DATE: 20010126

DOCKET: C34574, C34595, C34604, M24387

COURT OF APPEAL FOR ONTARIO

MORDEN, MOLDAVER, and MACPHERSON JJ.A.

BETWEEN:

DIANNA LOUISE PARSONS, MICHAEL HERBERT CRUICKSHANKS, DAVID TULL, MARTIN HENRY GRIFFEN, ANNA KARDISH, ELSIE KOTYK, Executrix of the Estate of Harry Kotyk, deceased and ELSIE KOTYK, personally

Paul J. Pape and M. Waddell, for the moving party Sutts Strosberg

Terrence O’Sullivan and Rochelle Fox, for the moving party Hodgson Tough Shields Desbrisay O’Donnell

Plaintiffs (Respondents)

and -

THE CANADIAN RED CROSS SOCIETY, HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO and THE ATTORNEY GENERAL OF CANADA

T. C. Marshall Q.C, and Richard Horak, for the responding party Her Majesty The Queen in Right of Ontario

Defendants (Appellants)

and -

HER MAJESTY THE QUEEN IN THE RIGHT OF THE PROVINCE OF ALBERTA, HER MAJESTY THE QUEEN IN THE RIGHT OF THE PROVINCE OF SASKATCHEWAN, HER MAJESTY THE QUEEN IN THE RIGHT OF THE PROVINCE OF MANITOBA, HER MAJESTY THE QUEEN IN THE RIGHT OF THE PROVINCE OF NEW BRUNSWICK, HER MAJESTY THE QUEEN IN THE RIGHT OF THE PROVINCE OF PRINCE EDWARD ISLAND, HER MAJESTY THEQUEEN IN THE RIGHT OF THE PROVINCE OF NOVA SCOTIA, HER MAJESTY THE QUEEN IN THE RIGHT OF THE PROVINCE OF NEWFOUNDLAND, THE GOVERNMENT OF THE NORTHWEST TERRITORIES, THE GOVERNMENT OF NUNAVUT AND THE GOVERNMENT OF THE YUKON TERRITORY

Michel Lapierre, for responding party Attorney General of Canada

E.M. Stewart for the responding parties Non-Class-Action Provinces and Territories

Intervenors (Appellants)

B E T W E E N

JAMES KREPPNER, BARRY ISAAC, NORMAN LANDRY, as Executor of the Estate of the late SERGE LANDRY, PETER FELSING, DONALD MILLIGAN, ALLAN GRUHLKE, JIM LOVE and PAULINE FOURNIER as Executrix of the Estate of the late PIERRE FOURNIER

Plaintiffs (Respondents)

and -

THE CANADIAN RED CROSS SOCIETY, THE ATTORNEY GENERAL OF CANADA AND HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO

and -

HEARD: January 22 and 23, 2001

BY THE COURT:

[1] On June 22, 2000 Winkler J. decided a motion under s. 32 of the Class Proceedings Act, 1992, S.O. 1992, c. 6 for approval of the counsel fees in these two companion class proceedings. His decision, which is reported at 2000 22386 (ON SC), 49 O.R. (3d) 281, contain a complete description of the history of these proceedings and his reasons for approving the agreements respecting fees and disbursements in each proceeding.

[2] The defendants Her Majesty The Queen in Right of Ontario (“Ontario”), the Attorney General of Canada (“Canada”) and the Intervenors, who may be compendiously described as the non-class-action provinces and territories (“the Intervenors”), have appealed to this court from Winkler J.’s judgment. The class action counsel, Sutts Strosberg in one proceeding and Hogdson Tough Shields Desbrisay O’Donnell in the other, moved for orders quashing these appeals. At the conclusion of the hearing we quashed the appeals for reasons to be given. What follows are these reasons.

[3] The moving parties have satisfied us that none of the appellants has a right of appeal to this court from the judgment of Winkler J. made under s. 32 of the Class Proceedings Act, 1992 approving the class counsel fees in each of these proceedings. It appears to be common ground, or virtually common ground, that if there is a right of appeal it is that conferred by s. 6(1)(b) of the Courts of Justice Act. In saying virtually common ground we refer to the fact that counsel for Ontario suggested that there might be an appeal under s. 30(3) of the Class Proceedings Act, 1992. We do not think that the judgment made by Winkler J. is “a judgment on common issues” or “an order made under s. 24” within the meaning of these terms in that provision.

[4] Section 6 (1)(b) of the Courts of Justice Act, in so far as it is material, provides that an “appeal lies to the Court of Appeal from a final order of a judge of the Superior Court of Justice…”.

[5] In support of their position that they do have a right of appeal the appellants rely substantially on the fact that they were parties in the class proceedings in which the orders under appeal were made. This is not, in itself, sufficient to give standing to appeal unless the orders affected their rights. We examine this issue now.

[6] The first matter to note is that the appellants are not parties to the fee agreements in question that were before the court on the motion under s. 32. Next we consider the provisions in s. 32 itself. It reads:

– (1) An agreement respecting fees and disbursements between a solicitor and a representative party shall be in writing and shall,

(a) state the terms under which fees and disbursements shall be paid;

(b) give an estimate of the expected fee, whether contingent on success in the class proceeding or not; and

(2) An agreement respecting fees and disbursements between a solicitor and a representative party is not enforceable unless approved by the court, on the motion of the solicitor.

(3) Amounts owing under an enforceable agreement are a first charge on any settlement funds or monetary award.

(4) If an agreement is not approved by the court, the court may,

(a) determine the amount owing to the solicitor in respect of fees and disbursements;

(b) direct a reference under the rules of court to determine the amount owing; or

[7] From the terms of s. 32(2) it may be seen that, although the motions may have been made by class counsel in the class proceedings in question, the appellants were not, by the terms of the statute, parties to the motion. In this respect, in British Columbia, s. 38(3) of the Class Proceedings Act, R.S.B.C. 1996, c. 50 specifically addresses this question and provides that the court may order the defendant be given notice of the application by the solicitor for approval of an agreement respecting fees and disbursements. We do not say that, if a court orders that notice be given to a defendant, the defendant becomes a party to the application with standing to appeal from the order made on it. We, of course, do not have to decide this question. We refer to this legislation simply to indicate that, although it was open to the Ontario legislature to include a provision to this effect, this course was not followed.

[8] We turn now to the facts relating to the hearing of the s. 32 motion before Winkler J. In the circumstances, we do not think that it is significant that two of the three appellants, Ontario and Canada, appeared and made submissions. The uncontested affidavit of Bonnie Tough deposes that on two occasions, following the settlement approval hearing, Winkler J. advised counsel for all entities that had made submissions before him on the approval hearing that he was prepared to hear submissions from any entity on the issue of class counsel fees, provided that the submissions were not merely critical of the amounts claimed, but also included a submission to the court on the level of fees considered by the entities to be appropriate. Winkler J. said that the submissions were to be constructive and serious and intended to help in the making of his decision.

[9] Ms. Tough further deposed that at no time did Winkler J. say that it was understood that, by inviting submissions from any entity that was prepared to provide assistance to him, he was conferring on those entities any standing or status that they would not otherwise possess. It was her understanding that Winkler J.’s invitation was to enable him to obtain assistance from as broad a group as possible.

[10] It is submitted to us, correctly we think, that this description of the role of these entities is borne out by the first paragraph of Canada’s factum on the s. 32 approval hearing. It read:

The Attorney General of Canada has been asked to assist the court in assessing the reasonableness of the counsel’s fees and disbursements claimed in the Parsons and Kreppner class actions. [Emphasis added.]

We think that it is also borne out by the fact that Winkler J. was not asked to make, nor did he make, an order relating to the costs of the fee approval motions. It would have been reasonable for class counsel to receive their costs of this lengthy proceeding from the appellants, but only if they were parties to the motion. In the result class counsel bore their own costs of the motions.

[11] We can well appreciate that it would be helpful for the motions judge to receive the submissions from defendants who, of course, were familiar with the overall proceedings.

[12] The appellants did not seek, and Winkler J. did not make, an order granting them party status on the motions. If motions had been made to intervene, an order could not have been made adding them as parties to the motion unless the appellants satisfied the court that they claimed an interest in the subject matter of the motion or that they might be adversely affected by a judgment in the motion (rule 13.01(1)(a) and (b)).

[13] The settlement agreement dated June 15, 1999 that resolved the litigation and under which the proceedings against the defendants were to be dismissed without costs, was the place where the defendants, if they intended to participate in the subsequent fixing of the fees and disbursements of class counsel, could have reserved their rights in this regard. There is no provision in the settlement agreement to this effect. The closest provision bearing on the subject of class action counsel fees is Article 13.03 which reads:

13.03 Class Action Counsel Fees

The fees, disbursements, costs, GST and other applicable taxes of Class Action Counsel will be paid out of the Trust. Fees will be fixed by the Court in each Class Action on the basis of a lump sum, hourly rate, hourly rate increased by a multiplier or otherwise, but not on the basis of a percentage of the Settlement Amount.

[14] This is where the appellants were content to leave the matter of counsel fees as far as they were concerned. On this point, the British Columbia Court of Appeal in Endean v. British Columbia (Attorney General), [2000] B.C.J. No. 2330 in paragraph 10 said:

The governments have no basis for complaint under the settlement agreements. The settlement agreements make no other provision for government involvement in the determination of counsel fees and there is nothing in the settlement agreements that give the governments standing to appeal the approval orders.

[15] It follows from the absence of a provision in the settlement agreement on this subject that there was a similar absence in the judgment of Winkler J. dated October 22, 1999 approving the settlement agreement and dismissing the action, without costs. The judgment merely provided that the fees and disbursements of counsel would be dealt with on December 9 and 10, 1999.

[16] Canada has submitted that it has an interest in the surplus in the trust fund provided for in the settlement, the amount of which would be affected by the amount of counsel fees and disbursements approved, and that this interest gives it the right to participate in the fixing of counsel fees. In the context of the proceeding as a whole, and on the facts, we are not persuaded by the submission. It is based on the implicit contention that the government has a legal interest in the administration of the plan in so far as it bears on what may be returned to it at the end of its administration some eighty years in the future, but it is focussed entirely on that portion of the fund relating to counsel fees (2.3%) and not on any part of the balance of the fund. As we have said, with respect to this balance, none of the defendant appellants reserved any rights in the settlement agreement to protect this possible interest. In light of this, it is difficult to think that there was any contemplation of legal rights with respect to any possible surplus relating to that small portion of the fund that related to counsel fees.

[17] Accordingly, in addition to the highly speculative and contingent nature of Canada’s interest in the surplus in the fund, we think that the absence of a provision in the settlement agreement tells against the right of appeal.

[18] Further, we are satisfied that the provinces and territories, whose funding of the trust fund under the settlement is to be on a “pay as you go” basis, are in no different position. The amount of the total fund, $1.2 billion, which the governments are obliged to pay, is unaffected by the amount that is determined for counsel fees. Specifically, with respect to the provinces and territories, they are obliged over the life of the agreement to pay 3/11s of the total amount regardless of the amount allocated for counsel fees.

[19] In light of the foregoing, we are satisfied that none of the appellants has a right of appeal from the judgment of Winkler J. Nothing we have said, of course, is intended to reflect a view on whether or not defendants in some class proceedings should have the right to participate as parties with rights of appeal in fee-fixing motions or applications. Much will depend on the facts of the particular case. We have merely held that, on the facts of this case, we do not think that the appellants’ rights were affected by the judgment of Winkler J. and that, accordingly, there is no basis for appeal from his judgment.

[20] Without commenting in any way on the merits of the appeals, we order that the appeals in each of these two proceedings be quashed, with costs, including the costs of the appeals to this date, on a party and party basis.

“J.W. Morden J.A.”

“M.J. Moldaver”

“J.C. MacPherson”

RELEASED: January 26, 2001

Parsons v. The Canadian Red Cross Society, 2001 ONCA 24094

Case Summary

COURT OF APPEAL FOR ONTARIO

Judges

Counsel

Parties

Areas of Law

Fact Patterns

Issues

Statutory Provisions 2

Legislation 6