Law Times

Page 12 November 28, 2016 • Law Times www.lawtimesnews.com STRUCTURED SETTLEMENTS Structured settlement favoured in Markus BY MICHAEL MCKIERNAN For Law Times T he reliability and secu- rity of structured settle- ment payments have helped make judges some of the product's biggest fans, according to an Aurora, Ont. personal injury lawyer. In the recent case of Markus v. Non-Marine, Ontario Superior Court Justice Bryan Shaughnessy overruled the mother of a minor who wanted to have about one third of her son's $585,000 settle- ment paid out in cash so that he could purchase a small condo. According to the mother's plan, the rest of the money, about $400,000, would have gone into a structure — a financial product that divides large legal settlements into regular tax-free installments across many years and potentially for life. But in his Sept. 16 decision, Shaughnessy ordered the entire amount into a structured settlement, citing concerns about the proposal. Settlements involving minors must receive approval from the court, and Russ Howe, a partner with Aurora-based personal in- jury boutique Boland Howe LLP, says he expects judges will con- tinue taking refuge in structures when faced with doubts about the ability of minors and their guard- ians to handle large cash amounts. "To be frank, judges are con- servative by nature, and there's very little that can go wrong with a structured settlement," Howe says. Kate Mazzucco, a partner at personal injury boutique McLeish Orlando LLP in Toron- to, says when the injured person has care needs that will stretch for years into the future, a struc- tured settlement becomes almost a default option for the court. "Unless you have a very clear rationale for why the money should not go into a structure, you're going to have a difficult time getting the settlement ap- proved," she says. "Courts do like them because of the favourable tax treatment and the guarantee that the money will f low." James Moore, a principal at brokerage firm McKellar Struc- tured Settlements in Guelph, Ont., says the level of involve- ment of judges in cases involv- ing minors means those acci- dent victims get an extra layer of protection over adults with the capacity to make their own financial decisions. "The courts are very much proponents of structured settle- ments for minors, regardless of the size of the award, but partic- ularly so for those who are physi- cally incapacitated and whose needs are likely to last for their lifetime," Moore says. In Markus, the plaintiff suf- fered his injuries in a car accident back in 1997 when he was just 18 months old. Unrestrained in the back seat, he suffered serious head trauma and a skull fracture. However, it wasn't until 2006 that a tort action was commenced in his name, with an accident ben- efits case following in 2009. Shaughnessy's involvement in the case also goes back some distance, since he refused to ap- prove settlements in the tort and accident benefits actions as long ago as 2012. The judge expressed particular concern about the value of the accident benefits claim, for which the insurer had offered $225,000, since it was ap- parent to him from medical re- ports that the child should have received an assessment for cata- strophic impairment. Shaughnessy ultimately ap- proved a $1.125-million settle- ment in the tort action, plus a further $650,000 award in the accident benefits claim. Much of the money had previously been distributed for legal fees and to an existing structure, but Shaughnessy's most recent deci- sion dealt with the mother's plan to deal with the final $585,000 available to her child. The judge refused to sanction the $185,000 cash payment for a condo, concluding that the pro- posal was "unrealistic" consider- ing the child's large monthly defi- cit resulting from his living and medical expenses. A larger value structure, created without a guar- antee period, would maximize the child's monthly income and could be "a means to reduce the deficit and enhance the ability to achieve some of the services" that he requires, Shaughnessy wrote. The value of the structure is likely to get a further boost since the judge also cut the fees of Markus' lawyer, Daniel Balena, to 15 per cent from 25 per cent in the accident benefits action, after finding his contingency agree- ment breached the Solicitors Act. "The time expended by the solicitor undoubtedly increased when the first proposal for settle- ment of the SABS was not ap- proved. Further work was re- quired to get the matter into po- sition where it could be settled. However this does not warrant an increase in the legal fee percent- age to 25%," Shaughnessy wrote. "This was not a matter that in- volved legal complexity outside the mainstream of cases involving settlement of accident benefits." Balena declined to comment because the case remains before the courts. According to Barry Chobotar, managing partner at Henderson Structured Settlements, courts are almost as likely to approve a structure in cases involving mi- nors with less serious injuries and much smaller payouts where fu- ture care needs are less pressing. "Parents tend not to want their children to have access to even a five-figure sum at age 18," he says. In these cases, the payments can be structured to cover post- secondary education fees or to provide periodic smaller lump sum payments, according to Kyla Baxter, president of Toron- to-based Baxter Structures. "If there is money left over, then we would generate a lump sum payment either at age 23 when school is assumed to be completed, or we wait until age 25," she says. LT Kate Mazzucco says when an injured per- son has care needs that will stretch for years into the future, a structured settle- ment becomes almost a default option for the court. What do your clients need? The means to move on. Guaranteed. ™ Baxter Structures customizes personal injury settlements into tax-free annuities that can help your clients be secure for life. » Pre- and post- settlement consultation and support » Caring professionalism for over 30 years » No fee to you or your clients Need more information? Contact us at 1 800 387 1686 or baxterstructures.com Kyla A. Baxter, CSSC PRESIDENT, BAXTER STRUCTURES Untitled-3 1 2016-10-12 10:02 AM

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