COURT FILE NOS.: CV-10-41191 and CV-10-41734300CP
DATE: 20140227
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: David McKillop by his Litigation Guardian Christine Victoria Grace Clarke, Plaintiff
and:
Her Majesty The Queen in Right of the Province of Ontario, Defendant
AND RE: Rosalind Bechard as Litigation Guardian of Mary Ellen Fox, Plaintiff
and:
Her Majesty The Queen in Right of the Province of Ontario, Defendant
BEFORE: Conway J.
COUNSEL: Kirk M. Baert, Celeste Poltak and David Rosenfeld, for the Plaintiffs
Robert Ratcliffe, John Kelly and Jonathan Sydor, for the Defendant
HEARD: February 24, 2014
Proceeding under the Class Proceedings Act, 1992
REASONS FOR DECISION (re: Settlement Approval)
Conway J.
[1] The plaintiffs move for approval of settlements on these two actions pursuant to s. 29(2) of the Class Proceedings Act, 1992, S.O. 1992, c.6 (the “Act”).
[2] At the conclusion of the hearing, I approved the settlements and signed the settlement approval orders (the “Settlement Approval Orders”). These are my reasons for doing so.
The Actions
[3] These actions were brought in 2010 on behalf of residents of Rideau Regional Centre (“Rideau”) and the Southwestern Regional Centre (“Southwestern”) (collectively, the “Centres”). They are companions to the litigation brought in 2009 on behalf of residents of the Huronia Regional Centre (“Huronia”). The Huronia class proceeding settled in September 2013. I approved the Huronia settlement on December 3, 2013: see Dolmage v. HMQ, 2013 ONSC 6686.
[4] Rideau and Southwestern, like Huronia, were provincially operated residential facilities for individuals with developmental disabilities. Rideau was located in Smith Falls, Ontario and Southwestern in Blenheim, Ontario. They were intended to provide a residential program of hospital care, activity, educational programs and adult training to individuals of all ages labelled mildly, moderately, severely and profoundly disabled. Most residents were admitted to the Centres as children.
[5] Rideau operated from 1951 to 2009, during which time it housed approximately 3000 individuals. Southwestern operated from 1961 to 2008, during which time it housed approximately 937 individuals.[^1]
[6] The plaintiffs allege that the defendant (the “Crown”) was negligent and breached fiduciary duties in its funding, operation, management, administration, supervision and control of the Centres. They claim that the Crown breached standards of care by knowing of and condoning overcrowding and understaffing; failing to implement abuse prevention policies; and deliberately exploiting residents for the Crown’s own benefit. They allege that despite receiving reports and recommendations, the Crown failed to take adequate steps to improve the quality of care or living at the Centres or, even if some of the recommendations were followed, those measures were inadequate and failed to meet the standard of care.
[7] The actions were certified as class proceedings by Horkins J. in August 2011. The classes are defined as:
(a) All persons who resided at [the Centres] between September 1, 1963 and [Rideau: March 31, 2009; Southwestern: October 31, 2008] who were alive as of [Rideau: September 24, 2008; Southwestern: December 29, 2008] (the “Resident Class”); and
(b) All parents, spouses, children and siblings of persons who resided at [the Centres] between March 31, 1978 and [Rideau: March 31, 2009; Southwestern: October 31, 2008], who were alive as of [Rideau: September 24, 2008; Southwestern: December 29, 2008] (the “Family Class”).[^2]
[8] The cases progressed through significant documentary production, 15 days of discoveries, six case conferences, and mediation/settlement discussions. The trials were set to commence in March 2015 and last for approximately four months. Settlement negotiations started in November 2013 and the two settlement agreements were executed on December 23, 2013 (the “Settlement Agreements”). By the time the Settlement Agreements were signed, the Huronia action had reached the courthouse steps and extensive legal and factual investigations into the merits of that claim had been conducted. Since the issues in these two actions were virtually the same as those in Huronia, the claims were settled with the benefit of that investigation and preparation. The settlement negotiations were hard-fought, lengthy and supervised by experienced counsel.
The Settlement Agreement
Key Terms
[9] The key terms of the Settlement Agreements are virtually identical to those in the Huronia action (proportionate to the size of the respective classes). They include:
• a written apology to former residents from the Premier of Ontario;
• a settlement fund of $20,619,000 on the Rideau action and $12,081,000 on the Southwestern action (each, a “Settlement Fund”), for a total of $32.7 million;
• the Crown will pay for the cost of notice to the class and administration of the claims process, in addition to the Settlement Fund;
• the compensation awards will not be subject to tax or government claw-backs;
• the application process is paper-based and does not require former residents to testify or appear in person;
• the maximum compensation that a claimant can receive is $42,000;
• the documents produced in these cases will be deposited with Archives Ontario for the purpose of scholarly research and will be publicly accessible, subject to privacy provisions for personal information; and
• commemorative plaques will be located on or about the community of each Centre. The plaques will state that in 2014, the Government of Ontario issued an apology to former residents of the Centres who were harmed for the conditions over time. A Ministry representative will conduct an unveiling ceremony for the plaques, which will be publicized and recorded.
[10] Class counsel’s legal fees, disbursements and taxes (in an amount approved by the court) will be deducted from the Settlement Funds before any amounts are paid to the class.[^3]
The Compensation Scheme
[11] The Settlement Agreements provide a claims-based compensation scheme with two streams – Section A and Section B claims.
[12] Section A claims only require a claimant to solemnly declare that he or she was harmed at the Centre without providing any further details. Section A claims are eligible to receive up to $2000 in compensation. Section A claims in the aggregate are limited to 20% of the net Settlement Fund for the Centre.
[13] Section B claims require the claimant to provide details of the harm or abuse suffered while at the Centre. The parties have agreed that the Honourable Ian Binnie will oversee the claims administration process. Mr. Binnie and Crawford Class Action Services (“Crawford”) will create protocols and procedures for reviewing and evaluating all claims and assigning points to the claims in accordance with the “Points Allocation System” in the Settlement Agreement.[^4] Compensation will be based on the number of points allocated to the claim. Claims with the highest number of points will receive $35,000.
[14] If the Section B claims do not exhaust the net Settlement Fund, each claimant will receive an increase of up to 20% of his or her allotted compensation, or until the Settlement Fund is exhausted. The maximum that a claimant can receive is $42,000.
The Claims Process
[15] The claims process is entirely paper-based, so that claimants will not have to testify in order to receive compensation. A claim form can be completed by a class member’s personal representative or family member if the class member is unable to do so.
[16] The claim forms are intended to be simple and easy to complete. To that end, class counsel has received input from Kinsella Media LLC (with expertise in plain language communication) and ARCH Disability Law Centre (a legal clinic for persons with disabilities) in preparing these forms.
Remaining Amount in the Settlement Fund
[17] If there are any funds remaining in the Settlement Fund after payment of legal fees and expenses and Section A and B claims, the Crown will make an investment of up to $1.7 million for Rideau and $1 million for Southwestern (Schedule D funding) into programs that will benefit individuals with a developmental disability and their families. The parties have mutually agreed on the types of organizations that will receive this investment.
[18] If there are further amounts remaining in the Settlement Fund after the Schedule D funding is made, those amounts will revert to the Crown.
Non-Monetary Benefits
[19] In addition to the compensation scheme, the Settlement Agreements contain several non-monetary benefits for the class, including an apology pursuant to the Apology Act, preservation of the voluminous documents in this action for scholarly research, waiver of taxes and claw-backs on funds received, and commemorative plaques.
Law on Settlement Approval
[20] To approve a settlement of a class proceeding, the court must find that in all the circumstances the settlement is fair, reasonable, and in the best interests of those affected by it.[^5]
[21] The test is whether the settlement is fair, reasonable, and in the best interests of the class as a whole, not whether it meets the demands of a particular member. The settlement must fall within the range of reasonableness in order to obtain court approval – it need not be perfect.[^6] The “range of reasonableness” test permits that a number of settlement possibilities may be in the best interests of a class when compared to the unpredictable alternative of costly protracted litigation. Compromises are to be expected.[^7]
[22] There is a “strong initial presumption of fairness” when the settlement is negotiated at arm’s-length and recommended by experienced class counsel.[^8]
[23] The “zone or range of reasonableness” is not a static valuation test but one that permits for a whole host of variations depending upon the subject matter of the litigation and the nature of damages for which the settlement is intended to provide compensation.[^9]
[24] In determining whether to approve a settlement, courts may consider, among other factors:
• The likelihood of recovery or success;
• the amount and nature of discovery, evidence or investigation;
• the terms of the settlement;
• the recommendation and experience of class counsel;
• future expenses and likely duration of litigation and its attendant risks;
• the recommendations of neutral parties;
• the number of objections or objectors, if any;
• the presence of good faith, arms-length bargaining and the absence of collusion;
• the degree and nature of communications by counsel and the representative parties with class members during the litigation; and
• information conveying to the court the dynamics of and positions taken by parties during the negotiations.[^10]
Analysis
[25] Considering the above factors, I approve the proposed settlements, on the terms set out in the Settlement Agreements.
[26] As in the case of Huronia, each Settlement Agreement is multi-dimensional. Its terms reflect the sensitive nature of this litigation and the unique circumstances of the class members in the following ways:
• It provides both financial compensation and non-monetary benefits to class members.
• It recognizes that some class members may not wish to provide details of the harm suffered (Section A claims). For those members who do provide details (Section B claims), the structure reflects the varying levels of harm claimed through the Points Allocation System.
• The claims process is a simplified and paper-based one that avoids class members having to provide oral accounts and re-live their experiences.
• The apology from the Crown is a vital and extraordinary component of this settlement. The commemorative plaques will constitute an enduring public record of that apology.
• The other non-monetary benefits recognize the dignity of the Centres’ residents and enable the history of the Centres to be recorded and preserved.
[27] The settlements reflect the very real litigation risks the plaintiffs face if these matters proceed to trial.[^11] Class counsel acknowledges that the legal issues are numerous and complex and include (i) whether the Crown owed a duty of care to class members and whether any prima facie duty was negated by policy considerations; (ii) what the standard of care was at varying times over a lengthy period; (iii) whether the Crown breached the standard of care during this period; (iv) whether the Crown owed a fiduciary duty to class members; (v) whether the Crown breached that duty; (vi) whether claims are barred by limitation periods; and (vii) whether damages can be assessed on an aggregate basis (failing which damages would have to be assessed at individual hearings after trial). Class counsel further acknowledges the legal frailties of the Family Class members’ monetary claims.
[28] There is no doubt that without a settlement, the proceedings will be protracted, the outcome uncertain and (even if successful) the class members will not receive compensation for years. There is no assurance that at the end of this process they will receive any more than they will get under these Settlement Agreements. Given the advanced age of class members and the historical nature of this litigation, the benefits of an immediate and certain settlement cannot be overstated.
[29] The Rideau settlement is supported by Mr. McKillop and his litigation guardian. Ms. Fox’s litigation guardian supports the Southwestern settlement.[^12] Experienced class counsel supports both settlements. The settlements have further received the support of People First of Ontario (a self-advocacy group for persons with intellectual disabilities) and Community Living Ontario (a non-profit, province-wide federation that promotes and facilitates the full participation and inclusion of people who have an intellectual disability).
[30] I have carefully considered all of the written and oral objections to the settlement.[^13] I understand that to some objectors the amount of the Settlement Fund is just not enough.[^14] While it is true that more is always better, this is a compromise arrived at after lengthy, adversarial and hard-fought arm’s length negotiations. It was arrived at on the eve of trial, after counsel had the chance to evaluable a considerable amount of information and the risks that lie ahead if these cases proceed to trial.
[31] Some object that compensation will not be provided to anyone who was not alive as at the applicable date (Rideau: September 24, 2008; Southwestern: December 29, 2008). The reason for this is that the claims of those who died before those dates are statute barred: see Dolmage v. Ontario, 2010 ONSC 1726, at para. 153.
[32] Some object that the claims process may be difficult for certain class members. I note that the settlement has been designed to facilitate the making of claims. It is a paper-based process and others (such as family members) can complete the claim form on behalf of a class member. Class members will also be receiving support from Crawford, Community Living Ontario, ARCH Disability Law Centre and People First Ontario in completing their claims forms.
[33] Some object that compensation should be based on other factors, such as the length of time that a class member lived at the Centre, rather than on harm suffered. I am satisfied that the basis of compensation in the settlements, harm suffered, is a fair one.
[34] Some object to the Crown’s reversionary interest. I note that under the Settlement Agreements if there are excess funds remaining after claims have been paid, two things must happen before any amounts revert to the Crown: first, Section B claimants are entitled to a 20% increase in payment and second, the Schedule D funding will be made.[^15] That strikes me as a reasonable balancing of interests.
[35] A settlement is a compromise that reflects the risks, delays and expense of continuing litigation: see Stewart v. General Motors of Canada Ltd., 2008 CarswellOnt 6590 (S.C.J.), at para. 23.
[36] In my view, this settlement, viewed as a whole, fairly achieves that compromise. It recognizes that class members are entitled to financial compensation but that a discount is appropriate to reflect the realities of continued litigation. At the same time, the significant non-monetary terms will benefit the residents of the Centres and their families. Considering the context in which it was reached, and the interests of those affected by it, the settlement falls within the “zone of reasonableness”.
[37] I have concluded that the settlements are fair, reasonable and in the best interests of the class members and I approve them.
Next Steps
[38] Class counsel brought a motion for approval of its legal fees on all three actions. I heard that motion on February 25, 2014. I approved the legal fees and disbursements at the conclusion of the motion. I will release separate written reasons on the fee approval motion.
[39] I also held a case conference with counsel on February 26, 2014 to finalize the form and content of the notices of approval of settlement, their method of dissemination and the form and content of the claim forms. The 120 day claims period will not start to run until after I have finally approved these notice and related issues.[^16]
[40] Under the Settlement Approval Orders, the court will retain jurisdiction over the parties and all class members for purposes of implementing, enforcing and administering the Settlement Agreements. The order also requires the plaintiffs and Crawford to report regularly to the court until administration of the Settlement Agreements has been completed.
Honorarium to Representative Plaintiffs
[41] Class counsel sought approval of honorarium payments of $5,000 for each of the representative plaintiffs, to recognize “the significance and difficulty for Mr. McKillop and Ms. Fox who have suffered abuse, to come forward on behalf of all other residents, to tell their stories and to confront a painful past”. This honorarium is payable out of the Settlement Funds after all claims of class members have been satisfied.
[42] Both of these representative plaintiffs have committed a significant amount of time to directing this litigation right up to fixing a date for trial. They were involved through pleadings, certification, examinations for discovery and preparation for trial. Their participation required them to travel from their homes outside Toronto. Most important, they were the face of these actions and their personal experiences became matters of public record. They were required to recount experiences that no doubt have been extremely difficult and emotional for them. The honorarium is, in the words of Perell J.,[^17] “not an award but a recognition that the representative plaintiffs meaningfully contributed to the class members’ pursuit of access to justice”.
[43] I approve an honorarium of $5,000 to each of Mr. McKillop and Ms. Fox, to come from the Settlement Funds remaining after all claims of class members have been paid.
Order
[44] Order accordingly.
Conway J.
Date: February 27, 2014
[^1]: Rideau operated under various names over the years including the Ontario Hospital School, Smith Falls, the Rideau Regional Hospital School and the Rideau Regional Centre. Southwestern operated under the name Ontario Hospital School for Retarded Children at Cedar Springs and then Southwestern Regional Centre. Their respective catchment admission areas covered large areas surrounding Smith Falls and Blenheim, Ontario.
[^2]: The evidence is that there were approximately 2750 former residents of Rideau alive as of September 2008 and 1600 former residents of Southwestern as of December 2008.
[^3]: The levy owing to the Law Foundation of Ontario will further be deducted from the Settlement Fund.
[^4]: The Points Allocation System has 6 categories of abuse – Levels 1, 2 and 3 physical assault and Levels 1, 2 and 3 sexual assault.
[^5]: Dabbs v. Sun Life Assurance Co. of Canada, (1998) O.J. No. 1598 (Gen. Div.), at para. 30, aff’d (1998), 1998 7165 (ON CA), 41 O.R. (3d) 97 (C.A.).
[^6]: Dabbs, at para. 30; Parsons v. Canadian Red Cross Society, [1999] O.J. No. 3572, at paras. 69, 70 (S.C.J.).
[^7]: Dabbs, at para. 30; Baxter v. Canada (Attorney General), 2006 41673 (ON SC), [2006] O.J. No. 4968, at para. 21 (S.C.J.).
[^8]: Serhan (Trustee of) v. Johnson & Johnson, 2011 ONSC 128, at paras. 55 and 56.
[^9]: Parsons, at para. 70.
[^10]: Sayers v. Shaw Cablesystems Ltd., 2011 ONSC 962, at para. 28.
[^11]: I note that the Huronia settlement occurred at the doorstep of trial, so class counsel had a meaningful opportunity to assess these risks after productions and discovery had been completed.
[^12]: There was no affidavit filed on behalf of Ms. Fox with respect to the settlement. Ms. Fox’s litigation guardian (her sister) filed an affidavit in support of the settlement.
[^13]: There were five written objections on each of the Rideau and Southwestern actions. In addition, six class members (or someone on their behalf) spoke at the hearing.
[^14]: Some objectors submit that the Crown should be paying the legal fees on top of the Settlement Fund. They have filed a petition with the Premier for the Crown to pay those fees over and above the Settlement Fund. In my view, this objection is another way of saying that the amount of the Settlement Fund is not enough.
[^15]: I also note that the Schedule D funding is designed to benefit persons with individuals with a developmental disability and their families generally, regardless of whether they make a claim under the settlements.
[^16]: Counsel recognized that the Crown’s lists of class members required updating and cross-referencing to its databases, as many addresses were incomplete or incorrect. I am satisfied that the steps taken to update these lists, combined with the other steps taken by the parties, were adequate to provide notice of the settlement approval hearing to class members so that they could attend or file an objection. However, further updating and cross-referencing is being conducted to ensure that class members receive notice of when and how to make a claim.
[^17]: See Johnston v. The Sheila Morrison Schools, 2013 ONSC 1528, [2013] O.J. No. 1126, at para. 43.