3d) 417, at para. 37 indicated that the fairness requirement “is concerned with thecircumstances surrounding the making of the agreement and whether the client fully understands and appreciates the nature of theagreement that he or she executed”. [22] I note that in relation to this issue, the affidavit of counsel filed on this application described what another lawyer with his firmexplained to the Litigation Guardian in relation to the Contingency Fee Retainer Agreement and stated that she encouraged the LitigationGuardian to seek independent legal advice prior to committing to such an agreement.

The affidavit of the litigation guardian did notaddress these points. There is no statement in the lawyer’s affidavit that he discussed the circumstances in which the agreement wassigned with the lawyer who met with the Litigation Guardian. This evidence should be presented by the lawyer who met with theLitigation Guardian and should be included in the affidavit of the Litigation Guardian. [23] The affidavit filed in support of the application also referenced and attached as an exhibit an

article written by Claire Burns,formerly the Children’s Lawyer for Ontario, in which she offers a salutary commentary and observation that lawyers, when acting forand/or in relation to children, “face unique ethical and professional challenges”. Indeed, the title of her

article is “Child Clients: AnOngoing Ethical Dilemma”. While counsel referenced this

article for a point that I will discuss further below, I note that Ms. Burnsprovided her commentary and suggestions with respect to what might be presented to the court in order for the court to determine that theagreement was fairly entered into. [24] The fairness issue was discussed further by the Court of Appeal in Henricks-Hunter (Litigation Guardian of) v. 814888 OntarioInc. (c.o.b. Phoenix Concert Theater), 2012 ONCA 496, 204 O.A.C. 333, where the court set out the provisions of s. 5(1) of O.

Reg.195/04 noting that a solicitor can choose to have a contingency fee agreement approved by the court before it is finalized and notingfurther at para. 16, “[i]f a contingency fee agreement is approved by the court before being finalized, the fairness of the agreement is nolonger an issue”. [25] The alternative approach is what has been undertaken here, and the Court of Appeal noted further in Henricks-Hunter at para. 17: Upon hearing a rule 7.08 motion or application, the judge cannot simply disregard a finalized contingency fee agreement.

Rather, themotion judge must assess both the fairness and reasonableness of the agreement. If the agreement is fair and reasonable, the motionjudge may give effect to it. [26] The requested order on this application that the court approve this Contingency Fee Retainer Agreement mandates that thefairness and reasonableness of such an agreement be assessed. [27] The Court of Appeal in Henricks-Hunter at para. 22 noted that the test for reasonableness was set out in Raphael at para. 50. Thefactors to be considered are: (

a) The time expended by the solicitor; (

b) The legal complexity of the matter at issue; (

c) The results achieved; (

d) The risk assumed by the solicitor. [28] I note that in Henricks-Hunter at para. 21, the Court of Appeal commented that in that case it was apparent that the contingencyfee agreement in issue was fair when it was negotiated, and it was noted “in particular, that when it was negotiated there wasconsiderable uncertainty as to the likely success of the claim and the extent of the investment that would be required of the solicitors tobring the action to a favourable conclusion”. It seems to me that similar commentary cannot be made in relation to the accident benefitsclaim.

Therefore, again, I am not prepared to approve the Contingency Fee Retainer Agreement on this application. [29] In addition, I see no basis on which the court should now approve the Contingency Fee Retainer Agreement and order that it“persist and is effective in relation to” the tort action.

I am uncertain, in fact, as to what is intended by an order that the agreement would“persist” and be effective in another action, or what the efficacy of such an order would be. [30] Even if the material filed on this application was sufficient to address the fairness requirement, the reasonableness analysiscannot be undertaken on this application to approve fees calculated pursuant to the Contingency Fee Retainer Agreement on a settlementin relation to the tort action. [31] In relation to the reasonableness issue, I note that the affidavit filed in support of this application stated that Ms.

Burns“recognized that contingency fees need to be high in order to make it economically possible to review cases which, on review, are notviable”. I simply observe that, in my view, Ms. Burns did not indicate that contingency fees need to be high. Rather, with respect to theissue of contingency fees, in the full paragraph containing the quotation as used in the affidavit, she stated as follows: It is further argued that the percentage recovery in Contingency Fee Agreements needs to be high so as to make it economical viable forlawyers to continue to review cases which, upon review, are not viable.

The necessary corollary of this is that child clients with viableclaims are financing from their damages’ awards, the review of other clients’ matters. [32] Ms. Burns goes on to state that:

It is here that the ethical dilemma lies. Why should one client finance another when the duty to promote access to justice is the lawyer’s, not the client’s responsibility? [ 33 ] I repeat that the reasonableness of a contingency fee can only be assessed in relation to the factors previously outlined.

Issue #4 – The request for a Sealing Order of this file, this Application Record and the Orders made [ 34 ] Counsel cited no authority for an order for the sealing order request. [ 35 ] The affidavit filed in support of this motion simply stated that: The materials submitted on this application and all documents relating to it with the exception of the proposed order approving the CFRA and making it effective in the impending tort litigation are confidential in nature and should not form part of the public record. [ 36 ] Section 137(2) of the Courts of Justice Act , R.S.O. 1990 c.

C.43 provides that “[a] court may order that any document filed in a civil proceeding before it be treated as confidential, sealed and not form part of the public record.” The onus is on the applicant to establish why the contents of this file should be sealed from public view pursuant to s. 137(2) . [ 37 ] In considering this issue, counsel must take into consideration the comments of the Court of Appeal in M.E.H. v. Williams , 2012 ONCA 35 , 108 O.R. (3d) 321 , where the court indicated that a sealing order is an extraordinary one and one that requires a court to undertake a two-part inquiry as set in R. v.

Mentuck , 2001 SCC 76 , [2001] 3 S.C.R. 442 , which is commonly referred to as the Dagenais/ Mentuck test.

Put briefly, a sealing order should only be made where it is necessary to prevent a serious risk to the proper administration of justice and where the salutary effects of the publication ban or sealing order outweigh the deleterious effects on the rights and interests of the parties and the public. [ 38 ] The Court of Appeal in M.E.H. at para. 31 made clear that as they put it, “[t]he necessity inquiry comes first which focuses exclusively on the existence of a serious risk to a public interest that can only be addressed by some form of non-publication or sealing order. … Unless a serious risk to a public interest is established, the court does not proceed to the second branch of the inquiry where competing interests must be balanced.” Ultimately, as the court noted at para. 32: [T]he court must ask: Has the respondent shown that without the protective orders she seeks there is a serious risk to the proper administration of justice? [ 39 ] There is simply no basis put forward in the application materials that would justify the sealing order requested.

Conclusion [ 40 ] Counsel may file further materials in relation to the approval of the settlement of the accident benefits claim of the infant plaintiff and the fees and disbursements to be paid from that settlement. “ Justice L. C. Leitch” Justice L. C. Leitch Released: December 09, 2013