E.B. v. Basi

2012 BCSC 1169 E.B. v. Basi

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: E.B. v. Basi, 2012 BCSC 1169 Date: 20120803 Docket: 08-5321 Registry: Victoria Between: E.B. by her Litigation Guardian, Kimberley Ross Brown Plaintiff And: Avtar Rashi Basi, Micheline Slader, The Provincial Director of Child Welfare and Her Majesty the Queen in Right of the Province of British Columbia (Ministry of Children and Family Development) Defendants Before: The Honourable Mr. Justice Macaulay Reasons for Judgment (In Chambers) Counsel for Acheson Whitley Sweeney Foley: G. Turriff, Q.C. Counsel for the Public Guardian and Trustee: D.B. Kirkham, Q.C. Place and Date of Hearing: Victoria, B.C. June 29, 2012 Place and Date of Judgment: Victoria, B.C. August 3, 2012 [1] Arising out of the settlement of the infant plaintiff's tort claim, her lawyers, Acheson Whitley Sweeney Foley (the "law firm"), seek court approval of their fees. At a separate hearing on April 16, 2012, I approved the settlement of the infant's claims for $13,000,000. However, I bifurcated the process insofar as legal fees are concerned and directed a separate hearing on June 29, 2012. Counsel for the law firm and for the Public Guardian and Trustee ("PGT") participated in the hearing and, at its conclusion, I reserved judgment. These are my reasons for judgment. [2] Various members of the law firm, including three of the partners, Acheson, Sweeney and

Foley, swore affidavits, as did the litigation guardian, Kimberley Ross Brown. The affidavits were filed in support of the law firm's contention that I should approve fees of $3,045,204.71, calculated in accordance with the contingency fee agreement that Mr. Brown and the infant's mother signed. Mr. Brown acted as the infant's litigation guardian and is fully supportive of the law firm's claim. [3] Pursuant to s. 40(10) of the Infants Act, R.S.B.C. 1996, c. 223, the PGT is required to provide written comments regarding any infant settlement for which court approval is sought. It is well understood that approval of the legal fees payable to counsel for the infant is a necessary part of the settlement process. [4] By written report dated June 25, 2012, the PGT commented on the proposed fee and recommended that I approve a reduced fee of $2 million, and, in addition, approve reimbursement for the disbursements and special damages that the law firm has paid on behalf of the infant and her claim. [5] There is, accordingly, an issue between the law firm and the PGT whether I should approve the fee as calculated under the contingency fee agreement. I intend, first, to address the law as it applies to that question. [6] The existence of a contingency fee agreement does not alter my responsibility to only approve a fee that is reasonable (Harrington (Public Trustee of) v. Royal Inland

Hospital (1996), 131 D.L.R. (4th) 15 (B.C.C.A.), at para. 255). In Murphy, Battista v. Tejani (Guardian ad litem of), 2009 BCSC 1782, at para. 32, Butler J. referred with approval to the following extract from Thibodeau et al. v. Stanevicius et al., 2006 BCSC 1403 at para 10: Although the nature of the retainer agreement signed by the parent or other guardian should not be ignored and the vital role of contingency fees should not be discounted ... [ss. 40(8) to (10) of the Infants Act] require the court to give specific approval to the legal fees that are to be paid out of infant settlement funds and to be satisfied that the fee is reasonable in all the circumstances. [Emphasis added.] Justice Butler went on to point out that the assessment of a reasonable fee is similar to a quantum meruit analysis and the "precise terms of the contingency fee agreement do not weigh heavily in that consideration" (para. 33). [7] Justice Butler also pointed out that when an adult signs a contract to obtain legal services for a child, the contract is not binding on the child. In the result, the court must determine a reasonable fee, taking into account, but only as a factor, that the guardian ad litem entered into the contingency fee agreement (paras. 31-33). I agree with his analysis. [8] In British Columbia (Pubic Guardian and Trustee of) v. Ralston (Guardian ad litem of), 2008 BCCA 372, also

arising from an infant settlement, Saunders J.A., for the court, summarized the factors to be considered in assessing the reasonableness of a contingency fee, based on Harrington, at para. 21: 1. the financial circumstances of the plaintiff; 2. the risk to the law firm where it carries disbursements; 3. the complexity of the issues; 4. the experience and skill of defendant's counsel; 5. the experience and skill of plaintiff's counsel; 6. the risk assumed by plaintiff's counsel that there would be no pay for effort expended; 7. the time expended by plaintiff's counsel; 8. the importance of the case to the plaintiff; and, 9. whether the settlement is a good settlement. It is not suggested in Harrington or Ralston that the list of factors is exhaustive. The factors must be considered and extended, as necessary, in light of the circumstances of the individual case. Some factors may take on more importance than others. [9] For example, as will be seen, the risk assumed by plaintiff's counsel in the present case extended beyond a risk of no pay for effort to include non-reimbursement of over $500,000 in expenses that the law firm paid on behalf of the plaintiff. Further, I am satisfied that, were it not for the willingness of the law firm to fund those expenses and proceed on the basis of a contingency fee agreement, the financial circumstances of the plaintiffs would have prevented

them proceeding with the litigation. While it is possible that some other law firms would have also agreed to proceed on a contingency fee basis, only a very small number of local firms, if any, would have had both the requisite legal expertise and the financial capability to assume the risk for the expenses that needed to be incurred in this case. [10] In spite of Murphy and Ralston, the law firm contends that the question for me is whether the fee payable under the contingency fee agreement is reasonable. With respect, I disagree. Framing the question in that way restricts the court's inquiry. It tends to overly focus on the apparent fairness of the agreement rather than a determination of what is a reasonable fee, taking into account, among other things, the need for and terms of the agreement. [11] For this reason, I cannot accept that the reasoning of the Ontario Superior Court of Justice in Cogan (Re) (2007), 88 O.R. (2d) 38 (Ont. S.C.), applies in this province, even though the Alberta Court of Appeal commented favourably upon it, albeit in a different context, in Morrison v. Rod Patony Professional Corp., 2008 ABCA 145. [12] In Cogan, the court addressed the fairness and reasonableness of a contingency fee after approving an infant settlement. The court pointed out that contingency fees are "intended to promote access to justice and to ensure that the cost of our legal

system [does] not act as a barrier to justice" (para. 37) and further, that the fees are considered "particularly important for very complex cases that involve lengthy and costly preparation" (para. 37). The court then went on to apply the factors identified by the Law Society in Ontario relating to the approval by the court of contingency fees. [13] These factors were listed as: a) the financial risk assumed by the lawyer, which is included under likelihood of success, the nature and complexity of the claim, and the expense and risk of pursuing it; b) the results achieved and the amounts recovered; e) achievement of the social objective of providing access to justice for injured parties, including injured children and parties under disability (para. 42). It is obvious that this list primarily focuses on the purposes and fairness of a contingency fee agreement. Further, the list takes some, but not all, of the Harrington and Ralston factors into account. There is also no reference to the quantum meruit analysis mandated by law in British Columbia with respect to assessing the reasonableness of the fee for legal services provided to an infant. [14] Similarly, in Morrison, the focus of the court was not on the considerations applicable to legal fees in relation to an infant settlement, but instead on the taxation of an account rendered to the clients pursuant to a contingency fee

agreement. There is no indication in the style of cause or the reasons for judgment to suggest that either of the clients was an infant. Accordingly, neither Cogan nor Morrison alter the law that applies in this province respecting the determination of a reasonable fee for legal services in relation to infant claims. [15] The settlement in this case stemmed from an alleged intentional assault in November 2008 upon a child who was only two and one-half months old at the time. The child suffered severe traumatic brain injuries. At the material time, the child, having been removed from her mother, was in foster care. The alleged perpetrator, Mr. Basi, was the then-boyfriend of Ms. Slader, the foster parent. Basi was living in the Slader home at the time but had not been approved by the Ministry of Children and Family Development ("MCFD") as a foster parent or caregiver. [16] The child's mother and grandfather, Mr. Brown, retained the law firm in early December 2008. Mr. Brown became the litigation guardian of the infant in the proceeding. Basi, Slader and Her Majesty the Queen, as represented by the Director and the MCFD (the "Crown" and the "Director"), were all named as defendants. [17] Ultimately, by December 20, 2011, and shortly before a three month long trial scheduled to commence February 6, 2012, the parties reached an all-inclusive settlement of $13,000,000, subject to

the approvals of the PGT, Treasury Board and the Court, all of which were later provided. The Crown funded almost all of the settlement. Slader's insurer contributed $1,000,000 but Basi, who had no assets, did not contribute anything. The child will require, as the amount of the settlement attests, lifelong care. In fact, the settlement was successfully negotiated on the basis that the child is entitled to one-to-one care at an annual cost of $250,000. [18] Both Mr. Brown and the child's mother signed the contingency fee agreement on December 5, 2008. The fee, excluding GST and PST, is expressed as a varying percentage on "all money recovered" and is stated as: · 25% on the first million dollars; · 15% on the second million; and · 25% on anything in excess of the second million. As the PGT points out, the fees calculated pursuant to the agreement amount to $3,041,528.24, plus taxes of $364,983.38, on a net recovery of $12,566,112.97. [19] The agreement also states that the law firm will pay disbursements, defined as expenses relating to the claim; and, at its discretion, advance cash payments, including for special needs, special damages, wage loss or for treatment-related expenses. Although the agreement provides for interest (not compounded) at 10% per year on any expenses carried by the firm that the insurer does not promptly repay, it expressly states that the clients will

not be responsible for paying them if the insurer is not responsible. In such event, "the firm assumes financial responsibility for the above treatment related expenses and disbursements." [20] By the terms of the agreement, the law firm committed to "all steps up to and including trial" subject only to the firm's entitlement to cease acting if the clients "misrepresent a fact which affects the claim" or "refuse to accept sound legal advice." In such case, the agreement provides that the law firm may charge for services rendered by three named partners at $350 per hour; by other lawyers at $250 per hour; and by paralegals at $125 per hour. [21] In the result, the law firm not only committed to carrying the matter through to trial, if necessary, at a very early stage, but also agreed to underwrite the expenses. The firm also provided other legal services that benefitted the infant and assisted in developing the case for settlement purposes and trial. [22] Ms. Foley addressed this in her letter to the PGT dated December 20, 2011, respecting the provisional settlement under the heading "Other issues", as follows: Moving the Child to Living with Family This issue alone took two years of litigation, negotiation, strategy and consultation with family law lawyers in Provincial Court as well as an application in Supreme Court to have this child moved to the guardian, Mr. Brown's,

residence and allow him full custody in February 2011. The Ministry clearly wanted to keep the child in foster care in a group home type setting, to the exclusion of family. The family, i.e., the mother and grandfather, were treated horribly throughout this process. The same risk management people in the litigation were overseeing and involved in the family law matter. There were reports that the grandfather was over-stimulating and making the child worse during visits. This was unfair and inaccurate. It was only until our firm provided the demands of 24-hour LPN care in a private home that we were able to move Baby E back to her family and guardian, Mr. Kim Brown. She is extremely happy and described by all caregivers as being a happy child and physicians have described that she has improved since she had been with family. She was overweight when she came to the family; she is now getting a proper diet and exercise and is a stable weight. Her seizures are well in control. If we had not been able to move this child back with family, she would not have had the benefit of daily, hourly family contact. Nor would she have the one-to-one care model she needs for optimal involvement, rehabilitation and ongoing stability and quality of life. The foster care model was not in the best interests of this child, medically or socially. Moreover, the Ministry was cognizant of the fact that the model of one-to-one care, unlike group home foster care, would be much more expensive in any tort settlement. In my view, these additional services are sufficiently related to the retainer so as to include them in the quantum meruit analysis. [23] The PGT's comments focus on the Harrington factors. I summarize, and respond to, them, as follows.

1. Financial circumstances of client [24] As the PGT points out, the child's family would not have been able to prosecute a claim of this magnitude except on a contingency fee basis. The PGT suggests a generous approach to compensation "given the need to encourage such arrangements in risky cases and the PGT concedes this is warranted here." I agree.

2. Carrying of disbursements [25] Disbursements totaled $243,224 and special damages totaled $354,809. The law firm began funding rehabilitation costs in February 2009 and care costs in February 2011. The law firm paid Mr. Brown's rental costs commencing in April 2011. The PGT suggests this was "a major undertaking for a relatively small firm." I characterize it as a major undertaking for any size firm, keeping in mind that the monies were only recoverable in the event of success. [26] In spite of that, the PGT suggests that the benefit is mitigated by the interest charged on the advances. I consider that a minor factor as I expect the interest charged simply offsets, in whole or in part, the cost of the firm utilizing its own borrowing power to fund the expenses. [27] The PGT also suggests that the risk of non-recovery decreased substantially after the conclusion of the examination for discovery of a social worker in May 2011. I will return to this topic under number 6 below as it arises in other contexts as well.

3. Complexity and difficulty of issues [28] The PGT agrees that the issues in the case were complicated but suggests not as complex as those in infant birth malpractice cases that have led to the approval of lesser fees than the law firm seeks here. The PGT contends that at the end of the day, this case "was difficult but not complex." [29] Every case has its own degree of complexity. From my perspective as the trial management judge, this case was more complex than some medical malpractice claims. Keeping in mind the various decisions relating to the child being in care for the first two years and effectively under the day-to-day control of the government defendant, the overall case was extremely challenging at the beginning and for a considerable time thereafter. While the risk of non-recovery reduced as the parties got closer to trial, that was also the result of effective tactical planning; the obtaining of opinions from the most qualified experts available respecting shaken baby syndrome; and, finally, overall execution by counsel.

4. Experience and competence of defence counsel [30] I agree with the PGT's observations in this regard. The most well known and experienced of the defence counsel was appointed by Ms. Slader's insurer. He did not appear to take a lead role in the case.

5. Experience of plaintiff's counsel [31] The PGT comments that the three partners involved in the case are all experienced litigators. They did good work and, in the view of the PGT, effectively won the case at the examination for discovery stage. The law firm was also involved in another successful shaken baby case that was prosecuted to a successful conclusion while the present proceeding was ongoing.

6. Degree of risk [32] The PGT acknowledges that the risks of non-recovery were very significant at the outset but suggests that the risk was substantially lower after the conclusion of examinations for discovery and the obtaining of expert medical reports regarding the severity of the shaking necessary to cause the injuries. Those views are consistent with the views of the law firm as it approached settlement negotiations and trial, at least, insofar as the claims against Basi and the MCFD are concerned. The law firm was, however, justifiably less confident about its case against Slader. [33] Even with the increased likelihood of success against the MCFD after discoveries, the law firm still had to face the risks associated with proceeding to trial on liability if it could not negotiate successfully on quantum. In his second affidavit, Mr. Sweeney, one of the partners responsible for the conduct of the litigation, details the continuing associated risks. I accept his evidence in such regard and need not restate it here.

7. Time expended [34] This is a significant area of contention between the PGT and the law firm. While the PGT recognizes that time spent is not, in itself, usually a significant factor for the court's consideration, it asserts that the law firm's estimate of hours spent is over-inflated. The law firm responds to that assertion aggressively but I am satisfied that the estimate is unreliable and place no weight on it. [35] Having said that, I am persuaded that the law firm expended a considerable and appropriate amount of time throughout its involvement in the matter but not as much as 5,000 to 6,000 billable hours over three years as was estimated after the fact. Because the individual partners did not keep track of their time, the attempts to reconstruct and establish a conservative estimate of individual time expended were almost bound to fail. For these reasons, and in spite of the law firm's assertions, I do not accept the estimates of minimum time spent that the law firm put forward. [36] It is curious, given the provision in the contingency fee agreement, for hourly billing in the event the retainer was to be terminated as set out above, that the partners did not maintain time records. Given that time spent is also a recognized factor in Harrington, and, as pointed out in previous cases, it is foolhardy for a lawyer not to keep time records in a case such as this. See Adams (Guardian ad litem of) v. Emmott, 2000 BCSC 1812, and Richardson (Guardian ad litem of) v. Low, [1996] B.C.J. No.

954. Taking these risks into account, the law firm should not now expect the court to take its after-the-fact time estimates at face value. [37] Time spent is a factor for consideration. For example, a settlement early in a proceeding, when relatively little time may have been spent, cannot reasonably result in the same fee as time spent through to conclusion of trial. Far more important than the number of hours spent, however, is how the law firm used its time. [38] Was the law firm efficient or non-efficient? Did it direct its resources, including time spent, rationally and intelligently such that the infant benefited? The purpose behind considering time is not to reward the inefficient. A more experienced and talented lawyer will usually accomplish a given task more efficiently than a lawyer who has less experience and talent. Effective advocacy requires a substantial amount of time appropriate to the task at hand. In that sense, time spent is, at best, sometimes a proxy for effective representation and is not to be slavishly applied as a factor. [39] I am satisfied that the law firm took all necessary and reasonable steps that were appropriate in the circumstances. The lawyers went the extra distance in committing time to resolving the dispute over the living arrangements for the infant. That important tactical consideration paid off in the end. The law firm invested

significant extra time in the examination for discovery process, knowing that was their opportunity for success and did succeed. [40] Even after settlement, the law firm skillfully and effectively negotiated with competing bidders for necessary financial management and administrative work. This resulted in potential savings to the infant's estate of $500,000. [41] The time spent by the law firm was obviously considerable, whatever the actual hours were, but, more important, I find that the time spent was necessary, focused and effective. That is, in my view, the hallmark of success. By the time of settlement, this difficult and relatively complex case was very close to being ready, if not actually ready, for trial.

8. Timing of settlement [42] The PGT describes the case as settling two months before trial. It actually settled just before the traditional holiday break in December. There was probably, at most, five to six weeks of working time available before trial. The PGT believes that there should be a fee reduction to reflect an early settlement. [43] The quantum meruit analysis focuses on a reasonable fee for the services actually performed and it is unnecessary, in my view, to focus on whether it is appropriate, in the circumstances, to reduce the fee chargeable under the contingency fee agreement because of an early settlement. As a fee calculation under the agreement, it is either reasonable in all the circumstances or it is not. If not, a reasonable fee will be set independently, taking into account the stage of the proceeding at the time of resolution.

9. Importance of case to plaintiff [44] The PGT accepts that this factor warrants a generous fee that takes into account the importance of contingency fees.

10. Was the settlement a good one? [45] The PGT accurately describes the settlement as excellent with a good recovery. It recommends a fee of $2,000,000 as reasonable, with taxes and repayment of disbursements and special damages to be paid in addition. The PGT emphasizes that $2,000,000 is larger than any past fee approved in similar circumstances in this jurisdiction. [46] The PGT also suggests that the court could achieve the same result, in effect, by modifying the contingency fee agreement and "stipulating that in the event the case is settled well before trial the percentage fee on any recovery over $1,000,000 is 15%." According to the PGT, this would result in a maximum fee less than $2,000,000. [47] I am not persuaded that approach is necessary or appropriate. As stated in Richardson, at para. 35: The question "what is the reasonable fee?" must be answered, not as a percentage, but in dollars. My task is to determine the reasonableness of the fee, not to focus on the fairness of the contingency fee agreement that the mother and grandfather both agreed to. Nor, as I have set out above, do I accept that this case was "settled well before trial." [48] It also follows from the above that I decline to award the amount calculated under the contingency fee agreement as reasonable in the present circumstances. The contingency fee agreement is important, for the reasons I

earlier set out, but it is not determinative of reasonableness. [49] I have considered the fees found to be reasonable in other cases. The PGT conveniently summarized them in an appendix to the statutory comments and I attach a copy as Appendix A to my reasons. [50] Two of the cases involve shaken babies and the rest are medical malpractice cases. The highest recorded fee in a medical malpractice case is $1,800,000 against a settlement of $8,500,000 (including costs) achieved on the eve of trial. The settlements in the shaken baby cases were under $5,500,000, reached during trial in one and before retrial in the other, with reasonable fees set at $1,347,000 and $1,475,000 respectively. The current settlement, at $13,000,000, is roughly one and one-half times the previous high of $8,500,000 and more than double the settlement in the two shaken baby cases. [51] Taking into account all the circumstances in this case, a reasonable fee is $2,400,000. In addition, the law firm is entitled to applicable taxes and repayment of disbursements and treatment-related expenses, and special damages, as recommended by the PGT. Although counsel made limited submissions on costs, I think it is preferable that they reconsider their positions in light of my conclusion. If there is a disagreement on the costs outcome, they may provide written submissions. "M.D. Macaulay, J." The Honourable Mr. Justice Macaulay

APPENDIX A Case Nature of Claim Settlement Amount Settlement Timing Legal Fee Sought Hours Estimated Fee Awarded Harrington v Royal Columbia 1995 CanLII 2345 (BCCA) Medical malpractice $1.5 million and costs 3 days < trial $500,000 Estimate of 800 hours not accepted by trial judge; 280 hours accepted $175,000 Richardson v Low 1996 CanLII 571 Medical malpractice (birth case) $2.27 million Settled well before trial $897,750 Court says no basis to estimate time but must be less than 260 hours $325,000 Cook v Mission 1996 CanLII 1394 Medical malpractice $2.6 million Settled on 1st day of trial $850,000 Non recorded $650,000 Adams v Emmott 1997 CanLII 746 Medical malpractice (birth case) $3 million Settled Thursday before Tuesday trial $725,000 300 hours estimate by Court $600,000 Chong v Royal Columbia 1997 CanLII 4362 Medical malpractice (birth case) $2.5 million After 1 week of trial $750,000 2131.2 hours for counsel and 654.9 for paralegals and students $750,000 Renaerts v Korn 1998 CanLII 4979 Medical malpractice (birth and abandonment; intentional infliction of harm) $8 million and $500,000 costs Settled weekend before trial (numerous pretrial motions and limitation defence) $2.2 million Hours for 3 counsel valued at $825,000 $1.8 million Duchene v Woolley 2002 BCSC 1878 (CanLII) Medical malpractice (birth case) $3.6 million Settled 2 days before trial although defendants did

not serve liability reports $1.244 million 167 hours estimated but Court notes more was probably spent $900,000 Case Nature of Claim Settlement Amount Settlement Timing Legal Fee Sought Hours Estimated Fee Awarded Bizove v Cornish 2003 BCSC 1615 (CanLII) Medical malpractice (birth case) $3.566 million 3 days before trial $750,000 740 hours (3 senior counsel) $750,000 Makowsky v Jaron 2004 BCSC 419 (CanLII) Medical malpractice (birth case) $3.2 million 4 months before trial but liability ceased to be issue several months before trial $900,000 136 hours recorded but Court suggests they must have exceeded 200 hours $600,000 Strachan v Winder 2005 BCSC 59 (CanLII) Medical malpractice (birth case) $4 million 2nd day of 2 week trial $862,500 Recorded time for 3 senior counsel 484 hours $800,000 Delaronde v.

HMTQ 2000 BCSC 1626 MCFD shaken baby case $5.448 million Settled after 4 weeks of evidence and 3 days of submissions $1.347 million None mentioned $1.347 million B.M. (Guardian ad Litem of) v R.M. 2011 BCSC 64 MCFD shaken baby case $5.35 million Liability trial (8 days) and appeal then settled several months before trial $1.7 million Hours valued at $607,320 $1.475 million