SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: CV-10-415780
DATE: 20120508
RE: Christian Helm, Plaintiff/Moving Party
Toronto Hydro-Electric System Limited , Defendant/Respondent
BEFORE: G.R. Strathy J.
COUNSEL:
Charles Wright & Daniel Bach , for the Plaintiff/Moving Party
Kelly Friedman, for the Defendant/Respondent
E N D O R S E M E N T
(Settlement Approval and Fee Approval)
1This is a motion for: (a) approval of a settlement reached by the parties; (b) approval of the fees of Class Counsel; and (c) approval of an “honorarium” of $2,500.00 to the representative plaintiff.
2The plaintiff in this proposed class action alleges that Toronto Hydro-Electric System Limited (“Toronto Hydro”) breached s. 4 of the Interest Act , R.S.C. 1985, c. I-15, by failing to inform its customers of the effective annual rate of interest it charged on overdue accounts.
3Section 4 of the Interest Act states that where a written or printed contract provides for interest to be paid at a rate or percentage for any period less than a year, and does not express the equivalent annual rate, the collection of interest is limited to 5% per year. The rate actually charged by Toronto Hydro was 19.56% per annum. This rate was set out in its tariff, which had been approved by the Ontario Energy Board (“OEB”). However, Toronto Hydro’s invoices to its customers referred only to a 1.5% monthly late payment interest charge and made no reference to the effective annual rate of interest.
4The plaintiff claims, among other things, that Toronto Hydro’s invoice did not comply with the Interest Act . He alleges that he and other Class Members have been charged more than the limit permitted by law and that Toronto Hydro has thereby been unjustly enriched.
5On June 16, 2011, I heard a summary judgment motion brought by Toronto Hydro and a cross motion for judgment brought by the plaintiff. While my decision was under reserve, I was advised that counsel were pursuing settlement discussions. I agreed that my decision would not be released if the parties were able to reach a settlement. Settlement discussions continued, with counsel keeping the court advised of their progress, in the hope of reaching a settlement that would form a proper framework for the resolution of the litigation.
(a) Settlement Approval
6The parties have executed a Settlement Agreement that, subject to the approval of the court, resolves the claims of the Class Members for the total sum of CAD$5,835,882.00.
7On February 8, 2012, there was a preliminary motion to certify this action as a class proceeding for the purposes of settlement and to establish a procedure for the dissemination of a notice of this settlement hearing and an opt-out form. The opt-out period expired on April 16, 2012 and there have been no opt outs. Nor have there been any objections to the proposed settlement.
8The basic terms of the settlement are as follows:
(a) The Defendant will consent to certification of a class proceeding for the purposes of settlement. The Class will consist of:
All persons that were customers (retail, commercial or otherwise) of the Defendant, who were billed at some time within the period from July 1, 2000 through to and including December 8, 2010, and who paid interest on an unpaid account billed during that period.
(b) The Common Issue will be:
Did the Defendant breach the Interest Act by charging interest on unpaid customer accounts at a monthly rate which equated to more than 5% per annum without disclosing the equivalent annual rate on its bills dated between July 1, 2000 and December 8, 2010, inclusive?
(c) The Defendant will provide CAD$5,835,882.00 in compensation to the Class, to be distributed as follows:
(i) The Defendant will make repayment, less applicable court-approved Class Counsel Fees, by mailed cheque or account credit, of interest paid in excess of 5% per annum (“Excess Interest”) to Class Members who, between December 7, 2008 and June 29, 2011, paid an amount equal to or greater than $30.00 in Excess Interest in respect of a bill issued on or before December 8, 2010 (“Refund Eligible Class Members”).
(ii) The Defendant will pay any residual funds, less Class Counsel Fees, to cy près recipient charities in proportions to be approved by the court.
(d) The Defendant will take all reasonable steps, including instructing third party collection agencies, within sixty (60) business days of the Approval Order to cancel all Excess Interest currently owed by Class Members that was assessed prior to December 9, 2010. The amount of accounts receivable to be cancelled and the benefit to the class in this regard is approximately $184,224.00. To the extent that any currently owed Excess Interest is collected before the cy près payment is made, and to the extent that such funds can reasonably be identified as Excess Interest, they will be paid to the cy près recipient charities in the same manner as the residual funds addressed above.
(e) The Defendant will achieve a final resolution of this matter and will not be required to admit liability for the allegations advanced in the Plaintiff’s Claim. The action will be settled and dismissed on the merits with prejudice and without costs.
9The Refund-Eligible group is limited to Class Members who, between December 7, 2008 and June 29, 2011, paid an amount equal to or greater than $30.00 in Excess Interest. This was done for two primary reasons.
10First, Customer data for the portion of the Class Period prior to December 7, 2008 and after April 30, 2002, is stored on a different database than the one currently used by Toronto Hydro. It would have been disproportionately expensive and time-consuming to access this data. As well, Customer data for the beginning of the Class Period until April 30, 2002 is archived. Creating a structure to access this data and to convert it to manageable form would have been expensive and time-consuming. Moreover, logistical difficulties would have been created due to difficulties in locating former Customers of the defendant who are no longer Customers.
11Second, the estimated cost of distributing the Settlement Amount to Refund-Eligible Class Members is approximately $4.00 per Class Member. Nearly 60% of the Class Members paid less than $5.00 in Excess Interest. It would have been manifestly uneconomical to spend $4.00 to put $5.00 in the hands of a Class Member. By restricting refund entitlements to Class Members who paid at least $30.00 in Excess Interest, chronic late payers are compensated. Such chronic late payers have suffered the most from the alleged wrongdoing. It would further allow these individuals to benefit without compromising the parties’ ability to achieve a meaningful settlement due to costs concerns.
12The Cy Près recipients are listed below, and were selected for the following reasons:
(a) United Way Centraide Canada, was selected because of its dedication to community-building and poverty-relief initiatives, as well as its ability to distribute cy près funds to numerous meritorious projects;
(b) Second Harvest, was selected because of its work toward supplying fresh, nutritious food to low income communities in the Toronto region; and
(c) Red Door Family Shelter, was selected because of its efforts in assisting Toronto families in crisis by providing them with transitional housing facilities.
13The plaintiff proposes, and I agree, that the cy près distribution ought to be split among the three recipients equally.
14In order to approve a settlement, the court must be satisfied that it is fair, reasonable and in the best interests of the class. The leading authority is Dabbs v. Sun Life Assurance Co. of Canada , [1998] O.J. No. 1598 (Gen. Div.) , which identifies the following factors that a court should take into account in approving a settlement;
(a) its likelihood of success;
(b) the amount and nature of discovery, evidence or investigation required to prosecute the action;
(c) its terms and conditions;
(d) the recommendation and experience of counsel;
(e) the future expense, and likely duration of litigation and risk;
(f) the recommendation of neutral parties, if any;
(g) the number of objectors and nature of objections;
(h) the presence of good faith, arms-length bargaining and the absence of collusion;
(i) information conveying to the court the dynamics of and the positions taken by the parties during the negotiation; and
(j) the degree and nature of communications by counsel and the representative plaintiff with Class Members during the litigation.
15It is well understood, however, that these factors are only guides and that their relative importance will vary from case to case. In any particular case, some factors will have greater significance than others and weight should be attributed accordingly: Parsons v. Canadian Red Cross Society , 40 C.P.C. (4 th ) 151 (S.C.J.) .
16As a result of having heard the summary judgment motion on the merits, I am in a rather unique position. A judge on a settlement approval motion rarely has the benefit of such an intensive, merits-based analysis on agreed facts. Having had this benefit, I am able to form my own independent view of whether the settlement is fair, reasonable and in the best interests of the class.
17In this case, having had that perspective, I am satisfied that significant compromise was warranted, on both sides, and that the resulting settlement is well within the zone of reasonable outcomes. I am also satisfied, from my own observations, that the settlement was the result of good faith, arm’s length negotiations in which the parties were attempting to reach a resolution that was fair to Class Members, workable and reasonable. The settlement comes with the recommendation of experienced and highly reputable counsel, on both sides and I am fully satisfied that they have fulfilled their duties to their clients and to the court in the negotiation of the settlement and resolution of this litigation. It is of significance, as well, that there have been no objections to the settlement.
18Every settlement involves compromise. This settlement is no exception. Some compromises had to be made as a practical matter to ensure that the costs of administration of the settlement did not become disproportionate to the amount actually paid to Class Members. I am satisfied, however, that the settlement, which includes not only direct payments to the Refund-Eligible Class Members, but also the forgiveness of arrears and the cy près distribution, is fair and reasonable.
19For these reasons, the settlement is approved.
(b) Class Counsel Fee Approval
20Class Counsel also move for an order: (a) approving the retainer agreement entered into with Christian Helm; and (b) approving Siskinds LLP’s legal fees (“Class Counsel Fees”) in the amount of $ 1,458,970.50 , plus applicable taxes.
21Class Counsel seeks a fee of 25% of the recovery, namely $1,458,970.50 plus HST in the amount of $189,666.16. Under the terms of the settlement, the defendant is responsible for paying the first $10,000.00 in “reasonable” disbursements. The parties have agreed to a payment of $7,678.29 (inclusive of taxes, as applicable). Class Counsel is writing off the balance of the disbursements as well as all disbursements incurred after April 19, 2012. I should also note that under the terms of the settlement, the defendant agreed to pay the costs of giving notice of the settlement approval motion.
22Mr. Helm entered into a retainer agreement that provided that Class Counsel’s compensation should be 25% of the recovery obtained in the action, plus disbursements and taxes. This is a reasonably standard fee agreement in class proceedings litigation. Mr. Helm supports Class Counsel’s legal fee request. The fee agreement complies with the requirements of the Class Proceedings Act, 1992 , S.O. 1992, c. 6 ( C.P.A. ) and it is approved.
23Since the commencement of the action, Class Counsel have financed disbursements totalling $10,741.37 (including taxes as applicable and as of April 19, 2012). In addition, as of April 19 , 2012, Class Counsel had docketed time of $ 203,669.50 .
24There are some particular aspects of this case that should be taken into account in assessing whether the fee is fair and reasonable:
the amount of the settlement is substantial, particularly having regard to the legal difficulties associated with recovery of the claim;
leaving aside the monetary benefit to Refund Eligible Class Members, there are direct benefits to all Class Members through the cancellation of Excess Interest charges, there is a substantial cy près payment and actual behaviour modification has been achieved;
the proceeding was funded entirely by Class Counsel and no application to the Class Proceedings Fund was required;
there was significant risk to Class Counsel in taking on this case, in which liability was hotly contested and the outcome difficult to predict; and
the proceeding was conducted in an efficient, imaginative and cost-effective manner.
25The proposed fee represents a significant premium over what the fee would be based on time multiplied by standard hourly rates. Is that a reason to disallow it? If the settlement had only been achieved four years later, on the eve of trial, when over a million dollars in time had been expended, would the fee be any more or less appropriate? Should counsel not be rewarded for bringing this litigation to a timely and meritorious conclusion? Should counsel not be commended for taking an aggressive and innovative approach to summary judgment, ultimately causing the plaintiff to enter into serious and ultimately productive settlement discussions?
26Plaintiff’s counsel are serious, responsible, committed and effective class action counsel. They are entrepreneurial. They will likely take on some cases that they will lose, with significant financial consequences. They will take on other cases where they will not be paid for years. To my mind, they should be generously compensated when they produce excellent and timely results, as they have done here.
27For those reasons, I approve the counsel fee.
(c) Honorarium for Representative Plaintiff
28Counsel requests an honorarium of $2,500.00 for Mr. Helm, to be paid out of the settlement fund. They note that Mr. Helm carried out his responsibilities in a diligent and proper manner, providing assistance in the litigation leading to the settlement. They say that were it not for Mr. Helm’s willingness to represent the class despite his small personal stake in the action, there would have been no settlement. Mr. Helm’s efforts resulted in nearly immediate behaviour modification: the defendant brought its invoices into compliance with law shortly after the filing of the claim. Counsel says that Mr. Helm’s accomplishments in this action far exceed his individual interest, which is only about $70.00, and that some modest payment is in order to recognize his accomplishment and to provide some indemnity for the time and effort he has put into the case.
29I accept that I have jurisdiction to award an honorarium: Wilson v. Servier Canada Inc, 2005 7128 (ON SC) , 2005 CarswellOnt 1020 at para 95 (S.C.J.) ; Pysznyj v. Orsu Metals Corp, [2010] O.J. No 1994 at para 31 (S.C.J.) ; Farkas v. Sunnybrook & Women’s College Health Sciences Centre , 2009 CarswellOnt 4962 at paras 69-70 (S.C.J.) ; Smith Estate v. National Money Mart Co, 2011 ONCA 233 at paras 133-136 .
30I discussed the issue of compensation or honoraria for representative plaintiffs at some length in my settlement approval decision in Robinson v. Rochester Financial Ltd. , [2012] O.J. No. 534 ; 2012 ONSC 911 . I noted in that case, at para. 43, that “compensation should be reserved to those cases, where, considering all the circumstances, the contribution of the plaintiff has been exceptional”. In my view, this is not an exceptional case.
31My decision not to award an honorarium should not be perceived by Mr. Helm as a lack of appreciation for what he has accomplished in commencing this action and in bringing it to a successful conclusion. Mr. Helm can take some satisfaction from the fact that this case, his case, Helm v. Toronto Hydro-Electric System Limited , has accomplished the goals of the Class Proceedings Act, 1992 – it has brought access to justice to thousands of Toronto Hydro customers; it has actually achieved behaviour modification by causing Toronto Hydro to change its invoices; and it has resulted in judicial economy. The settlement puts real money into the hands of many Toronto Hydro customers and the cy près award will bring assistance to others in need. Mr. Helm can be justly proud of these accomplishments and he should be commended for them.
32In closing, I express the court’s appreciation to counsel on both sides for the efficient manner in which this action has proceeded and has been brought to a satisfactory conclusion.
G.R. Strathy J.
DATE: May 8, 2012