In a multi-jurisdictional class action regarding credit card merchant fees, Class Counsel entered into a Fee Sharing Agreement with a competing law firm to resolve a carriage dispute.
The agreement provided the competing firm up to $800,000 from Class Counsel's fees in exchange for staying rival actions.
On a motion to approve a partial settlement and fees, the motion judge reduced Class Counsel's requested fees by 10%, declared the Fee Sharing Agreement unenforceable, and prohibited any payments to the competing firm.
The Court of Appeal upheld the fee reduction and the prohibition on paying the competing firm from the settlement or approved fees, finding the agreement was subject to court approval under the Class Proceedings Act.
However, the Court set aside the declaration that the agreement was entirely unenforceable from any source, as the competing firm was not given notice or an opportunity to make submissions on that specific issue.
