OSHAWA COURT FILE NO.: 66247/10
DATE: 20120208
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
JOHN SHERLOCK ROWLANDS
Todd J. McCarthy/Sean A. Brown/Matthew J. Stepura, for the Plaintiff
Plaintiff
- and -
DURHAM REGION HEALTH, also known as DURHAM REGIONAL HEALTH DEPARTMENT, also known as THE REGIONAL MUNICIPALITY OF DURHAM HEALTH DEPARTMENT and THE REGIONAL MUNICIPALITY OF DURHAM
Defendants
David B. Boghosian//Laura Day, for the Defendants
Amy Leamen, for the Third Party, Her Majesty the Queen in the Right of Ontario
HEARD: February 7, 2012
REASONS FOR DECISION
LAUWERS J.
[1] The background details concerning this class action are set out in the decision accompanying the Certification Order found at [2011] O.J. No. 1864. The Litigation Administrator seeks the court’s approval of and payment of its accounts.
[2] The Certification Order appointed Deloitte & Touche LLP as “Litigation Administrator” to do a number of things. The Order provides that: “The defendants shall pay the fees of the Litigation Administrator, which are subject to court approval.”
[3] An estimate was provided by Deloitte & Touche LLP for the Certification Motion. It provided in part:
Based on our experience in class action administration and previous court appointments, the services which may be required during such an engagement include:
• Obtain and preserve an electronic listing of the contact names and mailing addresses for approximately 84,000 known Class Members*;
• Review and provide comment on the draft language of the certification notice (“Notice”) to advise Class Members of the class proceeding certification*;
• Coordinate the publishing of the Notice in media publications such as the Toronto Star, the Toronto Sun, and Whitby This Week (or alternate publications)*;
• Coordinate the printing and distribution of the Notice, Opt-Out Election Form, and pre-paid business reply envelope to the Class Member’s last known address*;
• Collect and log the returned Opt-Out Election Forms submitted, by the post and fax, both within and beyond the Court ordered 90 day opt-out period;
• Collect and log change of address requests submitted by Class Members and provide periodic reports to Counsel;
• Collect and log the undelivered Notice mail items for further investigation and additional future outreach efforts (if required);
• Coordinate the reprinting and redistribution of the Notice to Class Members whose original Notice was returned/undeliverable (if required)*;
• Provide notification to Claimants whose contact names were not found within the 84,000 electronic listing and do not constitute valid opt-out submissions;
• Review and consolidate the listing of opt-out submissions collected through dedicated class action website with those received by the Administrator and remove any duplicates; and
• Report to the Court and Counsel on the status and results of the notification process.
We anticipate that Class Members may wish to receive information on the status of the matter or the opt-out process, in addition to that made available on the dedicated class action website, and may elect to contact Deloitte to obtain same. A toll-free telephone line may be employed to manage such telephone inquiries which would be staffed by Deloitte call centre personnel experienced in class action matters. Voicemail messages pertaining to telephone inquiries received outside normal business hours will be responded to with one (1) business day.
While out professional fees for the services required in connection with the notice of certification and opt-out processing in the Durham Healthy Class Action will be based on the amount of professional time and resources necessary to complete the engagement, we have prepared a preliminary fee estimate for consideration of Counsel.
Project Tests
Hours
Cost
Upload and test electronic Class Member listing*
5
$ 1,500.00
Coordination of media campaign and notice mailing*
10
$ 3,000.00
Collection and logging of opt-out submissions
40
$ 12,000.00
Operation of call centre and telephone Inquiries[^1]
TBD
TBD
Investigation and remailing of undelivered notices*[^2]
TBD
TBD
Preparation and filing affidavit to the Court
15
$ 5,000.00
Total
70
$ 21,500.00
A summary of our billing rates has been provided for reference.
Resource
Rate
Director
$ 500.00
Manager
$ 375.00
Analyst
$ 175.00
[4] The Litigation Administrator was represented by Eric Khan, who is the national director of the class action administration practice at the Toronto Office of Deloitte & Touche, who attended before me. He reported on the Litigation Administrator’s activities by Affidavit dated October 27, 2011.
[5] Three accounts were put before the court for approval. The first is dated June 9, 2011 and seeks payment of professional fees in the amount of $17.012.50 plus HST of $2,211.63 for a total of $19,224.13. The second account is dated August 15, 2011 and seeks payment of professional fees in the amount of $26,075.00 with HST in the amount of $3,389.75 for a total of $29,464.75. The third account dated January 20, 2011 deals with services rendered between August 1, 2011 and December 31, 2011 and seeks professional fees in the amount of $14,837.50, plus HST in the amount of $1,928.87 for a total of $16,766.37. Mr. Khan advises that there is a January 2012 account in the likely amount of about $2,500.00.00 plus HST. The total of the bills rendered so far is $65,455.25.
[6] The defendants object to the accounts. Mr. Bogoshian complains that the total amount far exceeds the estimate of $21,500.00, plus the call centre costs to be determined, that was tabled with the court at the Certification Motion.
The legal principles for assessing the Litigation Administrator’s accounts
[7] The parties did not provide me with any authority on how the court is to assess the fees of a litigation administrator. In my view the principles involved in passing the accounts of court-appointed receivers should apply by analogy. See Bennett on Receiverships (3rd ed.-2011) at page 574 and following.
[8] In Re Bakemates International Inc., (also known as Confectionately Yours), 2002 CanLII 45059 (ON CA), [2002] O.J. No. 3569, 219 D.L.R. (4th) 72 at paragraph 36, the Ontario Court of Appeal endorsed a passage in an earlier edition of Bennett on Receiverships, which now appears in exactly the same form on page 575 of the current edition:
One of the purposes of the passing of accounts is to afford the receiver judicial protection in carrying out its powers and duties, and to satisfy the court that the fees and disbursements were fair and reasonable. Another purpose is to afford the debtor, the security holder and any other interested person the opportunity to question the receiver's activities and conduct to date. On the passing of accounts, the court has the inherent jurisdiction to review and approve or disapprove of the receiver's present and past activities even though the order appointing the receiver is silent as to the court's authority. The approval given is to the extent that the reports accurately summarize the material activities. However, where the receiver has already obtained court approval to do something, the court will not inquire into that transaction upon a passing of accounts. The court will inquire into complaints about the calculations in the accounts and whether the receiver proceeded without specific authority or exceeded the authority set out in the order. The court may, in addition, consider complaints concerning the alleged negligence of the receiver and challenges to the receiver's remuneration. The passing of accounts allows for a detailed analysis of the accounts, the manner and the circumstances in which they were incurred, and the time that the receiver took to perform its duties. If there are any triable issues, the court can direct a trial of the issues with directions. [footnotes omitted]
[9] At paragraph 46 the court also endorsed the approach of Houlden J. in Re West Toronto Stereo Centre Limited (1975), 19 C.B.R. (N.S.) 306 Ont. S.C. at page 308:
In fixing the trustee's remuneration, the Court should have regard to such matters as the work done by the trustee; the responsibility imposed on the trustee; the time spent in doing the work; the reasonableness of the time expended; the necessity of doing the work, and the results obtained. I do not intend that the list which I have given should be exhaustive of the matters to be considered, but in my judgment they are the more important items to be taken into account.
See also Winalta Inc. (Re), [2011] A.J. No. 1341 (Alta. Q.B.).
[10] Mr. Khan prepared and filed an Affidavit together with details. The accounts were made exhibits to an Affidavit sworn by Sonia Coward, the Manager, Risk Management & Insurance Department of the Regional Municipality of Durham. The Affidavit included the accounts and a detailed billing summary. Mr. Khan appeared before me and was available to answer questions. I would have sworn him in as a witness for cross-examination had any party asked me to do so.
The Hourly Rate
[11] Mr. Boghosian does not quarrel with the quality of the services provided by the Litigation Administrator and does not dispute the time entries. He submitted that the hourly rate of $175.00 was simply too high for what was essentially a low-level clerical function of answering the phones and data input. The plaintiff submits that getting the “opt-out” details correct is essential in a class action; this is not low-level work. Mr. Brown points out that the hourly rates to be charged for this work are set out in two places in the estimate provided by the Litigation Administrator.
[12] I dismiss the defendants’ complaint about the hourly rate. The time to make this objection was at the argument of the Certification Motion. While the advisability of the appointment of the Litigation Administrator was strenuously argued at the Certification Motion, the hourly rate was not. It is too late to dispute it now. I find that the hourly rate of $175.00 is reasonable in the circumstances.
Other complaints
[13] The rest of the defendants’ complaints about the Litigation Administrator’s accounts requires more factual context. In order to save costs, the Region, with the support of the plaintiff, took over responsibility for coordinating the publishing of the Notice in media publication, and coordinating the printing and distribution of the Notice, Opt-Out Election Form, and Pre-Paid business reply envelope, and also coordinating the reprinting and redistribution of the Notice to Class Members whose original Notice was returned as undeliverable.
[14] It would appear that neither class counsel nor the Litigation Administrator got an electronic listing of the contact names and mailing addresses for the class members as required. Mr. Boghosian seemed surprised by that news so I draw the inference that this was inadvertent. The problem was, however, that as individual class members or potential class members contacted the Litigation Administrator, the Administrator could not check these out but was obliged to pass these along to the Region for checking and reprocessing, which increased costs.
[15] The Litigation Administrator did not do precisely what the Order, Litigation Plan or the estimate contemplated. The asterisks placed in the estimate quoted above identify things that the Litigation Administrator did not do.
[16] Mr. Boghosian begins by notionally re-setting the amounts to be paid under the estimate by removing the time that would have been spent to upload and test electronic class member listing in the amount of $1,500.00, and the coordination of media campaign and notice mailing in the amount of $3,000.00. This reduces the estimate by $4,500.00 to $17,000.00 plus the operation of the call centre.
[17] Mr. Boghosian notes that the estimate provided for 40 hours for the collection and logging out of opt-out submissions for $12,000.00 but the actual time taken was significantly greater. He notes that the opt-out data entry cost $24,981.25, which alone exceeds the estimate.
[18] Approximately 90 hours were spent associated with responding to the 1,738 inquiries by proposed class members which, at $175.00 per hour results in a calculation of $15,750.00. Mr. Boghosian does not dispute the number of hours were actually spent.
[19] Mr. Boghosian notes that “status reporting” was not an element of the estimate yet 18.25 hours were spent on it at $175.00 for a total of $3,193.75.
[20] Mr. Boghosian complains about Mr. Khan’s oversight time. His time was charged at $500.00 per hour, as noted in the estimate, and he spent 28 hours on that function for a total of $14,000.00, which amounts to a substantial proportion of the original estimate.
[21] Mr. Boghosian submits that the provision of an adequate estimate is a professional obligation, so that the Litigation Administrator must be held to the original estimate in some reasonable measure. Combining the various complaints, Mr. Boghosian submits that the appropriate fee in this case would be $35,950.00, not the amount sought of more than $65,000.00. Mr. Boghosian’s figure is composed of the re-set $17,000.00 estimate plus the operation of the call centre at $15,750.00 plus $3,200.00 for status reporting, without any deduction in respect of the hourly rate.
[22] Applying the principles in the cases, I see no reason to reduce the Litigation Administrator’s accounts to the end of December, 2011. The work done was actually done and appears to have been well done. It was also necessary. The hourly rates were known in advance. The change in the way in which class members were provided with notice reduced some expenses but increased the complexity and expense of reporting and responding to inquires from potential class members who did not receive the notice package. This led to an increase in the Litigation Administrator’s cost. This was a situation in which the parties were feeling their way. In my view it is a moot point as to whether the estimate could have been more accurate.
[23] Further, neither class counsel nor defence counsel turned their minds to when the Litigation Administrator should stop acting. In retrospect it would have been better if the Order had specified that the Litigation Administrator’s activities were to terminate within a short period of time after the end of the opt-out period. That was not done, and in the absence of any alternative the Litigation Administrator carried on, albeit at a reduced level of activity.
[24] I therefore approve the Litigation Administrator’s accounts and direct them to be paid by the defendants pursuant to the Certification Order forthwith. There was, in my view, no reason for the Litigation Administrator to continue to provide any services after the end of December, 2011 so I will not approve any further accounts for time spent in January, 2012.
[25] Costs were not sought by the plaintiffs or the defendants so I make no costs order.
P.D. Lauwers J.
Released: February 8, 2012
[^1]: The fees associated with addressing responding to telephone inquiries will be determined based on time spent at an hourly rate of $175.00.
[^2]: The fees associated with tracing and remailing undelivered mail items per the Canada Post’s CCOA utility will be determined based on time spent at an hourly rate of $175.00.