COURT FILE NO.: CV-15-534042 CP

DATE: 20180524

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Christopher Welsh

Plaintiff

– and –

Her Majesty the Queen in Right of the Province of Ontario

Defendant

Celeste Poltak and Robert Gain for the Plaintiff

Jonathan Sydor and Lisa Brost for the Defendant

Stephanie DiGiuseppe for Aaron Zachary Smith, a Class Member

HEARD: April 30, 2018

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] Pursuant to the Class Proceedings Act, 1992,[^1] Christopher Welsh sued Her Majesty the Queen in Right of the Province of Ontario (“Ontario”). He alleged that for decades, Ontario had been negligent and that it had breached its fiduciary duty and its and duty of care to the students of four provincially-run schools for the deaf. He claimed $325 million in damages for the Student Class Members plus damages pursuant to s. 61 of the Family Law Act[^2] for the Family Class Members. There were approximately 4,800 Student Class Members.

[2] This is a motion for approval of a $15 million settlement in Mr. Welsh’s action against three of the four schools of the deaf. At its maximum, the net settlement is worth $9.2 million.

[3] The parties seek an order: (a) declaring that the Settlement Agreement is fair, reasonable, and in the best interest of the Class Members; (b) approving the settlement pursuant to s. 29 of the Class Proceedings Act, 1992; (c) declaring the Settlement Agreement is binding on the Representative Plaintiff, on all Class Members, and on Ontario; (d) providing that the Class Proceedings Fund is entitled to its levy pursuant to s. 59.3 of the Law Society Act;[^3] (e) approving the form, content and manner of distribution of the settlement; (f) approving the proposed claim form; and (g) appointing Crawford Class Action Services as the Administrator of the claims process.

[4] Class Counsel, Koskie Minsky, LLP, seeks an order: (a) approving the retainer agreement; (b) approving fees of $3.75 million plus HST of $487,500; (c) approving reimbursement for disbursements, including all applicable taxes, of $168,975; (d) approving administrative and notice costs estimated to be $320,000; (e) approving a $5,000 honorarium to Mr. Welsh; (f) ordering the payment to the Class Proceedings Fund of the amount of any direct financial support paid under s. 59.3 of the Law Society Act and 10% of the Settlement Fund; i.e., $1.027 million and, (g) directing that the Class Counsel’s fees, reimbursement for disbursements, honorarium, and the Class Proceedings Fund levy, shall be paid out of the Settlement Fund.

B. The Discontinuance Against Centre Jules-Léger

[5] After this motion was argued, I noted that the Statement of Claim in the Motion Record made claims against four schools. I was puzzled about why the fourth school, Centre Jules-Léger, was not included in the Settlement Agreement. I was concerned about the absence of this school because under s. 29 of the Class Proceedings Act, 1992, the court has a duty to protect the interests of the Class Members when class actions are abandoned or discontinued. I will discuss the test for the approval of a settlement below, but there is also a test for a discontinuance, and the court must ensure that Class Members are not prejudiced by a discontinuance. Thus, after the motion was argued, I inquired as to the status of the action with respect to the students who had attended Centre Jules-Léger.

[6] I learned that Class Counsel had investigated the claims of the students of this school and had decided to remove these students as Class Members. I learned that there was an amended Statement of Claim, which had not been included in the Motion Record. The amended pleading removed the claims against Centre Jules-Léger.

[7] Unfortunately, Class Counsel had forgotten the requirements of s. 29 of the Class Proceedings Act, 1992. I, therefore, direct Class Counsel to bring a motion for approval of the discontinuance with proper supporting material. In the meantime, I shall proceed to consider whether to approve what I now regard as a motion for approval of a partial settlement agreement.

C. Overview

[8] By way of overview, there were four objectors to the proposed settlement. Of these, a single objector, Aaron Zachary Smith, appeared at the settlement approval hearing. Mr. Smith was a former student of one of the four schools for the deaf, and he is a spokesperson for the rights of the deaf.

[9] As I shall explain in more detail below, Mr. Smith’s objections to the Settlement Agreement and my own critical examination of it were sufficiently strong that I was initially inclined to not approve the settlement. I had four major interconnected criticisms.

[10] First, based on what the proposed settlement failed to achieve, there was a strong argument that the Settlement Agreement did not fall within the zone of reasonableness and that the Settlement Agreement’s Plan of Distribution was unfair and unreasonable.

[11] Second, in attempting to justify the proposed settlement, Class Counsel equated the proposed settlement agreement with approved settlements in other institutional abuse cases. Indeed, Class Counsel extolled and took pride in the fact that the proposed settlement in the immediate case was a clone of the settlement in Seed v. Ontario, another institutional abuse case. However, this approach was seriously misguided, and it had the opposite of the effect that was intended. This approach exposed the weaknesses and inadequacies of the proposed settlement.

[12] Third, in attempting to justify the proposed settlement, Class Counsel extolled the virtues of the Plan of Distribution, which was adopted from the Seed v. Ontario case. My own analysis, however, is that there was little to extoll in this Plan of Distribution. The heads of compensatory damage were limited, the compensation was capped, the compensation was not generous, there was a prospect of a reversion to Ontario, and the Plan of distribution envisioned that 90% of the Student Class and 100% of the Family Class would get no compensation, no apology, nor anything at all even indirectly for releasing their claims against Ontario.

[13] I thought that the Settlement Agreement was inadequate to bring substantive access to justice to the Class Members. I thought the Plan of Distribution was poor and unfair. I thought that the proposed settlement failed to respect the dignity of the overwhelming majority of the Class Members, who will recover no compensation under the proposed agreement and who will simply release their claims in a litigation that was so important to them.

[14] Fourth, in attempting to justify the proposed settlement, Class Counsel argued that the circumstances of extraordinary high litigation risks, the non-availability of aggregate damages for the Student Class Members, and the necessity of individual issues trials were factors that overwhelmingly privileged the Settlement Agreement as in the best interests of the Class Members over the alternative of continuing the class action. However, all these risks were known to Class Counsel when it commenced the action, when the action was certified, when Class Members were provided an opportunity to opt out, and as discussed below, while I agree with Class Counsel’s argument that the absence of aggregate awards in institutional abuse cases favour settlement over continuing litigation, this weakness in the Class Proceedings Act, 1992 should not provide an excuse for a capitulation to a poor settlement.

[15] However, upon reflection, I, nevertheless, decided that the Settlement Agreement met the test for approval and that while a disappointing outcome, it would be inimical to the best interests of the Class Members to reject the settlement. Upon reflection, I concluded that for the small portion of the Class that benefited from the Settlement Agreement, there was adequate compensation that should not be lost to them. I concluded that Class Counsel’s argument for the rest of the class that the combination of the litigation risks, the aging population of Class Members, and the weakness in the Class Proceedings Act, 1992, itself; i.e., the court’s limited jurisdiction to aggregate damages and the inevitability of individual issues trials, made the proposed settlement preferable to the alternative of further litigation.

[16] Turning to the matter of approving the fee of Koskie Minsky, LLP, I had no difficulty approving Class Counsel’s claim for reimbursement for disbursements. However, having regard to the quality of the results achieved by the Settlement Agreement and the prospect of a reversion to Ontario, I was not prepared to award Mr. Welsh an honorarium, nor to approve the counsel fee as requested. I am not prepared to approve the counsel fee without conditions and an adjustment to its quantum.

[17] Notwithstanding that Mr. Welsh approved of a contingency fee that would see 10% of the Settlement Fund go to the Class Proceedings Fund and 25% of the Settlement Fund plus HST go to Class Counsel, the quality of the success achieved did not merit a combined contingency fee of approximately $5.3 million for a $15 million settlement of a $325 million class action in which 90% of the Student Class Members and 100% of the Family Class Members would receive nothing in exchange for their forced releases.

[18] Therefore, for the reasons set out below, it is my conclusion that provided that Class Counsel donate $1.5 million to a charity or charities for the deaf as shall be designated by further order of the court and provided that the fee, but not the donation, be reduced proportionately to the amount, if any, of the Settlement Fund that reverts to Ontario, Class Counsel should receive a fee of $3.75 million plus HST of $487,500.

[19] Fortuitously, this qualified fee approval, in effect, introduces a cy-près element to the overall settlement that better achieves the substantive access to justice and behaviour modification goals of a class proceeding and that also addresses some of the objectors’ objections to the Settlement Agreement. What was an approvable settlement becomes a better one without amending the Settlement Agreement or without increasing the obligations on Ontario.

[20] Therefore, for the reasons that follow, I approve the Settlement Agreement and the requests for ancillary relief, and subject to the above conditions, I approve Class Counsel’s fee request.

D. Facts

1. Mr. Welsh

[21] Mr. Welsh was born in 1958. He attended Ernest C. Drury School for the Deaf in residence for seven years and the Roberts School for the Deaf for five years.

2. Mr. Smith

[22] The objector, Aaron Zachary Smith, who was born in 1996, is deaf, and he was raised by a deaf parent and has deaf siblings. His native language is American Sign Language (ASL). His culture is a culture of the deaf.

[23] In 1999, at the age of three, Mr. Smith became a student at the Ernest C. Drury School. He was a student at the school for 15 years both as a day student and, from time to time, in residence. He is a public critic and protestor about the quality of his education complaining about audism (the discrimination, marginalization, stigmatization, and alienation of the deaf community[^4]), the lack of resources provided to help the deaf, and the deficiencies of the education provided to the deaf.

3. The Schools for the Blind, the Deaf, and Demonstration Schools

[24] Ontario operated, funded, and supervised schools for the blind and the deaf; including: the W. Ross MacDonald School for the Blind, in Brantford; the Ernest C. Drury School for the Deaf, in Milton; the Sir James Whitney School for the Deaf, in Belleville; the Roberts School for the Deaf, in London; and Centre Jules-Léger, a demonstration school from French speaking students with learning disabilities, in Ottawa. All these schools were provincial schools under s. 13 of the Education Act.[^5] The schools were operated by the same ministry, operated under the same policies and procedures and were subject to the same system reports.

[25] In 1991, after receiving complaints of sexual abuse occurring at several of its provincial schools, Ontario’s Ministry of Education undertook a review of its provincial schools. The Ministry produced a report dated December 1991 entitled Report of the Review of Student Care at the Provincial Schools for the Deaf and Blind and Demonstration Schools (the “Review of Student Care”).

[26] The Review of Student Care made findings of serious deficiencies in the care and education of the students. The Review of Student Care found, among other things, that: there was a failure to implement appropriate practices and policies; there was a failure to follow proper staff hiring, training, and supervisory practices; the disciplining of students was unprofessional, inept, inconsistent, harsh, and excessive; staff were not trained with respect the obligation to report child abuse; staff were not trained in child health and safety practices; the education facilities were antiquated and unsuitable; students did not live in a secure or safe environment; and the learning potential of the students was underestimated and unrealized.

[27] Following the 1991 Report of the Review of Student Care, Ontario met with former students of Sir James Whitney School for the Deaf. The students recounted experiencing physical, emotional and sexual abuse while at the school. As a result, Ontario established an Alternative Dispute Resolution Project that operated until March 31, 2000 to provide compensation to the victims of the abuse. The Project was not made available for other provincial schools.

4. The Seed and the Welsh Class Actions

[28] On February 21, 2011, Robert Seed commenced a negligence and breach of fiduciary duty action against Ontario with respect to the W. Ross MacDonald School for the Blind. Class Counsel were Koskie, Minsky LLP, which later also became Mr. Welsh’s Class Counsel in the action now before the court.

[29] On May 4, 2012, after a vigorously contested motion, Justice Horkins certified Seed v. Ontario as a class action.[^6]

[30] In the immediate action, on June 4, 2015, pursuant to the Proceedings Against the Crown Act,[^7] Ontario was given notice of a proposed class action with respect to four provincially-run schools for the deaf.

[31] In August 2015, Mr. Welsh retained Koskie, Minsky, LLP for a proposed class action against Ontario. The Class Proceedings Fund agreed to support Mr. Welsh in his proposed class action.

[32] Ignoring the claim with respect to Centre Jules-Léger, Mr. Welsh’s proposed class action was brought on behalf of a class of approximately 4,500 former students. The action advanced claims of of systemic negligence and systemic breach of fiduciary duty by Ontario in the operation, management, administration, supervision and control of: (a) E.C. Drury School for the Deaf, for the period September 1, 1963 until August 23, 2016; (b) the Sir James Whitney School for the Deaf, for the period September 1, 1938 until August 23, 2016; and (c) the Robarts School for the Deaf, for the period September 1, 1963 until August 23, 2016.

[33] On August 10, 2015, Mr. Welsh delivered his Statement of Claim. He claimed: $300 million in damages; $25 million in punitive damages; damages pursuant to s. 61 of the Family Law Act; prejudgment and postjudgment interest pursuant to the Courts of Justice Act;[^8] the costs of notice and the administration of a Plan of Distribution; and costs on a full indemnity basis.

[34] In his Statement of Claim, Mr. Welsh alleged that Ontario breached the standard of care in the operation of the schools by, among other things: (a) knowing of and condoning violent and humiliating punishments; (b) knowing of and condoning understaffing or unqualified staffing at the schools; (c) failing to implement effective abuse prevention policies; and (d) failing to respond to reports of recommendations regarding the care provided at the schools. The Statement of Claim alleges that no adequate steps were taken to improve the quality of care or living at the schools, or even if measures were taken, those measures were inadequate and failed to meet the standard of care which was applicable in the circumstances. Mr. Welsh pleaded that the schools treated the students with abusive conduct, contempt, prejudice, and indifference.

[35] In his Statement of Claim, Mr. Welsh pleaded the following allegations of Ontario’s breaches of fiduciary duty and breaches of its duty of care: (a) failing to supervise the operation of the schools; (b) failing to investigate injuries sustained by students; (c) failing to provide medical care; (d) failing to report physical, emotional, or sexual abuse; (e) failing to conduct criminal background checks of staff; (f) hiring unqualified staff; (g) putting its own interest ahead of the interests of the students; (h) failing to supervise the school’s environment; (i) failing to provide financial resources to care for the students; (j) failing to respond to complaints and recommendations; (k) fostering an atmosphere of fear and intimidation; (l) failing to safeguard the students’ physical and emotional needs; (m) permitting inappropriate punishments; and (n) permitting an atmosphere that threatened violence.

[36] In his Statement of Claim, Mr. Welsh pleaded the following heads of damages suffered by the students: (a) emotional, physical, and psychological harm; (b) impaired mental and emotional health; (c) substandard education that failed to take into account student disabilities; (d) impaired ability to trust other persons; (e) impaired ability to participate in family affairs and relationships; (f) alienation from family; (g) depression, anxiety, emotional distress, mental anguish; (h) pain and suffering; (i) loss of self-esteem, feelings of humiliation and degradation; (j) impaired ability to obtain and sustain employment; (k) impaired ability to deal with persons in positions of authority; (l) impaired ability to trust other individuals or to sustain relationships; (m) sense of isolation and separation from community; (n) the need for medical and psychological treatment; (o) impaired ability to enjoy recreational, social, and employment activities; (p) loss of friendship and companionship; (q) sexual disorientation; and (r) the loss of general enjoyment of life.

[37] On November 16, 2015, Mr. Welsh served his motion for certification supported by 25 affiants. The affiants describe instances of sexual, physical, and emotional abuse suffered at the hands of teachers, residence counsellors, and staff and the impact of these experiences on them.

[38] On April 15, 2016, Ontario served its responding certification motion record, consisting of: (a) an affidavit from the Executive Director of the Provincial Schools Branch; (b) an expert affidavit opining aggregate damages was not possible and that an individual assessment of each Class Member would be required to determine damages; and, (c) expert affidavits from two clinical psychologists opining that an individual assessment of each Class Member would be required to determine the extent of harm as responses to traumatic events are not homogeneous.

[39] On May 13, 2016, the Plaintiff served a reply certification motion record consisting of an expert opinion regarding the feasibility of an aggregate assessment of damages.

[40] On August 23, 2016, Ontario consented to certification, and I certified the action.[^9] The class period certified was from September 1, 1963 to August 23, 2016 for E.C. Drury School and Robarts School and from September 1, 1938 to August 23, 2016 for Sir James Whitney School. 31, 1978 to the date of this Order (the “Family Class”). The following common issues were certified:

(a) By its operation or management of:

(i) Drury from September 1, 1963 to August 23, 2016;

(ii) Sir James Whitney from September 1, 1938 to August 23, 2016; and

(iii) Robarts from September 1, 1973 to August 23, 2016,

did the defendant owe a fiduciary duty owed to the Student Class to protect them from actionable physical or mental harm and, if so, did the defendant breach such duty?

(b) By its operation or management of:

(i) Drury and Sir James Whitney from September 1, 1963 to August 23, 2016; and

(ii) Robarts from September 1, 1973 to August 23, 2016,

did the defendant owe a duty of care to the Student Class to protect them from actionable physical or mental harm and, if so, did the defendant breach such duty?

(c) If the answer to either of common issues (a) or (b) is “yes”, can the court make an aggregate assessment of damages as part of the common issues trial?

(d) Are members of the Family Class entitled to recovery of their pecuniary losses resulting from injuries or damages to the members of the Student Class, pursuant to section 61 of the Family Law Act, R.S.O. 1990, c.F.3 and/or the equivalent legislation in other provinces?

(e) If the answer to either of common issues (a) or (b) is “yes”, does the defendant’s conduct justify an award of punitive damages?

(f) If the answer to common issue (e) is “yes”, what amount of punitive damages ought to be awarded against the defendant?

[41] The Class Members included Student Class Members, former students who attended or resided at the schools, and Family Class Members. The Family Class included only those spouses, children, grandchildren, parents, grandparents, and siblings of those who attended or resided at the schools from March 31, 1978 to August 23, 2016.

[42] On September 19, 2016, Ontario delivered its Statement of Defence. It denied it owed any duty of care to the Class, denied that any abuses occurred, and, if there were abuses, it denied it was responsible for them. Ontario advanced several limitation period defences.

[43] On September 28, 2016, Mr. Welsh delivered a Reply.

[44] The action progressed into the discovery phase, and Ontario produced over 20,000 documents, many of them documents with which Class Counsel were familiar because of its ongoing retainer in Seed v. Ontario.

[45] Meanwhile, Seed v. Ontario, the similar class action against Ontario about the operation of provincial schools for the blind, was working its way through the courts. The Seed Action involved similar allegations about Ontario’s alleged negligence and breach of fiduciary duty in the operation of schools for the blind. In the Seed Action, the parties had completed the review of thousands of documents (many of which were the same as Ontario’s productions in the immediate case), conducted many days of discovery, and fully briefed the issues of fact and law for the opening arguments for trial.

[46] On April 2, 2017, the Seed Action settled. The Action settled on the eve of first day of an anticipated two-month common issues trial before Justice Gans.

[47] On June 6, 2017, Justice Gans approved the settlement in the Seed Action.[^10]

[48] In Seed v. Ontario, the estimated net Settlement Fund was $4 million for a class of 1,962 persons. Although Justice Gans would not have known the outcome of the Plan of Distribution he approved, it is now known that the total compensation of all approved claimants in Seed is expected to be approximately $3 million; i.e., approximately $1 million of the settlement will be remitted to the defendant Ontario.

5. The Mediation and the Proposed Settlement Agreement

[49] Returning to the narrative of the immediate case, on November 20, 2017, the parties attended a mediation with Ronald G. Slaght as mediator. Mr. Slaght had been the mediator in Seed v. Ontario and he had mediated several other institutional negligence settlements; i.e.: (a) Slark v. Ontario; (b) McKillop v. Ontario; (c) Bechard v. Ontario; and (d) McIntyre v. Ontario.

[50] Class Counsel described the context and the nature of the hard bargaining that occurred at the mediation session. As revealed by their affidavit for this settlement approval motion, Class Counsel viewed Mr. Welsh’s class action as having an extremely high degree of litigation risk and uncertainty.

[51] Because of Class Counsel’s familiarity with the Seed Action, there was a very high level of appreciation of the litigation risks and the strengths and weaknesses of the case from an evidentiary, procedural, and substantive perspective. Class Counsel’s own internal assessment was that absent a settlement, the litigation would be protracted with the prospects of a lengthy and complex trial followed by appeals. Success at a common issues trial was a very uncertain prospect and even assuming success at the common issues trial, individual damages assessments would be protracted and arduous with uncertain outcomes as to the quantum of damages. There was also the factor that the Class Members were an aging and vulnerable population and the events had occurred decades ago.

[52] It seems that in the negotiations Ontario was not prepared to concede any liability and that it was very confident in its limitation period defences and that aggregate damages would never be available. It seems that Class Counsel ruefully appreciated that this confidence was justified with the result that Ontario had a powerful bargaining chip because of the prospect of individual issues trials making access to substantive justice prohibitively expensive and thus illusory.

[53] The settlement negotiations were also heavily informed by Class Counsel’s experience with the administration of settlements in similar class actions. During the mediation, the parties went to great lengths to ensure settlement terms that would result in parity between this action and the settlement in the Seed Action. In other words, the settlement in Seed v. Ontario was very influential and Ontario was prepared to bend only as far as it did in the Seed Action.

[54] The mediation session was successful in the sense that the parties reached an agreement. A settlement in principle was reached on November 20, 2017, and following the mediation session, a Settlement Agreement was negotiated by the parties and fully executed on December 8, 2017.

[55] The parties entered into a Settlement Agreement that is a clone of the settlement in the Seed Action. The claims process and compensation structure in the Settlement Agreement is also substantially similar to the approved settlements in (a) Slark v. Ontario; (b) McKillop v. Ontario; (c) Bechard v. Ontario; and (d) McIntyre v. Ontario.

[56] The key terms of the Settlement Agreement are:

• The gross Settlement Fund is $15 million.

• The net Settlement Fund will subtract legal fees, disbursements, taxes, estimated notice and administration costs, and Class Proceedings Fund levy.

• Class Counsel shall bring a motion for court approval of its Counsel Fee at the time of the settlement approval and Ontario shall take no position on the quantum of fees sought by Class Counsel.

• The costs of notice to the class and administration of the claim process is paid from the Settlement Fund.

• Compensation is determined by a “Points Allocation System.”

• The Points Allocation System reflects varying degrees of harm. The Points Allocation System is confined to sexual and physical assault claims. “Serious Sexual Assault” is defined to mean: “non-consensual oral, vaginal, or anal penetration or attempted non-consensual oral, vaginal, or anal penetration. “Serious Physical Injury” is defined to mean: “physical injury that led to or should have led to hospitalization or serious medical treatment by a physician; permanent or demonstrated long-term physical injury, impairment or disfigurement; loss of consciousness; broken bones; or a serious but temporary incapacitation such that bed rest or infirmary care of several days duration was required.”

• A Student Class Member may claim one level of harm for sexual assault and, or one level of harm for physical assault. The categories of abuse and associated points are set out in the following chart:

Level 3 Sexual Assault

One or more incidents of Serious Sexual Assault

600 points

Level 2 Sexual Assault

Repeated non-consensual touching of a resident or other non-consensual sexual behaviour that is not a Serious Sexual Assault

400 points

Level 1 Sexual Assault

Any non-consensual sexual touching of a resident or other non-consensual behaviour that is not a Serious Sexual Assault

200 points

Level 3 Physical Assault

One or more physical assaults causing a Serious Physical Injury

400 points

Level 2 Physical Assault

One or more physical assaults not causing a Serious Physical Injury, but resulting in an observable injury, such as black eye, bruise or laceration.

200 points

Level 1 Physical Assault or other Wrongful Acts

One or more physical assaults not causing a Serious Physical Injury and not resulting in an observable injury.

Repeated, persistent and excessive wrongful acts constituting demeaning behaviour, humiliation, or excessive physical punishment.

100 points

• The Administrator shall review the claims forms, any supporting documentation and documentation submitted by Ontario and Class Counsel to assign the number of points. To be compensable, a claim must contain some factual description of abuse.

• Ontario may audit a small percentage of only Level 2 or Level 3 claims and submit documents in respect of the claim, without argument.

• The Administrator will calculate the amount of compensation based on the points associated with a claim. The number of points awarded to that claim, will be multiplied by $37.50 to determine the value of compensation. For example, for a Claimant who claims compensation for a Level 3 Sexual Assault ($22,500) and for a Level 3 Physical Assault ($15,000), the total compensation is $37,500.

• Any allegation of harm that occurred before September 1, 1963 shall be given a 50% award that would otherwise be applicable if the harm had occurred after September 1, 1963. (The discounting is based on the Proceedings Against the Crown Act, which bars claims in negligence against Ontario for conduct before the statute came into force on September 1, 1963.)

• Depending on the take-up, the amount of compensation may be increased by up to 20%. Thus, the maximum potential compensation that a Student Class Member can receive for a Level 3 Sexual Assault combined with a Level 3 Physical Assault is $45,000. Thus, the maximum potential compensation that a Claimant can receive is $37,500 or up to $45,000, if funds remain in the Settlement Fund after calculating all awards.

• If the compensation calculated for all claims exceeds the net Settlement Fund, the claims will be distributed pro rata.

• If there is any residue after the payment of all claims including the up to 20% increase, the residue remits to Ontario.

• The claims process is paper based. Claimants are not required to testify or be cross-examined by Ontario. The claim, however, is a sworn document.

• The Proposed Claim Form consists of three parts: contact information for the claimant; space to include the substance of the claim; and the sworn oath in respect of the substance of the claim.

• In the absence of reasonable grounds to the contrary, Claimants will be assumed to be acting honestly and in good faith in completing their forms. Claimants will not be required to testify and may submit documents with their claim, if available, but documents are not mandatory.

• The compensation awards are designed not to be subject to tax or government claw-backs.

• Government revenue claw-backs on settlement awards for Claimants receiving forms of provincial social assistance are precluded.

6. The Retainer Agreement

[57] For present purposes, the relevant portions of the retainer agreement executed by Mr. Welsh and Class Counsel are as follows:

Terms of Payment of Fees and Disbursements under the CPA

7. The provisions of this agreement regarding legal fees and disbursements are subject to court approval as provided in the CPA (Class Proceedings Act, 1992).

8. Legal fees shall be paid only in the event the Class Action is successful in obtaining judgment on the common issues in favour of some or all Class Members or in obtaining a settlement that benefits one or more Class Members (defined herein as “Success”). The legal fees shall be paid by a lump sum payment or payments out of the proceeds of such judgment or settlement under the CPA.

9. Whether or not Success is achieved in the Class Action, Class Counsel shall be paid all costs awards recovered in the Class Action from the defendants in this Class Action or the Class Proceedings Fund of the Law Foundation of Ontario (the “Fund”), irrespective of scale, including any disbursements, applicable taxes and any interest payable thereon and any other amount paid by the Defendants, as costs. Class Counsel is authorized to settle the amount of costs awarded on any motion in the Class Action.

10. In the event of Success, Class Counsel shall be paid an amount equal to any disbursements not already paid to them by the Defendants as costs, plus applicable taxes, plus interest thereon in accordance with section 33(7)(c) of the CPA, plus the greater of:

(a) The usual class action hourly rate of the legal professionals (e.g. lawyers, law clerks or students) who perform work on the case multiplied by the number of hours worked by each such professional (the “Base Fee”) increased by a multiplier of four (4), less the fee portion of any recovered costs already paid to Class Counsel, plus HST; or

(b) If the Class Action is settled before the commencement of the examinations for discovery, twenty-five percent (25%) of the recovery less the fee portion of any costs already paid to Class Counsel, plus HST; or ….

11. Class Counsel may make any motion for the approval of its fees including a motion to have the Base Fee increased by a multiplier as contemplated in paragraph 10 (a).

12. Class Counsel and the Client acknowledge it is difficult to estimate what the expected fee will be. However, given the proposed claims in the Class Action and Class Counsel’s fee in other cases, Class Counsel estimates that the legal fees may be in the range of $3 to $4 million or more depending on the work done and the Recovery. The following are examples of potential fees to Class Counsel, not including any disbursements not already paid to them by the Defendants as costs, plus applicable taxes, plus interest thereon in accordance with section 33(7)(c) of the CPA, plus the greater of:

(b) Twenty-five Percent (25%) of Recovery: If a settlement is reached before the commencement of the examinations for discovery which results in a $10,000,000 gross recovery, Class Counsel’s fee will equal the recovery of $10,000,000 multiplied by twenty-five (25%), providing for a total fee payment of $2,500,000.

Class Proceedings Committee Application

20. This agreement and the Client’s participation as a representative plaintiff in this Class Action is contingent upon the Fund granting funding and, in particular, a cost indemnity to the Client from the Fund. The Firm will represent the Client in such application and any related hearing in respect thereof. The parties agree and acknowledge that the Firm will provide no costs indemnity to the Client.

[58] Class Counsel did not provide a breakdown of its dockets or hourly rates or any details of whom performed services for the Class Members and what services were provided.

E. Discussion

1. Settlement Approval

[59] Section 29 of the Class Proceedings Act, 1992 requires court approval for the discontinuance, abandonment, or settlement of a class action. Section 29 states:

Discontinuance, abandonment and settlement

29.(1) A proceeding commenced under this Act and a proceeding certified as a class proceeding under this Act may be discontinued or abandoned only with the approval of the court, on such terms as the court considers appropriate.

Settlement without court approval not binding

(2) A settlement of a class proceeding is not binding unless approved by the court.

Effect of settlement

(3) A settlement of a class proceeding that is approved by the court binds all class members.

Notice: dismissal, discontinuance, abandonment or settlement

(4) In dismissing a proceeding for delay or in approving a discontinuance, abandonment or settlement, the court shall consider whether notice should be given under section 19 and whether any notice should include,

(a) an account of the conduct of the proceeding;

(b) a statement of the result of the proceeding; and

(c) a description of any plan for distributing settlement funds.

[60] Section 29(2) of the Class Proceedings Act, 1992, provides that a settlement of a class proceeding is not binding unless approved by the court. 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 the class.[^11]

[61] In determining whether a settlement is reasonable and in the best interests of the class, the following factors may be considered: (a) the likelihood of recovery or likelihood of success; (b) the amount and nature of discovery, evidence or investigation; (c) the proposed settlement terms and conditions; (d) the recommendation and experience of counsel; (e) the future expense and likely duration of the litigation; (f) the number of objectors and nature of objections; (g) the presence of good faith, arm’s-length bargaining and the absence of collusion; (h) the information conveying to the court the dynamics of, and the positions taken by, the parties during the negotiations; and (i) the nature of communications by counsel and the representative plaintiff with Class Members during the litigation.[^12]

[62] In determining whether to approve a settlement, the court, without making findings of fact on the merits of the litigation, examines the fairness and reasonableness of the proposed settlement and whether it is in the best interests of the class as a whole having regard to the claims and defences in the litigation and any objections raised to the settlement.[^13] An objective and rational assessment of the pros and cons of the settlement is required.[^14]

[63] The case law establishes that a settlement must fall within a zone of reasonableness. Reasonableness allows for a range of possible resolutions and is an objective standard that allows for variation depending upon the subject-matter of the litigation and the nature of the damages for which the settlement is to provide compensation.[^15] A settlement does not have to be perfect, nor is it necessary for a settlement to treat everybody equally.[^16]

2. Methodology

[64] In litigation generally, save for parties under a disability, the court does not have the authority or the obligation to approve settlements. However, in the context of class actions, s. 29 of the Class Proceedings Act, 1992 compels the court to be involved when the parties propose a settlement. The court is charged with the responsibilities of approving or refusing the settlement and also Class Counsel’s fees.

[65] These are onerous responsibilities because the integrity of the entrepreneurial model that underlies the class action regime depends upon the court’s scrutinizing the settlement and scrutinizing the Class Counsel’s fee and ensuring that the Class Members, whose claims are being discharged, are being fairly treated. As Justice Belobaba noted in McIntyre v. Ontario,[^17] the entrepreneurial model of the Class Proceedings Act, 1992 creates a significant conflict of interest for Class Counsel about whether to press for more compensation for Class Members with the risk of getting no contingency fee or to settle for a less than an optimal amount but to secure a substantial contingency fee.

[66] The weight of the court’s responsibility to protect the Class Members is increased because approval motions are typically consent motions. The adversarial context dissipates because the Representative Plaintiff, Class Counsel, and the Defendant will be united in promoting the settlement and the Representative Plaintiff will approve the payment of fees to Class Counsel.

[67] However, while an onerous and difficult responsibility, most of the time, it is possible without an amicus curiae to represent the objectors for the court to determine whether a settlement falls within the zone of reasonableness. Depending upon the amount of information gathered when the action settles, including the opinion evidence of experts, and depending on the exigencies of any particular case, and the input, if any, of objectors, a judge should be able to use the factors listed above and assess whether a proposed settlement in a class proceeding is fair and reasonable. Depending upon the amount of information provided to the court about the nature and context of the class action and of the negotiations, judges typically are able to assess the merits of a settlement, notwithstanding that the usual crucible of the adversarial system is removed. The ability to recognize an approvable settlement arises because lawyers and judges, through professional experience, are able to recognize a bad, a poor, a good, and an excellent settlement.

[68] Generally speaking, the exercise of determining the fairness and reasonableness of a proposed settlement involves two analytical exercises. The first exercise is to use the factors and compare and contrast the settlement with what would likely be achieved at trial. The court obviously cannot make findings about the actual merits of the Class Members’ claims. Rather, the court makes an analysis of the desirability of the certainty and immediate availability of a settlement over the probabilities of failure or of a whole or partial success later at a trial. The court undertakes a risk analysis of the advantages and disadvantages of the settlement over a determination of the merits. The second exercise, which depends on the structure of the settlement, is to use the various factors to examine the fairness and reasonableness of the scheme of distribution under the proposed settlement. Both analyses are required in the immediate case.

3. Analysis

[69] The case at bar is an example par excellent of the challenges of settlement and fee approval. If I approve the proposed settlement and Class Counsel’s fee as requested, then Class Counsel will receive $3.75 million plus HST and the Family Class Members will release their claims for nil compensation and the Student Class Members will release their $325 million of claims in exchange for, at most $9.2 million payable to a fraction of the Class Membership.

[70] Mr. Smith, a student Class Member makes a strong argument that this outcome should not be approved by the court. He argues that the proposed settlement does not fall within the range of reasonableness.

[71] Analyzing the Settlement Agreement from the perspective of the compromises and concessions of the parties, it appears that without any admission of liability, Ontario compromised its position that it had no responsibility for any of the numerous types of harms suffered by the Student Class Members and offered to provide compensation to Student Class Members who suffered physical and sexual assaults. The amount of compensation for the assault victims was capped both individually and in the aggregate.

[72] Other than its agreement to pay and not to oppose Class Counsel’s fee request, Ontario makes no other concession, and even its concession to pay assault victims is not much of one, because apart from limitation period defences, the Class Members had a strong argument that the assault claims should be compensated. In other words, it is difficult to conceive that a court would decide that during the decades during which Ontario was responsible for the provincial schools that there ever was a time when the standards of a tort duty of care was so low or the scope of fiduciary duties so paltry as to provide a substantive defence for not protecting children in its care from physical and sexual assaults.

[73] For their part, Mr. Welsh and Class Counsel have conceded that there shall be no compensation for: (a) impaired mental and emotional health; (c) substandard education that failed to take into account student disabilities; (c) impaired ability to trust other persons; (d) impaired ability to participate in family affairs and relationships; (e) alienation from family; (f) depression, anxiety, emotional distress, mental anguish; (g) loss of self-esteem, feelings of humiliation and degradation; (h) impaired ability to obtain and sustain employment; (i) impaired ability to deal with persons in positions of authority; (j) impaired ability to trust other individuals or to sustain relationships; (k) sense of isolation and separation from community; (l) the need for medical and psychological treatment; (m) impaired ability to enjoy recreational, social, and employment activities; (n) loss of friendship and companionship; (o) sexual disorientation; (p) the loss of general enjoyment of life; (q) punitive damages; and (r) Family Class claims pursuant to s. 61 of the Family Law Act. All of these claims are being released under the proposed settlement without compensation.

[74] Not surprisingly, the objector, Mr. Smith asks some very tough questions about the risk analysis assessment of this proposed settlement. He asks why the settlement provides compensation only for assault claims and why it abandons all the claims about discrimination, all the claims about the poor quality of the education provided to the deaf, all the claims about the developmental, emotional, and social harms suffered by the class, and all of the derivative claims of Family Class Members.

[75] Mr. Smith objects that the proposed settlement would leave students who suffered serious effects from discrimination, Audism, toxic environment, and inadequate teaching and caregiving, but not specific acts of violence or sexual violence, either empty-handed or with extremely low levels of compensation. He objects that the proposed settlement does not secure an adequate advantage to the Class Members in return for the surrender of their litigation rights. He asserts that lack of any measures to respond to grievances of the majority of Class Members demeans the Class Members and their experiences. Mr. Smith challenges the approach of justifying the proposed settlement by modelling it after the settlement in Seed v. Ontario, where like the case at bar, Ontario only assumed some responsibility to compensate the Student Class victims of physical and sexual assault.

[76] For their part, Class Counsel and Ontario disagreed with Mr. Smith’s objections to the proposed settlement. They argued that the proposed settlement was justified and was within the range of reasonableness.

[77] In justifying the proposed settlement, Class Counsel relied heavily on the circumstance that the proposed settlement was modeled after the settlement that was approved in Seed v. Ontario. Class Counsel’s argument was that since the settlement in the immediate case is a clone of the approved settlement in Seed v. Ontario; therefore, almost as a matter of decided precedent, the settlement in the immediate case should be approved. Mr. Smith in opposing the proposed settlement made a similar type of comparative argument by contrasting the proposed settlement with settlements in other cases that arguably revealed that the settlement in the immediate case did not fall within the range of what is reasonable for an institutional abuse, negligence, and breach of fiduciary duty case. He pointed to other institutional abuse settlements where there was some recognition for claims by all of the Class Members.

[78] In my opinion, Class Counsel’s focus on the Seed v. Ontario settlement and also Mr. Smith’s arguments based on comparing the proposed settlement with settlements in other actions were ill-advised. Generally speaking, settlements in other cases provide useful information about what might be possible in structuring a settlement, but comparisons provide poor information about what is fair and reasonable for the next case where numerous factors may be unique or different from the circumstances of the arguably comparable case. The analytical exercise of performing a legal autopsy of prior settlements is ultimately only of modest assistance because each settlement must be examined on its own merits and based on its own facts and circumstances.

[79] Class Counsel’s reliance on the settlement in Seed v. Ontario, ironically, had the effect of revealing the weaknesses of the proposed settlement. For example, in fashioning the settlement in the immediate case as a clone of the settlement in Seed v. Ontario, the parties assumed that there would be a comparable take-up and a comparable average payment, but this comparison reveals how great were the concessions being made by Class Counsel acting on Mr. Welsh’s instructions. In Seed v. Ontario, 181 Class Members out of a class of 1,962 made claims; i.e., the take-up was approximately 10% and the average compensation was $16,285. If the settlement in the immediate case is comparable, then in the immediate case, 423 Class Members out of a class of 4,282 will receive compensation totalling $6.9 million (423 x $16,285), but 90% (3,859) of the Student Class Members will receive nothing.

[80] It is not necessarily bad that only 10% of a class benefits from a settlement. For example, it might be the case that only 10% of a class were actually injured. However, that is not what occurred in the case at bar. What is happening here is that a multitude of pleaded injuries and grievances have been abandoned in favour of providing compensation to assaulted Student Class Members. There is no compensation for discrimination in a variety of forms and no compensation for the deficiencies in the quality of education provided to the Class Members. There is no compensation for the indignities inflicted on the personhood of the Class Members. From the perspective of 90% of the Student Class Members and 100% of the Family Class Members, the Plan of Distribution the net settlement of, at most, $9.2 million was obviously poor because from their perspective, their claims were as worthy for compensation as the 10% of the class receiving compensation for physical and sexual assaults.

[81] In arguing in favour of the reasonableness of the settlement by relying on the court having approved the settlement in Seed v. Ontario, Class Counsel relied heavily on a comment by Justice Belobaba in McIntyre v. Ontario,[^18] where he stated:

The proposed settlement before me implements the same structure and compensation template as in the other three [settlements]. Given that this settlement, in essence, has already been judicially approved three times, this court could have simply approved this fourth iteration without any further discussion or explanation.

[82] In McIntyre v. Ontario, however, Justice Belobaba did not simply approve the fourth iteration of the model settlement without further discussion or explanation. A fair reading of the case reveals that he performed a fulsome analysis under s. 29 of the Class Proceedings Act.

[83] I do not know whether I would have reached the same decision as Justice Belobaba in approving the settlement in McIntyre v. Ontario, and I do not know whether I would have reached the same decision as Justice Gans’ decision in Seed v. Ontario, but their decisions are not precedents or binding authority that every settlement modelled after an approved settlement must, in turn, be approved. Relying on other settlements as a measure of whether to approve a settlement in a subsequent and different case, introduces pro forma approvals of settlements. Ultimately, the analysis in the immediate case is not helped by comparing the outcome in the immediate case with the settlement approved by Justice Gans in Seed v. Ontario. I, thus, give little weight or credit to the circumstances that the proposed settlement in the immediate case was a clone of the settlement in Seed v. Ontario.

[84] In arguing that the $15 million Settlement Fund and the proposed Plan of Distribution fell within the range of reasonableness, Class Counsel submitted that $15 million is a substantial amount of money and a significant recovery for the Student Class Members.

[85] This submission that $15 million is a significant benefit for the class, has some force if one only has regard to the portion of the class that suffered an assault. However, the submission loses much of its force when it is recognized that the Student Class Members might well have suffered damages in the range of the $325 million claimed for the many other damages they suffered. Class Counsel appears to have marshalled a substantial number of witnesses of the atrocities that occurred at the schools. Any submission that $15 million is a substantial amount of money loses force when it is recognized the Student Class Members are abandoning claims pleaded to be worth in excess of $300 million.

[86] Moreover, on an individual basis, the Points Allocation System is not particularly generous; visualize a Student Class Member will receive only $22,500 as compensation for having been raped, which rather suggests that while in absolute terms the Settlement Fund is a substantial amount of money, in relative terms $15 million is inadequate for the losses actually suffered by the Class Members. It is, thus, understandable why Mr. Smith and the other objectors would argue that a net recovery of $9.2 million from Ontario does not fall within the range of reasonableness.

[87] This brings me to Class Counsel’s main argument to justify the proposed settlement in the immediate case as being within the range of reasonableness. The gist of Class Counsel’s argument was that the litigation risks of the case were so high combined with the circumstance that the absence of any prospect of aggregate damages being available to the Student Class Members, made accepting Ontario’s offer to pay for the claims for physical and sexual assault far better than the alternative of continuing the class action.

[88] More precisely, Class Counsel enumerated the following litigation risks: (a) there was a multitude of procedural, evidentiary, and substantive legal uncertainties associated with the Student Class Members’ causes of action, including legal uncertainties of the success of the claims in both negligence and breach of fiduciary duty; (b) the uncertainties were exacerbated by the length of the class period and the prospect that legal duties and standards of care evolve and change over time; (c) Ontario had raised relatively strong substantive and strong technical defences; (d) the likelihood of the necessity of individual damages assessments because aggregate damages would not be available imposed a high barrier to access to justice; and (e) the aging Student Class Members were confronted with the prospect of 5 to 8 years of more litigation. Based on these litigation risks, Class Counsel argued that an immediate $9.2 million net settlement would constitute a substantial success for the class and an outcome that was far better than the alternative of proceeding with the class action. Thus, Class Counsel submitted that the settlement, while not perfect, was well within the range of reasonableness.

[89] As noted in the introduction to this decision, my initial reaction to this argument was that it did not persuade me that the proposed settlement was within the range of reasonableness. Class Counsel did not plead and obtain certification of a class action just for or only for the students who were physically and sexually assaulted at the provincially operated schools for the deaf (now estimated to be about the 10% of the class membership who will submit claims). Class Counsel sought and obtained certification of a class action for a much larger group of claimants. The litigation risks identified by Class Counsel for this larger class were all known at the commencement of the action, including the circumstances that aggregate damages were likely not available with the attendant consequence that the need for individual damages assessments might give only false hope of substantive access to justice. It would have been known from the outset that the absence of a general power under the Class Proceedings Act, 1992 to aggregate the harm caused by the defendant provided Ontario with considerable negotiating leverage.

[90] For present purposes, the point is that this risk that the Class Proceedings Act, 1992 falls short of removing the barriers to access to justice in systemic negligence cases where individual issues trials are unavoidable was known from the outset, and my initial reaction was that this circumstance should not rise to the level as being an excuse for the capitulation to a poor settlement for the class as a whole, which was my initial assessment of the proposed settlement for the class as a whole. Put bluntly, if the known litigation risks for all but the Student Class Members who had been physically or sexually assaulted were so great that it was predictable that there would be nothing for them by way of settlement or trial, then Class Counsel should not have sought to have them included as their clients only to tell them later that it was within the range of reasonableness that 90% of the Student Class would receive no benefits from their participation in the class action.

[91] However, upon further reflection, I decided that the proposed settlement was within the range of reasonableness - not for the reasons advanced by Class Counsel, but for the simple reason that the Settlement Agreement was better than the alternative of proceeding to a trial. Put somewhat differently, the 10% of the Student Class would likely not achieve much more from proceeding further and the disappointment of the other Class Members in having been included in the class action was not a good reason to reject what would have been a good settlement for the smaller class membership. It seemed to me that only the Student Class Members with claims for physical or sexual assault had a reasonable likelihood of success and $9.2 million was within the range of reasonableness for settling these claims. The proposed settlement was a product of hard bargaining and it was preferable to approve the settlement than to give the class as a whole the false hope that continuing litigation would produce a more favourable outcome.

[92] I, therefore, concluded that having regard to all the factors that inform whether a court should approve a settlement, the settlement in the immediate case should be approved. The settlement did not have to be perfect, and while a poor settlement, it was within the range of reasonableness, especially given the weaknesses of the Class Proceedings Act, 1992 itself in providing access to justice in cases where individual issues trials to quantify the Class Member’s damages cannot be avoided.

4. Class Counsel’s Fee

[93] The fairness and reasonableness of the fee awarded in respect of class proceedings is to be determined in light of the risk undertaken by the lawyer in conducting the litigation and the degree of success or result achieved.[^19]

[94] Factors relevant in assessing the reasonableness of the fees of class counsel include: (a) the factual and legal complexities of the matters dealt with; (b) the risk undertaken, including the risk that the matter might not be certified; (c) the degree of responsibility assumed by class counsel; (d) the monetary value of the matters in issue; (e) the importance of the matter to the class; (f) the degree of skill and competence demonstrated by class counsel; (g) the results achieved; (h) the ability of the class to pay; (i) the expectations of the class as to the amount of the fees; and (j) the opportunity cost to class counsel in the expenditure of time in pursuit of the litigation and settlement.[^20]

[95] The court must consider all the factors and then ask, as a matter of judgment, whether the fee fixed by the agreement is reasonable and maintains the integrity of the profession.[^21]

[96] In the immediate case, as I shall now explain, it is my conclusion that provided that Class Counsel donate $1.5 million to a charity or charities for the deaf as shall be designated by further order of the court and provided that the fee, but not the donation, be reduced proportionately to the amount, if any, of the Settlement Fund that reverts to Ontario, Class Counsel should receive a fee of $3.75 million plus HST of $487,500.

[97] I begin my explanation with the observation that it remains to be determined whether the proposed settlement will provide $15 million of benefits to the class. Depending on the quantity and the quality of the take-up of physical and sexual assault claims and depending on the amount of the approved Class Counsel fee there is the possibility of the balance of the Settlement Fund reverting to Ontario. It is for this reason that Class Counsel’s fee should be reduced proportionately to the amount of the Settlement Fund, if any, that reverts to Ontario.

[98] Moving on in the explanation, ignoring the circumstance that the above analysis of the Settlement Agreement reveals that the settlement is based on approximately 10% of the Student Class Members benefiting from the $15 million Settlement Fund, a 25% contingency fee; i.e., a fee of $3.75 million plus disbursements plus HST is fair and reasonable.

[99] Put somewhat differently, had Class Counsel defined the Student Class to be only the victims of assaults, a 25% contingency fee would have been a reasonable and fair compensation to be paid by those Student Class Members. Class Counsel assumed a significant risk for these Student Class Members and achieved a meaningful success for them that justifies a fee of $3.75 million.

[100] The question then is whether the circumstance in the immediate case that 90% of the Student Class Members and 100% of the Family Class Members receive no benefit from the $15 million Settlement Fund disqualifies a counsel fee of $3.75 million as being fair and reasonable to the Class Members.

[101] While the risk undertaken by Class Counsel was undoubtedly high, for the reasons expressed above, the results achieved for the whole of the Class was disappointing. This class action was not a class action for the lower-hanging litigation fruit of vindicating individual victims of assaults perpetrated by the guardians and teachers, it was a class action with the aim of achieving substantive access to justice for the victims of systemic negligence and systemic breaches of fiduciary duty.

[102] That aim was this class action’s raison d'être, but Class Counsel failed in the mission of the class action. For 90% of the Student Class and 100% of the Family Class, the outcome of the class action being settled is actually worse than had the action never have been brought on their behalf. With the approval of the settlement, their causes of action are now extinguished for no consideration. Theoretically speaking, the majority of the class is worse off than the students of Centre Jules-Léger, for whom the action will likely be discontinued.

[103] Accepting that Class Counsel should be rewarded for taking on the risk of achieving access to justice for the Class Members, they are not to be rewarded simply for taking on risk divorced of what they actually achieved. Class Counsel did not take on a retainer for only 10% of the Class Membership, and Class Counsel’s fee must be fair and reasonable for all of the Class Membership. Placing importance on providing fair and reasonable compensation to Class Counsel and providing incentives to lawyers to undertake class actions does not mean that the court should ignore the other factors that are relevant to the determination of a reasonable fee.[^22]

[104] Thus, for 90% of the Student Class and 100% of the Family Class, it cannot be said that Class Counsel earned a contingency fee of 25%. Put somewhat differently, considering all the factors that go into assessing the reasonableness of a lawyer’s fee, I cannot as a matter of judgment conclude that without adjustment the contingency fee fixed by the Settlement Agreement to be paid by the whole class is reasonable and maintains the integrity of the profession.

[105] What then to be done? Given the success achieved for some of the Class Members, it is not appropriate to make Ontario the beneficiary of a reduction of Class Counsel’s fee. Rather, it should be the 90% of the Student Class and 100% of the Family Class, that should benefit from the reduced fee. This outcome, which does not increase the financial burden on Ontario, can be affected by approving the $3.75 million fee provided that Class Counsel donate $1.5 million of it to a charity or charities for the deaf as shall be designated by further order of the court.

[106] Fortuitously this approach (perhaps also good tax planning for the law firm) has the added benefit of ameliorating the Class Members’ disappointment and in effect, introduces a cy-près element to the overall settlement that better achieves the substantive access to justice and behaviour modification goals of a class proceeding and that also addresses some of Mr. Smith’s objections to the Settlement Agreement. Indeed, this approach brings dignity and respect to the majority of the Class Membership who will now actually achieve a substantial benefit from not opting out and from participating in the class action.

[107] I appreciate that Ontario never envisioned that Class Counsel’s fee could be used to introduce compensation for the benefit of the Class Members who are delivering releases but receiving no compensation for their claims, but Ontario bargained away its right to participate in how the court determined the quantum of Class Counsel’s fee and no additional burden is being imposed on Ontario.

[108] Moreover, the outcome, maintains the honour of the profession and Class Counsel’s loyalty to the whole class membership. The settlement fund belongs to the whole class. Where there is a contingency fee, the whole class agrees to share the settlement fund with class counsel, the court’s order in the immediate achieves a fair sharing of the settlement fund. The outcome better serves the goals and purposes of the Class Proceedings Act, 1992. The result is that Class Counsel earns a fee commensurate to the results achieved for the collective that was the Student Class and the Family Class who no longer will have any reason to feel to have been exploited for their loyalty to the class action.

F. Conclusion

[109] Therefore, for the above reasons, I approve the Settlement Agreement and the requests for ancillary relief, and subject to the above conditions, I approve Class Counsel’s fee request. In the circumstances of this case, I decline to award Mr. Welsh an honorarium.

[110] I suggest that Class Counsel amend the notice to the Class Members of the settlement to invite the Class Members to suggest candidates for the charitable donation making it clear that the court must ultimately approve Class Counsel’s choice.

Perell, J.

Released: May 24, 2018

COURT FILE NO.: CV-15-534042 CP

DATE: 20180524

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Christopher Welsh

Plaintiff

– and –

Her Majesty the Queen in Right of the Province of Ontario

Defendant

REASONS FOR DECISION

PERELL J.

Released: May 24, 2018

[^1]: Class Proceedings Act, 1992, S.O. 1992, c. 6. [^2]: Family Law Act, R.S.O. 1990, c. F.3. [^3]: Law Society Act, R.S.O. 1990, c. L.8. [^4]: Eldridge v. British Columbia (Attorney General), 1997 CanLII 327 (SCC), [1997] 3 S.C.R. 624. [^5]: Education Act, R.S.O. 1990, c. E.2. [^6]: Seed v. Ontario, 2012 ONSC 6131. [^7]: Proceedings Against the Crown Act, R.S.O. 1990, c. P.27. [^8]: Courts of Justice Act, R.S.O. 1990, c. 43. [^9]: Welsh v. Ontario, 2016 ONSC 5319. [^10]: Seed v. Ontario, 2017 ONSC 3534. [^11]: Fantl v. Transamerica Life Canada, [2009] O.J. No. 3366 (S.C.J.) at para. 57; Farkas v. Sunnybrook and Women’s Health Sciences Centre, [2009] O.J. No. 3533 at para. 43 (S.C.J.); Kidd v. Canada Life Assurance Company, 2013 ONSC 1868. [^12]: Fantl v. Transamerica Life Canada, [2009] O.J. No. 3366 at para. 59 (S.C.J.); Corless v. KPMG LLP, [2008] O.J. No. 3092 (S.C.J.) at para. 38; Farkas v. Sunnybrook and Women’s Health Sciences Centre, [2009] O.J. No. 3533 at para. 45 (S.C.J.); Kidd v. Canada Life Assurance Company, 2013 ONSC 1868. [^13]: Baxter v. Canada (Attorney General) (2006), 2006 CanLII 41673 (ON SC), 83 O.R. (3d) 481 (S.C.J.) at para. 10. [^14]: Al-Harazi v. Quizno’s Canada Restaurant Corp. (2007), 49 C.P.C. (6th) 191 (Ont. S.C.J.) at para. 23. [^15]: Parsons v. Canadian Red Cross Society, [1999] O.J. No. 3572 (S.C.J.) at para. 70; Dabbs v. Sun Life Assurance Company of Canada (1998), 1998 CanLII 14855 (ON SC), 40 O.R. (3d) 429 (Gen. Div.). [^16]: Fraser v. Falconbridge Ltd., [2002] O.J. No. 2383 (S.C.J.) at para. 13; McCarthy v. Canadian Red Cross Society (2007), 158 ACWS (3d) 12 (Ont. S.C.J.) at para. 17. [^17]: 2016 ONSC 2662 at para. 26. [^18]: 2016 ONSC 2662, at para. 3. [^19]: Parsons v. Canadian Red Cross Society, 2000 CanLII 22386 (ON SC), [2000] O.J. No. 2374 (S.C.J.) at para. 13; Smith v. National Money Mart, 2010 ONSC 1334 at paras. 19-20, varied 2011 ONCA 233; Fischer v. I.G. Investment Management Ltd., [2010] O.J. No. 5649 (S.C.J.) at para. 25. [^20]: Smith v. National Money Mart, 2010 ONSC 1334, varied 2011 ONCA 233; Fischer v. I.G. Investment Management Ltd., [2010] O.J. No. 5649 (S.C.J.) at para. 28. [^21]: Commonwealth Investors Syndicate Ltd. v. Laxton, [1994] B.C.J. No. 1690 at para. 47 (B.C.C.A.). [^22]: Smith Estate v. National Money Mart Co., 2011 ONCA 233 at para. 92.