Court File and Parties
COURT FILE NO.: 00-CV-192059 DATE: 20170221 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
LARRY PHILIP FONTAINE in his personal capacity and in his capacity as the Executor of the estate of Agnes Mary Fontaine, deceased, MICHELLINE AMMAQ, PERCY ARCHIE, CHARLES BAXTER SR., ELIJAH BAXTER, EVELYN BAXTER, DONALD BELCOURT, NORA BERNARD, JOHN BOSUM, JANET BREWSTER, RHONDA BUFFALO, ERNESTINE CAIBAIOSAI-GIDMARK, MICHAEL CARPAN, BRENDA CYR, DEANNA CYR, MALCOLM DAWSON, ANN DENE, BENNY DOCTOR, LUCY DOCTOR, JAMES FONTAINE in his personal capacity and in his capacity as the Executor of the Estate of Agnes Mary Fontaine, deceased, VINCENT BRADLEY FONTAINE, DANA EVA MARIE FRANCEY, PEGGY GOOD, FRED KELLY, ROSEMARIE KUPTANA, ELIZABETH KUSIAK, THERESA LAROCQUE, JANE McCULLUM, CORNELIUS McCOMBER, VERONICA MARTEN, STANLEY THOMAS NEPETAYPO, FLORA NORTHWEST, NORMAN PAUCHEY, CAMBLE QUATELL, ALVIN BARNEY SAULTEAUX, CHRISTINE SEMPLE, DENNIS SMOKEYDAY, KENNETH SPARVIER, EDWARD TAPIATIC, HELEN WINDERMAN and ADRIAN YELLOWKNEE
Plaintiffs
- and -
THE ATTORNEY GENERAL OF CANADA, THE PRESBYTERIAN CHURCH IN CANADA, THE GENERAL SYNOD OF THE ANGLICAN CHURCH OF CANADA, THE UNITED CHURCH OF CANADA, THE BOARD OF HOME MISSIONS OF THE UNITED CHURCH OF CANADA, THE WOMEN’S MISSIONARY SOCIETY OF THE PRESBYTERIAN CHURCH, THE BAPTIST CHURCH IN CANADA, BOARD OF HOME MISSIONS AND SOCIAL SERVICES OF THE PRESBYTERIAN CHURCH IN BAY, THE CANADA IMPACT NORTH MINISTRIES OF THE COMPANY FOR THE PROPAGATION OF THE GOSPEL IN NEW ENGLAND (also known as THE NEW ENGLAND COMPANY), THE DIOCESE OF SASKATCHEWAN, THE DIOCESE OF THE SYNOD OF CARIBOO, THE FOREIGN MISSION OF THE PRESBYTERIAN CHURCH IN CANADA, THE INCORPORATED SYNOD OF THE DIOCESE OF HURON, THE METHODIST CHURCH OF CANADA, THE MISSIONARY SOCIETY OF THE ANGLICAN CHURCH OF CANADA, THE MISSIONARY SOCIETY OF THE METHODIST CHURCH OF CANADA (ALSO KNOWN AS THE METHODIST MISSIONARY SOCIETY OF CANADA), THE INCORPORATED SYNOD OF THE DIOCESE OF ALGOMA, THE SYNOD OF THE ANGLICAN CHURCH OF THE DIOCESE OF QUEBEC, THE SYNOD OF THE DIOCESE OF ATHBASCA, THE SYNOD OF THE DIOCESE OF BRANDON, THE ANGLICAN SYNOD OF THE DIOCESE OF BRITISH COLUMBIA, THE SYNOD OF THE DIOCESE OF CALGARY, THE SYNOD OF THE DIOCESE OF KEEWATIN, THE SYNOD OF THE DIOCESE OF QU’APPELLE, THE SYNOD OF THE DIOCESE OF NEW WESTMINISTER, THE SYNOD OF THE DIOCESE OF YUKON, THE TRUSTEE BOARD OF THE PRESBYTERIAN CHURCH IN CANADA, THE BOARD OF HOME MISSIONS AND SOCIAL SERVICE OF THE PRESBYTERIAN CHURCH OF CANADA, THE WOMEN’S MISSIONARY SOCIETY OF THE UNITED CHURCH OF CANADA, SISTERS OF CHARITY, A BODY CORPORATE ALSO KNOWN AS SISTERS OF CHARITY OF ST. VINCENT DE PAUL, HALIFAX, ALSO KNOWN AS SISTERS OF CHARITY HALIFAX, ROMAN CATHOLIC EPISCOPAL CORPORATION OF HALIFAX, LES SOEURS DE NOTRE DAME-AUXILIATRICE, LES SOEURS DE ST. FRANCOIS D’ASSISE, INSITUT DES SOEURS DU BON CONSEIL, LES SOEURS DE SAINT-JOSEPH DE SAINT-HYANCITHE, LES SOEURS DE JESUS-MARIE, LES SOEURS DE L’ASSOMPTION DE LA SAINTE VIERGE, LES SOEURS DE L’ASSOMPTION DE LA SAINT VIERGE DE L’ALBERTA, LES SOEURS DE LA CHARITE DE ST.-HYACINTHE, LES OEUVRES OBLATES DE L’ONTARIO, LES RESIDENCES OBLATES DU QUEBEC, LA CORPORATION EPISCOPALE CATHOLIQUE ROMAINE DE LA BAIE JAMES (THE ROMAN CATHOLIC EPISCOPAL CORPORATION OF JAMES BAY), THE CATHOLIC DIOCESE OF MOOSONEE, SOEURS GRISES DE MONTR é AL/GREY NUNS OF MONTREAL, SISTERS OF CHARITY (GREY NUNS) OF ALBERTA, LES SOEURS DE LA CHARIT é DES T.N.O., HOTEL-DIEU DE NICOLET, THE GREY NUNS OF MANITOBA INC.-LES SOEURS GRISES DU MANITOBA INC., LA CORPORATION EPISCOPALE CATHOLIQUE ROMAINE DE LA BAIE D’HUDSON – THE ROMAN CATHOLIC EPISCOPAL CORPORATION OF HUDSON’S BAY, MISSIONARY OBLATES – GRANDIN PROVINCE, LES OBLATS DE MARIE IMMACULEE DU MANITOBA, THE ARCHIEPISCOPAL CORPORATION OF REGINA, THE SISTERS OF THE PRESENTATION, THE SISTERS OF ST. JOSEPH OF SAULT ST. MARIE, SISTERS OF CHARITY OF OTTAWA, OBLATES OF MARY IMMACULATE –ST. PETER’S PROVINCE, THE SISTERS OF SAINT ANN, SISTERS OF INSTRUCTION OF THE CHILD JESUS, THE BENEDICTINE SISTERS OF MT. ANGEL OREGON, LES PERES MONTFORTAINS, THE ROMAN CATHOLIC BISHOP OF KAMLOOPS CORPORATION SOLE, THE BISHOP OF VICTORIA, CORPORATION SOLE, THE ROMAN CATHOLIC BISHOP OF NELSON, CORPORATION SOLE, ORDER OF THE OBLATES OF MARY IMMACULATE IN THE PROVINCE OF BRITISH COLUMBIA, THE SISTERS OF CHARITY OF PROVIDENCE OF WESTERN CANADA, LA CORPORATION EPISCOPALE CATHOLIQUE ROMAINE DE GROUARD, ROMAN CATHOLIC EPISCOPAL CORPORATION OF KEEWATIN, LA CORPORATION ARCHI éPISCOPALE CATHOLIQUE ROMAINE DE ST. BONIFACE, LES MISSIONNAIRES OBLATES SISTERS DE ST. BONIFACE-THE MISSIONARY OBLATES SISTERS OF ST. BONIFACE, ROMAN CATHOLIC ARCHIEPISCOPAL CORPORATION OF WINNIPEG, LA CORPORATION EPISCOPALE CATHOLIQUE ROMAINE DE PRINCE ALBERT, THE ROMAN CATHOLIC BISHOP OF THUNDER BAY, IMMACULATE HEART COMMUNITY OF LOS ANGELES CA, ARCHDIOCESE OF VANCOUVER – THE ROMAN CATHOLIC ARCHBISHOP OF VANCOUVER, ROMAN CATHOLIC DIOCESE OF WHITEHORSE, THE CATHOLIC EPISCOPALE CORPORATION OF MACKENZIE-FORT SMITH, THE ROMAN CATHOLIC EPISCOPAL CORPORATION OF PRINCE RUPERT, EPISCOPAL CORPORATION OF SASKATOON, OMI LACOMBE CANADA INC. and MT. ANGEL ABBEY INC.
Defendants
Proceeding under the Class Proceedings Act, 1992
COUNSEL:
- Jamieson Halfnight for the Monitor
- Catherine Coughlan for the Attorney General of Canada
HEARD: In writing
PERELL, J.
REASONS FOR DECISION - COSTS
A. INTRODUCTION
[1] Although it turned out not to be the case, Douglas J. Keshen and his former law firm, Keshen & Major Barristers and Solicitors, were suspected of having unlawfully charged fees or misappropriated funds from clients who had retained them to assist in making claims for compensation under the Indian Residential Schools Settlement Agreement (“IRSSA”). Pursuant to a Request of Directions (“RFD”) under the IRSSA, I authorized Crawford Class Action Services Inc., which is the Court Monitor appointed under the IRSSA, to conduct an investigation with respect to the legal services provided by Mr. Keshen and his firm (collectively “Keshen”). The Monitor conducted an investigation and prepared a Report.
[2] After the report was delivered, Canada sought an order that the Monitor’s investigation expense of approximately $500,000 be assessed and that the costs be paid by Keshen. Keshen resisted the relief requested by Canada, and sought an order that there should be a public statement clearing the stain of the allegations of wrongdoing. Keshen requested that Canada should pay its costs of the RFD on a substantial indemnity basis.
[3] I dismissed Canada’s and Keshen’s requests for relief and ordered that there should be no costs for the RFD. I further ordered that I shall assess the Monitor’s costs for the investigation by receiving submissions in writing. See Fontaine v. Canada (Attorney General), 2016 ONSC 5359.
[4] I received submissions from the Monitor along with a brief of the Monitor's billings for the entire period of the Keshen investigation, i.e., from November 2013 to August of 2016, and a spreadsheet of billings for the investigation showing the breakdown of the expenses.
[5] Having reviewed the accounts and the submissions, and for the reasons that follow, I reduce the accounts from $578,419.69 to $400,000.00, all inclusive.
B. FACTUAL BACKGROUND
[6] The Monitor’s accounts up until the end of April 2015 have been paid. The total of those accounts was $436,009.10, broken down as follows:
- Crawford fees: $155,710.00
- Crawford disbursements: $3,895.53
- McMillan fees: $220,755.50 (Howard M. Drabinsky $163,206.50; Lou Zivot $53,425.00; others $4,124.00)
- McMillan disbursements: $3,677.57
- McMillan taxes: $51,970.50
[7] The Monitor’s accounts after April 2015 have not been paid. These accounts total $142,410.59, broken down as follows:
- Crawford fees: $12,725.00
- McMillan fees: $28,943.39 (Howard M. Drabinsky $18,548.39; Lou Zivot $10,395.00)
- McMillan disbursements: $154.15
- Halfnight & McKinlay (“H&M”) fees: $81,025.00
- H&M disbursements: $1,443.55
- Tax: $18,548.39
[8] For the purpose of assessing the accounts, the following chart sets out the key dates:
| Date | Event |
|---|---|
| September 2013 | C. Knox visit to Kenora, triggering inquiries re Keshen |
| May 29, 2014 | Monitor brought RFD seeking authorization for an investigation |
| September 9, 2014 | Justice Perell order authorizing investigation |
| December 3, 2014 | Lou Zivot indicates report is being prepared but Monitor requires an extension |
| February 2015 | Draft report sent to Keshen’s counsel and revisions made |
| April 8, 2015 | First report of Monitor |
| June 10, 2015 | Keshen disciplinary proceeding (No. 1) commenced by LSUC |
| October 28, 2015 | Justice Brown’s decisions re (1) reasonable costs of decision in Bronstein; and (2) Monitor’s authority to settle costs |
| November 20, 2015 | Keshen disciplinary proceeding (No. 2) commenced by LSUC |
| December 2015 | Jamieson Halfnight of H&M retained by Monitor |
| April 15, 2016 | Revised report of Monitor |
| May 25, 2016 | Originally scheduled hearing of return of RFD before Justice Perell (adjourned to July 20, 2016) |
| June 17, 2016 | Keshen Change of Lawyer served |
| July 20, 2016 | Hearing of return of RFD before Justice Perell |
| August 25, 2016 | Decision on RFD released |
[9] It should be noted that during the course of the investigation, between September 2013 and December 2015, the Monitor retained McMillan as its legal advisor and the lawyers with carriage were Messrs. Howard M. Drabinsky and Lou Zivot. In December 2015, the Monitor changed lawyers, engaging Mr. Jamieson Halfnight of H&M.
[10] For the purpose of assessing the accounts, the following chart breaks down the billings having regard to the key dates and the stage of the investigation.
| Stage of Investigation | Billings |
|---|---|
| 1. Pre-Investigation and launching RFD, November 2013-January 2014 | $117,499.52 |
| 2. Pre-Investigation and launching RFD, February 2014 | $17,639.30 |
| 3. Pre-Investigation and launching RFD, March 2014 | $16,531.90 |
| 4. Pre-Investigation and launching RFD, April 2014 | $10,672.85 |
| 5. Pre-Investigation and launching RFD, May 2014 | $12,051.45 |
| 6. Post-RFD launch and investigation, June 2014 | $6,802.60 |
| 7. Post-RFD launch and investigation, July 2014 | $40,677.42 |
| 8. Post-RFD launch and investigation, August 2014 | $10,959.70 |
| 9. Post-RFD launch and investigation September 2014 | $16,606.76 |
| 10. Post-RFD launch and investigation, October 2014 | $50,115.84 |
| 11. Post-RFD launch and investigation, November 2014 | $17,373.75 |
| 12. Drafts of Reports, December 2014 | $61,848.32 |
| 13. Drafts of Reports, January 2015 | $10,765.97 |
| 14. Drafts of Reports, February 2015 | $20,230.43 |
| 15. Drafts of Reports, March 2015 | $5,904.55 |
| 16. Drafts of Reports, April 2015 | $20,328.73 |
| 17. Drafts of Reports, May 2015 | $2,755.26 |
| 18. Drafts of Reports, June 2015 | $2,901.68 |
| 19. Drafts of Reports, July 2015 | $212.70 |
| 20. Drafts of Reports, August 2015 | $1,165.28 |
| 21. Drafts of Reports, September 2015 | $390.92 |
| 22. Drafts of Reports, October 2015 | $4,257.52 |
| 23. Drafts of Reports, November 2015 | $17,903.34 |
| 24. Drafts of Reports, December 2015 | $5,168.13 |
| 25. Final Reports and hearings, January 2016 | $11,394.60 |
| 26. Final Reports and hearings, February 2016 | $1,966.07 |
| 27. Final Reports and hearings, March 2016 | $239.19 |
| 28. Final Report and hearings, April 2016 | $30,882.29 |
| 29. Final Reports and hearings, May 2016 | $19,922.26 |
| 30. Final Reports and hearings, June 2016 | $8,611.72 |
| 31. Final Reports and hearings, July 2016 | $31,098.72 |
| 32. Post-hearing work and costs submissions | $3,486.91 |
C. DISCUSSION AND ANALYSIS
[11] The principles guiding this assessment are set out in the “Administrative Protocol for Addressing the Court Monitor’s Obligations under the Implementation Orders”, Schedule “A” to the Administrative Judges’ Joint Direction of July 30, 2015 and the decisions in Fontaine v. Canada (Attorney General), 2015 BCSC 1968 (the “Bronstein Costs Decision”), Fontaine v. Canada (Attorney General), 2016 BCSC 1969 (the “Settlement Authority Decision”) and Fontaine v. Canada (Attorney General), 2016 BCSC 609 (the “Reimbursement Decision”).
[12] These principles may be summarized as follows:
- The Court has the responsibility to determine the reasonableness of the expenses charged by the Monitor to Canada;
- The Monitor is an officer of the Court. As with other officers of the Court, such as receivers, the Court retains a discretion to reduce the Monitor’s fees where the Court concludes that it has not exercised “reasonable prudence” in performing its duties;
- The onus is on Crawford to demonstrate that its costs (including disbursements) are reasonable. Crawford, in its role as the Monitor, has and had the responsibility of being vigilant to ensure that expenses charged to Canada (or to those under investigation) were kept to reasonable limits;
- It would be wrong to adopt a results-oriented approach when determining what, if any, costs are reasonable in connection with an investigation. Some issues simply need to be investigated, regardless of where the investigation is apt to lead;
- The essence of fairly conducted investigations is that they are not adopted with a view leading inexorably to a predetermined conclusion. Consequently, a hindsight-driven approach should not be taken when determining whether investigative costs are reasonable;
- In determining whether fees are reasonably necessary, the court should consider the circumstances, including: the complexity of the proceeding; the skill, specialized knowledge and responsibility required of the lawyer; the amount involved; the time reasonably spent; the conduct of any party; and the importance of the proceeding;
- The Monitor’s fees and costs, including disbursements, must be reasonable and prudent and must be proportionate to the work or assignment undertaken;
- The Court must scrutinize accounts to identify disproportionate amounts of time spent on activities that appear to be redundant or duplicative, and the Monitor cannot expect to be reimbursed for expenditures that were not required (such as unnecessary court appearances or work that was duplicated through the efforts of internal and external counsel);
- Redundancies (such as duplication of activities by internal and external counsel) can be addressed by an across-the-board reduction (such as the 25% reduction imposed in the Bronstein Costs Decision);
- It is appropriate to compare hourly rates charge by other lawyers in the same context to determine whether the rates being charged to Canada are reasonable and proportionate;
- In the immediate case, when the hourly rate comparison is conducted, it is apparent that the rate charged by Mr. Drabinsky was disproportionately high. A reasonable rate for him is $650 per hour; and,
- The accounts must be reasonable and necessary to be approved.
[13] Applying the above principles, for stages 1 - 5, the accounts should be reduced by adjusting Mr. Drabinsky’s hourly rate to $650 and by reducing the Crawford and McMillan fees by 25% for duplication and redundancies because the Monitor’s responsibility for the factual investigation should have reduced the necessity for lawyers to be involved in that work.
[14] Applying the above principles, for stages 6 - 11, the accounts should be reduced by adjusting Mr. Drabinsky’s hourly rate to $650 and by reducing the Crawford and McMillan fees by 25% for duplication and redundancies and for work that was not necessary having regard to the extensive pre-RFD investigation.
[15] Applying the above principles, for stages 12 - 24, the accounts should be reduced by adjusting Mr. Drabinsky’s hourly rate to $650 and by reducing the Crawford and McMillan fees by 25% because the Monitor’s involvement in preparing drafts should have reduced the lawyers’ time and further, there was duplication in the work of Messrs. Drabinsky and Zivot.
[16] Applying the above principles, for stage 25, the file was transitioned from McMillan to Mr. Halfnight at H&M and McMillan’s fees should be reduced by 50% as should H&M’s for duplication in work.
[17] Applying the above principles, for stage 26, H&M’s fees should be reduced by 25% for redundancies in time in the transitioning from McMillan.
[18] Applying the above principles, for stage 27, there should be no fee for transition communications and services.
[19] Applying the above principles, for stage 28, there should be no fee for McMillan and H&M’s fees should be reduced by 10% for transition work, and then the fee should be further reduced by 20% as excessive and because the Monitor’s involvement should have reduced the necessity for the lawyers to be involved.
[20] Appling the above principles, for stage 29, there should be a $1,000 reduction, for stage 30, a $2,000 reduction, and for stage 31, no fee should be paid for McMillan’s services in view of redundancies associated with continuing transition communications and services.
[21] For stage 32, there should be a 10% reduction because the fee is moderately excessive due to the transition from McMillan to H&M.
[22] With the above reductions, the accounts, which totalled $578,419.69 in the aggregate, are reduced to $398,980.73, which I shall round up to $400,000.00, all inclusive.
D. CONCLUSION
[23] For the above reasons, I assess the Monitor’s accounts at $400,000.00, all inclusive. For clarity, that is the amount that Canada is responsible for paying the Monitor in connection with those accounts.
Perell, J.
Released: February 21, 2017
COURT FILE NO.: 00-CV-192059 DATE: 20170221 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
LARRY PHILIP FONTAINE in his personal capacity and in his capacity as the Executor of the estate of Agnes Mary Fontaine, deceased, et al. Plaintiffs
‑ and ‑
THE ATTORNEY GENERAL OF CANADA et al. Defendants
REASONS FOR DECISION - COSTS
Perell, J.
Released: February 21, 2017