In this decision, Daley J was tasked with reviewing a proposed settlement under Rule 7.08 and a related guardianship application. The decision provides a helpful overview of the settlement approval process and the factors that judges take into consideration when evaluating proposed settlements.
It should be noted that the practice of bringing a guardianship application alongside a Rule 7.08 motion is not standard in all regions. For example, in London, Ontario, a Rule 7.08 motion is typically brought first, and the guardianship application is only started once the settlement is approved and the plaintiff’s recovery is finalized.
Decision
The underlying action arose from the allegedly negligent delivery of the minor plaintiff by the defendant midwives. After a mediation and two pre-trials, the action provisionally settled for $9,750,000. After deducting the proposed contingency fee (“CFA”) of 27.5%, deducting the HST on the CFA, deducting disbursements, and crediting the legal costs to the plaintiffs, the net recovery of the minor plaintiff was $5,640,178.84. This equated to an effective contingency fee of approximately 20%.
It was proposed that $5,500,000 of the minor plaintiff’s settlement be placed in a structure that was indexed at 2% and paid out for life. The proposed starting monthly payments were for $3,000, which then increased to approximately $14,000 by 2028, plus a lump sum of $100,000 in August of the same year. It was also proposed that the remaining $140,178.84 be paid out as a lump sum at the time of settlement approval. Of this lump sum, $30,000 was to be used for home modifications and the remainder used for the minor plaintiff’s immediate needs.
Daley J referred the matter to the Office of the Children’s Lawyer (“OCL”) and asked that they review the proposed settlement and the guardianship application and provide their views and opinions. After reviewing all materials, the OCL ultimately recommended the proposed settlement and the contingency fee sought. The OCL also recommended the approval of the guardianship application.
Based on the motion materials, the application materials, and the OCL’s report, Daley J concluded that the proposed settlement was fair and reasonable, and it was in the minor plaintiff’s best interests. Following the two-part test from Henricks-Hunter v. 814888 Ontario Inc, 2012 ONCA 496, Daley J also concluded that the CFA was fair when entered into and the fees sought were reasonable. Daley J also noted that the proposed settlement was not only fair and reasonable, but it resolved a very complex and potentially risky case at trial. To that end, Daley J commended plaintiff counsel for the way they had marshalled the necessary and critical evidence on both liability and damages and that this was what brought about the fair resolution of the matter.
