COURT OF APPEAL FOR ONTARIO

CITATION: Waldman v. Thomson Reuters Canada Limited, 2015 ONCA 53

DATE: 20150128

DOCKET: C58585

Simmons, MacFarland and Benotto JJ.A.

BETWEEN

Lorne Waldman

Plaintiff (Appellant)

and

Thomson Reuters Canada Limited

Defendant (Respondent)

Paul J. Pape and Shantona Chaudhury, for the appellant

Andrew E. Bernstein and Sarah Whitmore, for the respondent

Heard: November 18, 2014

On appeal from the order of Justice Paul M. Perell of the Superior Court of Justice, dated March 4, 2014, with reasons reported at 2014 ONSC 1288.

MacFarland J.A.:

[1] On October 3, 2013, the appellant and the respondent reached an agreement to settle a copyright infringement class action. By order dated March 4, 2014, Perell J. refused to approve the settlement, as well as the retainer agreement and class counsel fees sought as part of that agreement. The appellant, supported by the respondent, appeals that refusal to this court.

[2] Prior to the hearing of the appeal, this court, through its senior legal officer, raised with counsel the question of whether this court has jurisdiction to hear the appeal. Counsel were asked to address whether the appeal properly lay to this court or to the Divisional Court with leave.

[3] It is of note that both the appellant and the respondent are allied in interest on this appeal and there is no party contra. Prior to the hearing on the issue of jurisdiction, counsel were informed that, should the court conclude the appeal was properly before this court, the hearing of the appeal on the merits would be adjourned to permit the appointment of amicus.

Background

[4] The nature of the proceeding, the terms of the settlement agreement and the motion judge’s disposition are all succinctly set out in the first eight paragraphs of his reasons as follows:

[1] In this certified class action under the Class Proceedings Act, 1992, S.O. 1992, c. 6 [(“CPA”)], the Representative Plaintiff, Lorne Waldman, moves for approval of a settlement of a copyright infringement class action against Thomson Reuters Canada Limited (“Thomson”).

[2] The action was commenced because Thomson, through its legal publishing branch known as Carswell, makes available court documents authored by the lawyers who constitute the Class Members. Carswell copies documents from public court files, replicates them on an electronic database and search and retrieval service known as “Litigator”, and makes the copies available to subscribers. Documents authored by Mr. Waldman, who is a lawyer, were included in Litigator without his permission.

[3] In the class action, Mr. Waldman alleges that Thomson infringes the copyright of the Class Members under the Canadian Copyright Act, R.S.C. 1985, c. C-42 by making available, without permission and for a fee, copies of court documents authored by Class Members and their law firms.

[4] Subject to court approval, Mr. Waldman and Thomson have signed a Settlement Agreement. Under the Agreement, Thomson settles a $350,000 cy-près trust fund to support public interest litigation. Thomson also agrees to make changes to the copyright notices on Litigator and to the terms of its contract with subscribers. The individual Class Members, who may opt-out, receive no monetary award under the Settlement Agreement, and they sign a release and grant a non-exclusive license of their copyrights in the court documents to Thomson.

[5] Class Counsel, Sack Goldblatt Mitchell LLP, which was assisted by Deeth Williams Wall LLP in regard to copyright law, moves for approval of its contingent fee agreement with Mr. Waldman and for court approval of counsel fees of $825,000, all inclusive. Class Counsel’s fee is paid as a term of the proposed Settlement Agreement.

[6] The proposed settlement is supported by, among others, Mr. Waldman, Class Counsel, a blue-ribbon group of lawyers who are prepared to be trustees for the cy-près trust fund, several Canadian law schools, the Canadian Bar Association, the Canadian Civil Liberties Association, and the British Columbia Civil Liberties Association.

[7] After a thorough notice program, the Settlement Agreement is opposed by seven Class Members.

[8] For the reasons that follow, I conclude that the proposed Settlement is not fair, reasonable, and in the best interests of the Class Members. I, therefore, dismiss the motions for settlement and fee approval.

Analysis

[5] Section 29(2) of the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”) provides that a settlement of a class proceeding is not binding unless approved by the court. The CPA does not address the appeal route from an order refusing to approve a settlement agreement. Accordingly, the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) governs the appeal route in this case: see Locking v. Armtec Infrastructure Inc., 2012 ONCA 774, 299 O.A.C. 20, at para. 11.

[6] Section 6(1)(b) of the Courts of Justice Act provides that:

An appeal lies to the Court of Appeal from … a final order of a judge of the Superior Court of Justice, except an order referred to in clause 19(1)(a) or an order from which an appeal lies to the Divisional Court under another Act.

[7] The preliminary issue in determining the jurisdiction of this court is therefore whether the order appealed from is final or interlocutory. If the order is final, this court has jurisdiction over the matter, subject to certain exceptions outlined in s. 19(1)(a) of the Courts of Justice Act or the provisions of another Act. If the order is interlocutory, then this court has no jurisdiction and an appeal lies to the Divisional Court with leave, pursuant to s. 19(1)(b) of the CJA.

[8] The question of whether an order is final or interlocutory is one that has vexed courts for years. Courts asked to consider this issue often begin with the observation of Middleton J.A. in Hendrickson v. Kallio, 1932 CanLII 123 (ON CA), [1932] O.R. 675 (C.A.), at p. 678:

The interlocutory order from which there is no appeal is an order which does not determine the real matter in dispute between the parties – the very subject matter of the litigation, but only some matter collateral. It may be final in the sense that it determines the very question raised by the application, but it is interlocutory if the merits of the case remain to be determined.

[9] The appellant asserts that the order which is the subject of this appeal dealt with three separate matters:

1. approval of the settlement agreement;

2. approval of the fee retainer agreement; and

3. approval of the fees sought.[^1]

[10] The appellant submits that this court has the jurisdiction to hear the appeal from all three parts of the order. There are two prongs to the appellant’s argument. First, he submits that the motion judge’s refusal to approve the settlement agreement was a final order. Second, he submits that, even if the motion judge’s refusal to approve the settlement was an interlocutory order, his refusal to approve the fee agreements and the amount of fees sought was a final order, and this court therefore has jurisdiction to review the entire order pursuant to s. 6(2) of the Courts of Justice Act.

[11] Section 6(2) of the Courts of Justice Act provides that:

The Court of Appeal has jurisdiction to hear and determine an appeal that lies to the Divisional Court or the Superior Court of Justice if an appeal in the same proceeding lies to and is taken to the Court of Appeal.

[12] I shall begin by addressing the second part of this argument.

[13] The appellant submits that this court has previously determined that appeals in relation to the approval of fee retainer agreements and fees lie to this court. In this respect he relies on this court’s decision in Sutts, Strosberg LLP v. Atlas Cold Storage Holdings Inc., 2009 ONCA 690, 311 D.L.R. (4th) 323.

[14] I cannot agree that Sutts, Strosberg stands for the proposition that all appeals from orders related to fee retainer agreements and fees lie to this court. In Sutts, Strosberg, this court did indeed refuse to quash an appeal from the order of a motion judge reducing the amount of fees payable pursuant to a settlement agreement. In that case, however, the motion judge had approved the settlement agreement but, in so doing, she reduced the amount of fees sought by class counsel. She ultimately approved both the settlement and the reduced quantum of fees. Her order finally determined the issues between the parties and, subject to an appeal, the litigation.

[15] This case differs from Sutts, Strosberg because here there was no approval and therefore, in my view, no finality – here, the litigation continues.

[16] I would therefore reject the appellant’s argument that the appeal from the portion of the motion judge’s order refusing to approve the fee agreement and the fees themselves is properly before this court on the basis of the Sutts, Strosberg decision.

[17] Even if I had concluded otherwise, the appellant’s submission that this court would then have jurisdiction under s. 6(2) of the Courts of Justice Act to hear the appeal in respect of the entire order would still fail. An appeal from an interlocutory order only “lies to the Divisional Court” within the meaning of s. 6(2) once leave to appeal that order has been granted: see Albert v. Spiegel (1993), 17 C.P.C. (3d) 90 (Ont. C.A.), at p. 91; Merling v. Southam Inc. (2000), 2000 CanLII 5621 (ON CA), 128 O.A.C. 261, at para. 2; Cole v. Hamilton (2002), 2002 CanLII 49359 (ON CA), 60 O.R. (3d) 284 (C.A.), at paras. 6 and 15; Diversitel Communications Inc. v. Glacier Bay Inc. (2004), 2004 CanLII 11196 (ON CA), 181 O.A.C. 6 (C.A.), at para. 6. If the motion judge’s order refusing to approve the settlement agreement was interlocutory, then this court still would not have jurisdiction to hear the appeal from that order under s. 6(2) of the CJA unless and until the appellant obtained leave to appeal to the Divisional Court. Only then could the appellant bring a motion, under s. 6(3) of the CJA to transfer that appeal to this court. Section 6(3) of the CJA provides that:

The Court of Appeal may, on motion, transfer an appeal that has already been commenced in the Divisional Court or the Superior Court of Justice to the Court of Appeal for the purpose of subsection (2).

[18] The appellant, supported by the respondent, argues that, in any event, an appeal lies to this court under s. 6(1)(b) of the Courts of Justice Act because the order refusing to approve the settlement agreement is a final order of a judge of the Superior Court. He argues that this is a final order because, although the litigation could continue, the settlement agreement has been finally dismissed. The appellant submits that, where the approval of a settlement has been determined, substantive rights are affected. He argues that this situation is therefore different from the dismissal of a motion for summary judgment, which typically neither finally determines an issue in the litigation nor affects substantive rights.

[19] More specifically, the appellant argues that the settlement agreement is a contract that binds the parties, even if it is subject to court approval, and that the motion judge’s refusal to approve the settlement puts an end to these contractual rights. This, he submits, amounts to a final order. In this regard the appellant relies on this court’s decision in Wu Estate v. Zurich Insurance Co. (2006), 2006 CanLII 16344 (ON CA), 211 O.A.C. 133, 268 D.L.R. (4th) 670.

[20] In my view, Wu Estate gives no comfort to the parties. In that case, the order under appeal dismissed an application, brought by the deceased plaintiff’s estate, her estate trustees, and her relatives, to enforce minutes of settlement. It was a final order because it finally ended the particular proceeding before the court: see Buck Brothers Ltd. v. Frontenac Builders Ltd. (1994), 1994 CanLII 2403 (ON CA), 19 O.R. (3d) 97, 73 O.A.C. 298 (C.A.). The same cannot be said of the motion judge’s order refusing to approve the settlement agreement in this case. That order did not end the class proceeding; rather, it requires the proceeding to continue.

[21] Likewise, the jurisprudence dealing with appellate jurisdiction over orders made pursuant to rule 49.09 does not assist the parties in this case. When a judge concludes, on a motion under rule 49.09, that an action has not been settled, that factual issue is finally determined for the purposes of the litigation: see Fusarelli v. Dube, [2005] O.J. No. 4398, 2005 CanLII 37251 (C.A.); Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc., 2007 ONCA 497, 87 O.R. (3d) 443, at paras. 30-31. The same cannot be said here, where court approval of any settlement agreement between the parties is statutorily required and a settlement is not binding unless and until court approval is obtained.

[22] The appellant’s argument amounts to a claim that, because this particular settlement agreement cannot be reconsidered if the litigation goes forward, the order is a final order with respect to the agreement, and is therefore also a final order for the purposes of s. 6(1)(b) of the Courts of Justice Act. This submission presumes that, to be a final order, an order need only dispose finally of whatever issue was before the motion judge irrespective of whether the order terminates the action or resolves a substantive claim or defence of the parties. Were that so, the distinction between interlocutory and final orders would cease to exist. Some might say that would be a good thing. Still, I hearken back to the words of Middleton J.A. in Hendrikson:

... it may be final in the sense that it determines the very question raised by the application, but it is interlocutory if the merits of the case remain to be determined.

[23] Here, although the settlement agreement was not approved, the litigation continues, and the parties cannot be said to have lost a substantive right relating to the merits of the litigation. The order is interlocutory and any appeal lies to the Divisional Court with leave.

[24] I would therefore quash the appeal.

[25] In the circumstances of the case where both the appellant and the respondent were allied in interest and argued in favour of this court’s jurisdiction, I would order that there be no costs of the appeal.

Released: January 28, 2015 “JMacF” “J. MacFarland J.A.”

“I agree Janet Simmons J.A.”

“I agree M.L. Benotto J.A.”

[^1]: The order under appeal states:

1. THIS COURT ORDERS that the settlement agreement dated October 3, 2013 is not approved.

2. THIS COURT ORDERS that the class counsel fees sought are not approved.

3. THIS COURT ORDERS that there shall be no order as to costs.

On the motion, the appellant sought approval of the fee retainer agreement and the approval of class counsel fees. I assume that, in refusing to approve the fees sought, the motion judge also effectively refused to approve the fee agreement. The appellant treated these two issues as distinct on appeal.