Clarke v. Argosy Securities, 14-62625 (ONSC)

Settlement approval motion rejected due to claims not being fully delineated in motion materials

Heard May 4th, 2016Full Decision [Document Bank]

This motion was brought in writing for approval of a settlement reached at mediation in January 2016. Madam Justice S. Corthorn reviewed the materials and issued a written endorsement refusing to approve the settlement and requesting additional materials be filed. The claim involved a lawsuit against an investment adviser. The claim was brought by Wallace Clarke and the late Brenda Clarke alleging that the investment adviser negligently managed their assets. Wallace Clarke is over 85 years old.

In November 2014, Wallace’s daughter, Anne Ferguson was appointed by plaintiff’s counsel as Litigation Guardian for her father Wallace Clarke both in his personal claims and in his role as Estate Trustee for the Estate of the late Brenda Clarke. Plaintiffs’ counsel then began a lawsuit seeking $1,700,000 on the basis of a capital loss of $1,000,000.

At mediation in January 2016, a settlement was reached for $450,000 inclusive of claims for damages, costs and interest.

Justice Corthorn took issue with the representation of the Estate of Brenda Clarke. She was critical that plaintiffs’ counsel did not provide details of the provisions in the late Brenda Clarke’s will regarding appointing an alternate Estate Trustee if Wallace Clarke was not capable of acting in that role. Justice Corthorn was unclear as to how Wallace Clarke, who required a litigation guardian himself, was capable of remaining as estate trustee of his late wife’s estate and how he could provide counsel with instructions on behalf of the estate. She raised the issue of proper representation of the Estate under the Trustee Act.

Justice Corthorn’s next issue with the motion materials was that they did not clarify which of the plaintiffs suffered the alleged losses. There was no evidence provided about how many investment accounts were used and in whose names the accounts were held. If there were accounts in the name of Brenda Clarke as of the date of her death which were not joint with Wallace Clarke, Justice Corthorn requires details of Brenda’s will to examine which individuals other than Wallace Clarke may be entitled to a share of the net settlement proceeds.

She noted that there was nothing in the motion materials confirming why Wallace Clarke was incapable of managing his affairs and why he required a litigation guardian. Next, Justice Corthorn was critical of the retainer agreement. It was not signed by the lawyer and therefore was not a valid retainer under the Solicitors Act. She also questioned why Anne Ferguson referred to the legal action as “our action” in her affidavit when the action was in no way “her action”.

Justice Corthorn also took issue with the proposed fees of plaintiffs’ counsel. She noted that the contingency fee retainer agreement proposed to charge 1/3 of the sums paid or payable to the client. Disbursements and HST were to be charged over and above the fees to be calculated on the basis of a 33 percent contingency. The retainer agreement finds that if costs are awarded to the client then the contingency fee is the greater of the fees determined in the manner set out in the sample calculation and the “costs so awarded”. However, in their settlement approval materials, plaintiffs’ counsel proposed to charge 33 percent of $450,000 which sum included costs, HST and disbursements. Therefore Justice Corthorn held that the fees proposed are excessive. She also noted that there was no evidence provided as to the actual work done by counsel and the fees generated by that work on an actual hourly basis.

Lastly, Justice Corthorn took issue with the proposal that the net settlement funds be payable to Wallace Clarke directly. Given that Wallace Clarke has a litigation guardian in these proceedings, Justice Corthorn required evidence as to why it was reasonable for the net settlement funds to be payable to him directly.

The endorsement requested that plaintiffs’ counsel file a revised motion record to deal with the above noted matter. Justice Corthorn remained seized of the matter.

Motion not granted. Further materials requested.

Read the full decision on the OTLA Document Bank
Ryan Murray
Written by

A partner at Oatley Vigmond, Ryan joined the firm in 2006 shortly after he was called to the bar in 2005. Ryan holds an Honours B.A. from York University, as well as a Bachelor of Laws (LL.B.) and a Master of Laws (LL.M.) (Civil Litigation and Dispute Resolution) from Osgoode Hall Law School.

When Ryan is not practicing law, he enjoys golfing and spending quality time with his wife and two young children.