Canadian Underwriter

Damages For Guardian Costs In Brain Injury Claims

November 30, 2007   by Ian A. Mair

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In a serious brain injury case, damages for loss of income and future care are measured in millions of dollars. At the end of the case, a successful plaintiff will be left with a significant estate, and a continuing need for treatment and services. If the plaintiff is incapable of managing his finances and personal care, he will likely require one or more court-appointed guardians. Guardians cost money — often, a lot of money. Our courts recognize this, and will award significant damages to a successful plaintiff to cover the expenses associated with having a guardian. Recent cases show that guardianship damages can themselves run into the hundreds of thousands, even millions of dollars.

Take for example, Sandhu v. Wellington Place Apartments, [2006] O. J. No. 2448, (June 16, 2006) and Marcoccia v. Gill, [2007] O. J. No. 1333 (April 5, 2007). In Sandhu, the plaintiff was awarded $268,800 for the cost of an individual guardian, $1,127,000 for the cost of a corporate co-guardian and a further $400,000 for legal expenses which may be incurred in the future by the co-guardians on the plaintiff’s behalf.

In Marcoccia, liability was divided between plaintiff and defendant. But on a gross basis, the plaintiff’s damages were assessed at $161,250 for the cost of an individual guardian, $715,557 for the cost of a corporate co-guardian and $389,009 for future legal expenses.

Burden of proof

The burden of proof is on the plaintiffs to prove damages for guardianship costs. However, as with other types of future damages, the plaintiffs do not have to prove these damages on a balance of probabilities. Rather, the plaintiff need only show that there is a “real and substantial risk” that the plaintiff will incur the guardianship costs in the future. 1 Damages are not recoverable for those costs which are only speculative or fanciful possibilities.

Nature of injury determines need for guardian

In Sandhu, as a direct result of a fall from a fifth storey window, Harvinder Sandhu, a two-year-old boy, sustained a frontal lobe brain injury. Justice Carolyn Horkins accepted the nature of the brain injury would increase guardianship costs because the boy may become difficult to manage. The judge relied on medical evidence introduced to the jury, including:

• As a result of the frontal lobe brain injury, the boy would not appreciate that he is disabled. He would not understand that he cannot work or drive a car. Behavioural problems may develop.

• Brain injuries in a child become more apparent as the child grows. In effect, the child “grows into his disability.” Conflicts develop between the child who wants to establish his own identity and the people looking after him.

• He may become too outgoing, too trusting or too friendly.

• He will have difficulty behaving appropriately in different social situations

• His lack of judgment could cause him to become socially isolated, which could result in negative behaviour, and possibly illegal activity.

• He would require assistance of skilled caregivers, 24 hours a day, seven days a week, to act as his “prosthetic frontal lobes.”

In Marcoccia v. Gill, the plaintiff, Robert Marcoccia, was a young man who sustained a serious head injury in a motor vehicle accident. Justice J. Patrick Moore held that the circumstances of the case that were relevant to calculating damages for future guardian and legal expenses for the plaintiff were as follows:

• He sustained an injury to the frontal and temporal lobes of the brain and a left-sided hemi-paresis. This would affect his behaviour, social functioning, emotional response, initiation and planning, and anticipating consequences.

• He needed to be reminded to remember.

• The brain injury would affect his ability to drive

• He would be unable to manage his emotions and social behaviour, which would interfere with any ability to return to work.

• He would only be able to live in his own apartment with support. He would require 24 hour supervision, seven days a week.

• There was a risk that the plaintiff would fly into fits of rage and cause harm to himself and others.

In Sandhu, Horkins ruled the complexity of the plaintiff’s injuries supported the appointment of two guardians, or co-guardians. One should be a corporate guardian, the other a natural person. Initially, that natural person would likely be a member of the infant plaintiff’s family.

In Marcoccia, before the trial, the plaintiff’s mother had been appointed guardian of the plaintiff’s property. However, in Moore’s view, because the plaintiff had a severe brain injury with permanent, serious sequelae and because his estate would be substantial, he would likely require a corporate guardian as well.

In both cases, for the purposes of assessing damages, the court assumed the responsibilities would be shared between the co-guardians.

Will the judgment be paid into a structured annuity?

Where a large damages award is made to a brain-injured plaintiff, the court will typically order that a portion of the judgment be paid into a structured annuity.

Use of a structured annuity will lower guardianship costs. This is because the corporate guardian’s role is reduced, investment decisions are limited, the corporate guardian cannot take credit for the rate of return earned by the estate. As it relates to the money invested in the annuity,

the guardian’s role is essentially to cash a cheque each month from the annuity company.

Conversely, if the money is invested in a capital account under management by the corporate guardian, more work will be required, resulting in higher fees.

Therefore, before the court can calculate damages for guardianship costs, it must first decide where the money will be placed. If a portion is to be paid into the annuity, and a portion left as a capital fund, the court must decide upon the split.

The paramount consideration is: What is in the best interest of the brain-injured plaintiff? In Sandhu, Horkins ordered that the entire future care award — the sum of $10,942,908 — was to be invested in a structured annuity. The balance of approximately $3,000,000 dollars would be left in a capital fund to be managed by the co-guardians.

The plaintiff had argued for a split which placed less money in the annuity, and more money in a capital fund — $7,500,000 in the annuity, and $5,200,000 in the capital fund. Evidence led by the plaintiff’s damages expert suggested that, at current rates of return, the annuity would not keep pace with inflation. A larger capital fund would be needed to act as a hedge against inflation.

However, Horkins rejected the plaintiff’s proposal. She held that the lion’s share of the judgment had to be invested in the annuity. The security and safety for the long-term offered by the annuity, combined with a reasonable rate of return, was in the best interests of the plaintiff.

The plaintiff has appealed this decision by way of cross-appeal. The outcome of the cross-appeal ultimately may require an adjustment in the damages for guardianship costs.

Quantifying damages for non-corporate guardian costs

Once appointed, the compensation paid to a co-guardian will be subject to court review at regular passing of accounts. In the context of each passing of accounts, the court will determine whether the compensation sought by the guardian is fair and reasonable.

Horkins found the non-corporate guardian would work with the case manager, oversee caregivers and would also be involved with the management of the estate.

The judge looked at the reasonableness of fees proposed for the non-corporate guardian, based on hourly rate and number of hours spent. She assumed an hourly rate of $15 per hour. A time commitment of 3.8 hou
rs per week was likely to be the minimum. In light of the potential for extraordinary problems, Horkins accepted the plaintiff’s proposal of $7,500 per year as reasonable compensation for the non-corporate guardian. This translated into a present value award of $268,800 dollars.

In Marcoccia, Moore performed a similar hourly rate analysis, but allowed only $5,000 per year. His decision to award a lower annual fee turned on a few key facts. It was important that Marcoccia appeared to be more functional in his daily activities than the plaintiff in Sandhu. For example, Marcoccia was able to use a debit card, and he managed the spending of his allowance largely on his own. As such, Moore viewed the functions of the non-corporate guardian to be “necessary and important,” but “somewhat less challenging” than those arising in Sandhu.

Moore then assessed the damages, on a gross basis, for the non-corporate guardian at $161,250. Reduced to account for the jury’s liability apportionment, the net award for damages for non-corporate guardian costs was $98,363.

Quantifying damages for corporate co-guardian costs

The starting point for assessing damages for compensation for a corporate guardian for a brain-injured plaintiff is the Substitute Decisions Act 1992. Under Section 40, a “guardian of property” shall be entitled to compensation of:

• three per cent on capital and income receipts;

• three per cent on capital and income disbursements; and,

• 3/5 of one per cent on the annual average value of the assets as a care and management fee.

Evidence can be called to show that lower rates are available in the marketplace. In both Sandhu and Marcoccia, a senior trust company officer with Scotia Trust testified that the fee charged by a corporate guardian is subject to negotiation. The fee would vary depending upon the size of the estate — and in particular, the amount of money under the trust company’s management outside the structure. In a case involving a large estate, his company would generally charge less than the tariff permits.

For example, in Marcoccia, the trust company proposed to charge:

• 2 1/2 per cent on capital disbursements [the tariff amount is three per cent];

• 1/2 per cent on income earned upon collection of dividends, interest, rent, etc. including any payments made from the structured annuity [the tariff amount is three per cent];

• 2 1/2 per cent on other income [the tariff amount is three per cent]: and,

• 2/5 of one per cent on the annual average value of the assets in the capital fund as an ongoing care and management fee [the tariff amount is 3/5 of one per cent].

There would also be extra charges, including: a flat fee of $5,000 to set up the account; a fee for preparation of income tax returns ($175.00 an hour); payment of CPP or other government charges in the event outside service providers are treated as employees of the guardianship; and GST.

In Sandhu, the plaintiff’s damages expert applied to the trust company’s fee proposal a computer model programmed with assumptions about spending and arrived at an annual cost of $23,318.41. The judge awarded the present value of this, for life, totalling $1,127,000.

The same approach was followed in Marcoccia, where Moore assessed a gross figure for damages for corporate guardian costs of $715,557. (The jury’s liability apportionment reduced the net award to $436,490.)

Quantifying damages for future legal expenses

In Sandhu, $400,000 was awarded to cover future legal expenses which may be incurred by co-guardians. In Marcoccia, the gross award for future legal expenses was assessed at $389,009. (The jury’s liability apportionment reduced the net award to $237,296.)

In each case, these damages were awarded because the plaintiffs proved there was a substantial risk that events would arise during the guardianship that would involve payment of legal fees. For example:

a) the initial application for guardianship; b) the regular passing of accounts;

c) theapplicationforguardianshipofpersonandpropertyat the age of 18;

d)motions to the court for advice and direction, and “contingent litigation expenses;”

e) amendments to the investment or management plans; and,

f) appointment of new guardians, from time to time.

In the Sandhu case, both sides called experts who presented estimates of the future legal costs. In total, four experts testified — two for the plaintiffs, and two for the defendants. All were senior lawyers practicing in the estates and trusts field.

The present values of their estimates varied considerably. The range was from $90,002 at the low end to $593,666 at the high end. The differences in the estimates related primarily to the time allocated to each of the significant events listed above.

Horkins preferred the highest of the four estimates. Whereas the defence experts commented on the estimates offered by the plaintiff’s experts, Margaret O’Sullivan, the author of the highest estimate, based her opinion on the medical file, and how the complexity of the medical issues could trigger legal fees.

However, the judge did not accept O’Sullivan’s entire estimate of $593,666, and reduced the amount to $400,000. Although she accepted the appropriate hourly rate for a senior lawyer would be in the range of $490 to $525, it was unreasonable to assume a senior lawyer would do all the work. Instead, a blended rate should have been used to reflect a team approach using a law clerk and a junior lawyer.

O’Sullivan also testified on future legal fees in Marcoccia. However, there, O’Sullivan prepared her estimate using a blended rate of $350 per hour. This was based upon rates for a senior lawyer at $525 per hour, an associate lawyer at $350 per hour and a law clerk at $205 per hour. Moore accepted the blended rate, noting the criticism raised by Horkins in Sandhu had been addressed.


There are lessons to be learned for insurers (and excess insurers) in all of this. First, courts will award large sums for guardianship damages based on proof of a substantial risk that guardian costs may be incurred.

Second, large amounts are likely to be claimed for guardianship damages in all brain injury cases where there are resources to pay a judgment. For plaintiffs’ counsel, proving guardianship damages has effectively been reduced to a formula by the Sandhu and Marcoccia decisions.

Finally, for insurers and their counsel, in order to meet these claims, a concerted effort will have to be made to develop facts which tend to show the plaintiff’s strengths. An accurate picture of the implications of each plaintiff’s injury is essential to predict whether a guardian or co-guardians will be necessary in a particular case, and the scope of the guardians’ role. The use of a structured annuity may reduce guardianship costs. So the assistance of a structured settlement company will be needed. Competitive quotes will have to be sought from trust companies and co-operative witnesses from trust companies will have to be identified. As well, an expert in the area of estates and trusts law will have to be retained to review, in detail, the medical brief, and to provide an opinion on the reasonable legal fees likely to be incurred by the estate.

Ian Mair is a partner with Moodie Mair Harley & Walker LLP. He practices civil litigation with an emphasis on matters involving serious personal injury and insurance coverage.

1 Schrump v. Koot, [1978] 1 A. C. W. S. 16 (C. A.); Sandhu v. Wellington Place Apartments, [2006] O. J. No. 2448, (June 16, 2006).


Damages are not recoverable for those costs which are speculative or fanciful possibilities.

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