Court Approval of Settlement Funds for Minors – Farjam-Rad v Seneca College of Applied Arts and Technology, 2020 ONSC 4436

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Written By: Michael Warfe and Brandon Pedersen, Student-at-Law

Court Approval of Settlement Funds for Minors | McLeish Orlando Lawyers

Court Approval of Settlement

Under Rule 7.08 of the Rules of Civil Procedure, no settlement of a claim made by or against a person under disability (includes minors) is binding without the approval of a judge.[1] The material required to be submitted on a motion to approve includes an affidavit from the litigation guardian setting out the material facts and the reasons supporting the proposed settlement and an affidavit from counsel setting out their position in respect of the proposed settlement.[2] The overriding concern of a judge hearing a motion to approve a settlement is whether the settlement is in the best interests of the minor:

The requirement for court approval of settlements made on behalf of parties under disability is derived from the court’s parens patriae jurisdiction. The parens patriae jurisdiction is of ancient origin and is “founded on necessity, namely the need to act for the protection of those who cannot care for themselves… to be exercised in the ‘best interest’ of the protected person… for his or her ‘benefit’ or ‘welfare’”.[3]

Affidavit of Lawyer

This is the most important piece of the materials on a motion for approval of a settlement. Here, counsel outlines the theory of the case and includes expert reports supporting said theory. Further, the affidavit must set out the reasons that counsel believes the proposed settlement is in the best interests of the party under disability, as opposed to proceeding to trial. This is a significant component, considering awards at trial can greatly exceed amounts discussed in a settlement. Essentially, this portion of the affidavit is where counsel discloses the issues with the case, whether it be liability or damages, which make obtaining a settlement more beneficial to the plaintiff than pursuing a greater, but riskier, award at trial.

If the motion seeks approval of a proposed settlement of a personal injury claim for a minor there must be a medical opinion that contains a prognosis for the future. The idea is to ensure that the minor plaintiff receives enough compensation to ensure they can continue to obtain the necessary medical attention into the future.

Another important aspect of the affidavit is the fee charged by counsel. The fee can only be charged with the approval of the Court and must be both fair and reasonable in the circumstances. The affidavit must detail extensive information to allow the Court to evaluate the proposed fee.

Farjam-Rad v Seneca College of Applied Arts and Technology

The Plaintiffs brought a motion for approval of a settlement of the claims advanced in the action on behalf of a minor through her litigation guardian. The minor plaintiff sustained severe injuries, to which they sought damages for personal injury.

After the Statement of Claim was served, but before a Statement of Defence was delivered (and therefore, before the discovery phase), the action settled for the all-inclusive sum of $45,000, subject to Court approval of the settlement proposed.

Details of Settlement

This was the second shot that counsel for the Plaintiff had at obtaining approval of the settlement. On the first attempt, the Court declined to grant approval and directed that the Plaintiffs file a supplementary affidavit that provided more extensive documentation, including:

  • Medical evidence of the diagnosis of the injury sustained by the Minor Plaintiff in the Accident, the treatment of her injury, her state of recovery, any remaining or residual issues or complications, and the prognosis for her recovery from injury,[4] and
  • A litigation guardian affidavit. The motion judge noted that i) on the initial filing of the motion, the Plaintiffs did not file a litigation guardian affidavit and were thereby non-compliant with Rule 7, and ii) there was no litigation guardian when the action was initiated.
  • An explanation by the lawyer of the basis of the lawyer’s fees ought to be approved on the settlement.[5]

The motion judge was satisfied that the further evidence provided by the Plaintiffs had addressed the issues identified in the first attempt at obtaining approval and found that the proposed settlement was in the best interest of the minor. Specifically, it was noted that:

  1. The litigation guardian provided evidence of the minor’s recovery from her injury and does not require any further treatment;
  2. Case authority was provided for the quantification of the minor’s claim, demonstrating that the amount of the proposed settlement was reasonable, taking into consideration the nature of the injuries sustained and the resulting limitations; and
  3. The litigation guardian deposed that the proposed settlement is in his daughter’s best interest.

What to take from Farjam-Rad?

Farjam-Rad is a great example of the required materials to be submitted on a settlement approval motion. Materials on a motion for approval of a settlement of a minor plaintiff are to be comprehensive and detailed. It is best practice to get it right the first time around to avoid the risk of having the proposed settlement denied altogether.

 

[1] Rules of Civil Procedure, RRO 1990, Reg 194, Rule 7.08(1).

[2] Rule 7.08(4).

[3] Wu, Re, 2007 CanLII 16344 (ON CA) at para 10.

[4] Farjam-Rad v Seneca College of Applied Arts and Technology, 2020 ONSC 4436 at para 5(a).

[5] Ibid at para 5(h).

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