Leclerc v. Economical Mutual Insurance Company, 2017 ONSC 493

CITATION: Leclerc v. Economical Mutual Insurance Company, 2017 ONSC 493 COURT FILE NO.: 16-68334 DATE: 2017/01/24 SUPERIOR COURT OF JUSTICE - ONTARIO RE: Patrick Leclerc, by his Litigation Guardian, Lise Leclerc - Applicant -and- Economical Mutual Insurance Company - Respondent BEFORE: Madam Justice Liza C. Sheard COUNSEL: Élaine Lachaîne, for the Applicant, Patrick Leclerc, by his Litigation Guardian, Lise Leclerc HEARD: In Writing ENDORSEMENT: MOTION TO APPROVE SETTLEMENT [ 1 ] Further to my endorsement dated December 21, 2016 (the “Endorsement”), additional materials have been filed on behalf of the applicant. [ 2 ] The Endorsement included: (

a) Approval of the quantum of the settlement reached - $900,000 inclusive of all claims for benefits; (

b) Approval of the 30-year guarantee period proposed for the structured portion of the settlement; and (

c) Assessment and approval of the solicitor-client account in the amount of $90,826.86 inclusive of all fees, disbursements, and applicable taxes. [ 3 ] The solicitor-client account approved was lower than the solicitor-client account proposed by counsel for the applicant.

As a result, additional materials were requested to address how the additional funds available for Patrick Leclerc (“Patrick”) would be managed for his benefit. [ 4 ] As set out in paragraph 32 of the Endorsement, the $900,000 in settlement funds were allocated as follows: Settlement Amount $ 900,000.00 Less Payment of credit cards ( 11,360.00) Purchase of motorhome ( 60,000.00) Credit for IRB to Dec. 31/16 ( 29,200.00) Solicitor-client account ( 90,826.86) Balance Remaining $ 708,613.14 [ 5 ] The affidavit of Élaine Lachaîne, counsel for the applicant, sworn January 13, 2017, was filed in response to the Endorsement.

Ms. Lachaîne’s affidavit provides the additional evidence set out below. A. Structured Portion of the Settlement (

i) Payment

Schedule and Guarantee Period • The structure funding is $685,000 (an increase of $40,000 in previously proposed structure funding).

• The Payment

Schedule remains essentially unchanged: monthly payments remain at $2,000.00 to be indexed at two per cent per year, compounded. • The start date for the monthly structure payments is now March 1, 2017. • The Payment

Schedule now includes a guarantee period of 32 years and 2 months (increased from 30 years); payments are guaranteed until Patrick is 64 years and 2 months old. All structure payments are guaranteed. • The Payment

Schedule also includes lump sum payments of $5,000.00 per year, every five years commencing in 2022 and ending in 2047. These payments are intended to assist Patrick with extraordinary expenses such as the purchase of a vehicle, dental expenses, home maintenance, and clothing costs.

The original structure proposed did not include any lump sum payments. • McKellar Structured Settlements Inc. has confirmed that the wording of the draft order filed with the additional materials and the release that Patrick is being asked to sign are compliant with the requirements of the Canada Revenue Agency for the structure payments to be made tax-free to the applicant. [ 6 ] I find that the structure funding of $685,000, the full guarantee of structure payments for 32 years and 2 months, and the Payment

Schedule as proposed in Exhibit “B” to the January 2017 affidavit of counsel for the applicant are reasonable and in Patrick’s best interests. I therefore approve the Payment

Schedule of the structured portion of the settlement as proposed in Exhibit “B” to the January 2017 affidavit of counsel for the applicant. (ii) Recipient of Structure Payments [ 7 ] There is nothing in the Payment

Schedule attached as Exhibit “B” to the January 2017 affidavit of counsel for the applicant to identify that the monthly payments and the five, $5,000.00 lump sum payments are to be made to Lise Leclerc (“Ms. Leclerc”) in her capacity as Litigation Guardian for Patrick. However, in paragraph 3(

a) of the draft order attached as Exhibit “E” to the January 2017 affidavit of counsel for the applicant, it is provided that: [T]he Structure Payments shall be irrevocably directed, as follows: (

a) to Lise Leclerc, Attorney for Property of Patrick Leclerc, in trust for his benefit (or to such substitute Attorneys for Property as Patrick Leclerc may appoint, from time to time, in trust for his benefit). [ 8 ] There is no evidence to support payment of the structure payments to anyone other than Patrick. He has not been declared incapable. Therefore the payments should be paid to Patrick. [ 9 ] In her capacity as attorney for property for Patrick, Ms.

Leclerc may have access to Patrick’s bank accounts and other assets; but she has not been appointed as his Guardian of property. [ 10 ] The draft order should be revised so as to reflect payment of the structure payments to Patrick and then vetted once again by McKellar Structured Settlements Inc. for CRA compliance and the tax-free status of the structure payments.

In the event the requested revisions to the draft order will result in the loss of the tax-free status of the structure payments, counsel for the applicant is to make arrangements to appear before me and make further submissions with respect to the wording of the draft order. B. Non-Structured Portion of Settlement (

i) Application of Funds [ 11 ] The new motion materials do not explain why the continued payment of medical/rehabilitation benefits and attendant care benefits to the applicant was not mentioned in previous materials. In Ms. Lachaîne’s January 2017 affidavit, she explains that the respondent insurer paid those benefits in 2016 and continues to do so in 2017.

The information from the respondent insurer is that as of February 28, 2017 it will be entitled to a credit from the settlement of $900,000, of the following amounts: Income replacement benefits $ 29,600.00 [1] Attendant care benefits $ 16,013.20 [2] Medical/rehabilitation benefits $ 482.12 [3] Total $ 46,095.32 [ 12 ] Attached as an exhibit to Ms. Lachaîne’s January 2017 affidavit is a copy of an email exchange between counsel for the parties. In that exchange, Ms.

Lachaîne confirms that as of February 28, 2017 the respondent insurer will be entitled to reimbursement of accident benefits paid between September 2015, when the settlement was reached, and the end of February 2017. [ 13 ] The additional $400 in income replacement benefits, the $16,013.20 for attendant care benefits, the $482.12 for medical/rehabilitation benefits, and the $685,000 for structure funding are all to be deducted from $708,613.14 to determine the balance, if any, remaining of the unstructured portion of the settlement. As set out in paragraph 5(

g) of Ms. Lachaîne’s January 2017 affidavit, that balance is $6,717.82. [ 14 ] The proposal for the $6,717.82 is that it be maintained as a “slush fund” from which to reimburse the accident benefits insurer of additional benefits, if any, paid prior to the approval of the settlement, and to pay dental, clothing and other expenses Patrick may incur. [ 15 ] I accept the new deductions referenced above. I am satisfied that the proposed use of the non-structured portion of the

settlement is reasonable and in the best interests of Patrick. I approve the proposal except that, for the same reasons set out above with respect to the structure payments, I am of the view that the non-structured portion of the settlement is to be paid to Patrick. Alternatively, paragraph 2(

b) of the draft order may be revised to identify specific payees such as Economical Mutual Insurance Company ($46,095.32) and “Desjardins” ($11,360.00). The remaining $66,717.82 would be payable to “Patrick Leclerc”.

Summary [ 16 ] I therefore order as follows: 1. Counsel for the applicant shall take the steps necessary to arrange for the draft order attached as Exhibit “E” to her January 2017 affidavit to be (

a) revised as required by this endorsement and (

b) vetted by McKellar Structured Settlements Inc. for compliance with Canada Revenue Agency (“CRA”) requirements so as to maintain the tax-free status of the structure payments. 2. In the event McKellar Structured Settlements Inc. confirms that the draft order, as revised in accordance with this endorsement, is “CRA compliant” and the tax-free status of the structure payments is maintained an order shall be issued and entered in accordance with the revised draft order. 3.

In the event McKellar Structured Settlements Inc. does not confirm that the draft order as revised in accordance with this endorsement is ‘CRA compliant’ and/or that the tax-free status of the structure payments is maintained, then further submissions shall be made to me in person so as to avoid any potential delay that might occur with respect to the wording of the order. [ 17 ] I include this the third term above in an effort to bring this matter to a conclusion in a timely manner.

I am concerned about the delay that might result if additional written submissions are made and the settlement is once again not fully approved. The most efficient manner by which to bring this matter to a conclusion is to require that counsel for the applicant appear before me if necessary. Otherwise, the matter will be brought to a conclusion with an order on the terms as required herein being issued and entered. Sheard J. Date: January 24, 2017 CITATION: Leclerc v. Economical Mutual Insurance Company, 2017 ONSC 493 COURT FILE NO.: 16-68334 DATE: 2017/01/24

ONTARIO SUPERIOR COURT OF JUSTICE RE: Patrick Leclerc, by his Litigation Guardian, Lise Leclerc - Applicant AND Economical Mutual Insurance Company - Respondent BEFORE: Madam Justice Liza Sheard COUNSEL: Élaine Lachaîne, for the Applicant, Patrick Leclerc, by his Litigation Guardian, Lise Leclerc ENDORSEMENT: Motion to approve settlement Sheard J. Released: January 24, 2017