SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-09-376927CP00, CV-10-41191, CV-10-41734300CP
DATE: 20140304

RE: Marilyn Dolmage as Litigation Guardian of Marie Slark and Jim Dolmage as Litigation Guardian of Patricia Seth, Plaintiffs

and

Her Majesty The Queen in Right of the Province of Ontario, Defendant

AND 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 25, 2014

Proceedings under the Class Proceedings Act, 1992

REASONS FOR DECISION (re: Class Counsel Fee Approval)

Conway J.

[1] Class counsel moves for approval of its fees on these three actions pursuant to sections 32 and 33 of the Class Proceedings Act, 1992, S.O. 1992, c.6 (the “Act”). At the conclusion of the motion, I approved class counsel fees, disbursements and taxes, for oral reasons with written ones to follow. I have now signed the orders. These are my written reasons.

[2] These actions relate to three provincially operated residential facilities for individuals with developmental disabilities: Huronia Regional Centre (“Huronia”), Rideau Regional Centre (“Rideau”) and Southwestern Regional Centre (“Southwestern”). In each action, the plaintiffs allege that the defendant (the “Crown”) was negligent and breached its fiduciary duties in the funding, operation, management, administration, supervision and control of the facility.

[3] The parties settled the actions. I approved the settlements pursuant to s. 29(2) of the Act.[^1] All settlements have the same principal terms, which I set out in detail in my reasons approving the settlements. Among the key terms are the following:

• an apology from the Crown;

• a cash settlement fund to pay class members’ claims – $35 million (Huronia), $20.6 million (Rideau) and $12.1 million (Southwestern), for a total settlement fund of $67.7 million (the “Total Settlement Fund”). In addition, the Crown will pay the cost of notice to the class and administration of the claims process, approximately $3 million. The Crown’s total cash payment on these settlements is therefore approximately $70.7 million (the “Total Cash Value”);

• 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 documents produced in the actions will be accessible for scholarly research; and

• there are various commemorative initiatives, including commemorative plaques and, in the case of Huronia, maintenance of the on-site cemetery and opportunities for scholars to attend and archive artifacts from the facility.

Global Fee and Allocation Among the Actions

[4] Class counsel seeks a global fee for the actions in the amount of $14 million, plus disbursements of approximately $1.6 million and taxes of $1.78 million. The global fee sought is 20.68% of the $67.7 million Total Settlement Fund and 19.8% of the Total Cash Value.

[5] Class counsel proposes that the fees be allocated among the actions in proportion to the relative sizes of the settlement funds. The rationale is that Rideau and Southwestern benefitted greatly, if not entirely, from the prosecution of the Huronia action right up to trial. The litigation guardians support this allocation. The proposed allocation is as follows:

Action

Settlement Fund

Proposed Fee (20.68% of Settlement Fund)

Percentage of Global Fee Allocated to Action

Huronia

$35 million

$7.24 million

51.7%

Rideau

$20.6 million

$4.27 million

30.5%

Southwestern

$12.1 million

$2.49 million

17.8%

Total:

$67.7 million

$14 million

100%

Facts Relied on by Class Counsel

[6] Class counsel relies on the following facts, among others, on its motions for fee approval:

• The actions spanned approximately five years.

• The Huronia action settled on the first day of what was to be a four month trial. The Rideau and Southwestern actions were scheduled to go to trial in March 2015, also for four months.

• The plaintiffs received the Crown’s first settlement offer, in the Huronia action, only two months before the scheduled trial date.

• Extensive documentary production was made in all cases (63,000 documents in Huronia and 67,700 in the Rideau and Southwestern actions).

• There were 10 days of discoveries (plus 688 written interrogatories) in the Huronia action and 15 days of discoveries in the Rideau and Southwestern actions.

• In the Huronia action, the parties retained a total of 13 sets of experts to deliver 21 expert reports and intended to call each expert at trial. The plaintiffs and Crown intended to call 29 and 23 fact witnesses, respectively.

• Class counsel spent a total of 16,543 hours of lawyer, student and clerk time in prosecuting these actions. At counsel’s hourly rates, this amounts to approximately $5.89 million in legal fees. The fees sought represent a multiplier of 2.38.

• The retainer agreements with the representative plaintiffs (approved by their litigation guardians) are contingency fee arrangements. Fees, disbursements and taxes are to be deducted from any settlement funds recovered.

In the Huronia action, the contingency fee is at least the sum of 3.0 and .01 for every month between the date of the agreement and the date of settlement approval – in this case, the applicable multiplier is 3.5. Under the retainer agreement, class counsel would be entitled to fees of $15,556,016.

In the Rideau and Southwestern actions, the retainer agreements provide for the greater of a 4.0 multiplier or a percentage of any settlement – in this case, the applicable percentage is 30%. According to the percentages in the retainer agreements, class counsel would be entitled to fees of $6,185,700 for Rideau and $3,624,300 for Southwestern.

• In January 2014, after the amount of the Total Settlement Fund was known, the litigation guardians in all three actions approved the amount of class counsel’s fees and disbursements and the pro rata allocation among the actions. They acknowledged that the fees sought were less than what class counsel is entitled to receive under the retainer agreements.

• Class counsel will be incurring additional time and disbursements in seeing the settlements through to completion, for which it will not be seeking recovery. Class counsel undertook at the hearing to hold payment of $1 million of the approved fees in its trust account until such time as the settlement has been completed, to ensure class counsel’s continued involvement in the administration of the settlement.

[7] Class counsel made extensive submissions on the subject of risk, both those inherent in prosecuting class actions and those specific to these cases. I have already recognized the numerous and complex legal challenges in my reasons approving the settlements.[^2] Class counsel submits that the fee award in this case must account for these risks and fairly compensate counsel for assuming them.

Legal Principles

[8] In determining whether to approve class counsel’s legal fees, the court must determine whether the fees are fair and reasonable. The factors to be taken into account in making this determination are well known:

• the factual and legal complexities of the matters dealt with;

• the risk undertaken, including the risk that the matter might not be certified;

• the degree of responsibility assumed by class counsel;

• the monetary value of the matters in issue;

• the importance of the matter to the class;

• the degree of skill and competence demonstrated by class counsel;

• the results achieved;

• the ability of the class to pay;

• the expectations of the class as to the amount of the fees;

• the opportunity cost to class counsel in the expenditure of time in pursuit of the litigation and settlement.

See Smith Estate v. National Money Mart Co., 2011 ONCA 233, [2011] O.J. No. 1321 (C.A.), at para. 80.

Analysis

[9] Class counsel started this litigation five years ago. It was a risky proposition indeed, a case against a provincial government alleging institutional abuse over a period of decades. The legal issues were complex and novel. The class proceeding vehicle itself presented challenges at each step.

[10] But these were important cases. To the class members the issues were enormous and immensely personal. These class actions provided a means for them to bring their claims before the court and to create public awareness of the history of these institutions and the alleged experiences of the residents there.

[11] It is important that qualified class counsel be properly compensated for bringing these types of cases forward and assuming the risks of doing so. In these cases the risks were even more pronounced as the settlements did not occur until the first day of the Huronia trial. Class counsel had to do an enormous amount of work in seeing these cases through certification, productions, discoveries and trial preparation, without any assurance that it would ultimately succeed at trial or recover its fees and disbursements.[^3]

[12] With these settlements, the Total Settlement Fund of $67.7 million has been secured for the class members. The Total Cash Value is actually $70.7 million when the $3 million in notice and administration costs are factored in. That is only the cash value of the settlement – it does not account for the other benefits to the class in these settlements, most importantly the apology from the Premier of Ontario and the preservation and archiving of documents related to this litigation.

[13] Class counsel seeks 20.68% of that fund for its fees. That percentage is reduced to 19.8% when the notice and administration costs are added in.

[14] The fees sought are well below what class counsel is entitled to recover under its retainer agreements entered into at the start of this litigation. The amount of these fees has further been approved by the litigation guardians in all three actions recently, in January 2014, after the settlement figures were known. The fees are certainly within the expectations of the class.[^4]

[15] Finally, a contingency fee of 20.68% on the Total Settlement Fund falls squarely within the range of fee percentages awarded in other class actions and is closer to the lower end of that range.[^5] This is even more significant when I consider that most of those cases involved a settlement at the certification stage, not on the eve of a four month trial.

[16] I therefore approve these fees as fair and reasonable. I further approve the requested disbursements, set out in the detailed briefs, as fair and reasonable. I also approve the pro rata allocation of the fees and disbursements among the three actions.

[17] In the signed orders, I have approved the requested fees, disbursements and taxes. I further approved the amount of disbursements to be repaid to the Law Foundation of Ontario and the 10% levy payable pursuant to Regulation 771/92 of the Law Society Act. In accordance with class counsel’s undertaking, the orders provide that a total of $1 million of the fees are to be held in class counsel’s trust account until the claims process pursuant to the settlements are completed and court approval has been obtained for payment of such holdback amount.

Conway J.

Date: March 4, 2014

[^1]: The Huronia action was settled on September 17, 2013 and approved on December 3, 2013: Dolmage v. HMQ, 2013 ONSC 6686. The Rideau and Southwestern actions were settled on December 23, 2013 and approved on February 24, 2014: McKillop and Bechard v. HMQ, 2014 ONSC 1282.

[^2]: Dolmage, at para. 31; McKillop and Bechard, at para. 27.

[^3]: The only costs awarded to the plaintiffs in these actions have been a total of $132,000 in respect of the successful certification motion and denial of leave to appeal.

[^4]: The only objections with respect to fees were (i) the Crown should be paying them on top of the settlement fund – I addressed this objection in Dolmage, at para. 35 and McKillop and Bechard, at footnote 14; and (ii) class counsel should be doing this work on a pro bono basis –I disagree, as set out in these Reasons.

[^5]: Strathy J. (as he then was) stated that fees in the range of 20% to 30% are “very common” in class proceedings: Baker (Estate) v. Sony BMG Music (Canada) Inc. 2011 ONSC 7105, at para. 63. In Cannon v. Funds for Canada Foundation, 2013 ONSC 7686, Belobaba J. approved fees of 33% based on the retainer agreement ($9.4 million on a settlement of $28.2 million). Regional Senior Justice Morawetz recently canvassed the percentage ranges in Labourers’ Pension Fund of Central and Eastern Canada v. Sino Forest Corporation, 2014 ONSC 62, at paras. 43, 44 and approved the requested fees of $17.8 million, representing 17% of the settlement fund attributable to the Canadian claims.