Court File and Parties
COURT FILE NO.: CV-10-397096CP DATE: 20181205 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: TRILLIUM MOTOR WORLD LTD., Plaintiff AND: GENERAL MOTORS OF CANADA LIMITED and CASSELS BROCK & BLACKWELL LLP, Defendants
BEFORE: McEwen J.
COUNSEL: David Sterns, Andy Seretis, Allan Dick, Marie-Andree Vermette, and Michael Statham, for the Plaintiff Peter H. Griffin and Danielle Glatt, for the Defendant Cassels Brock & Blackwell LLP Sean Campbell, Natasha MacFarland, and Natalie Renner, for the Defendants General Motors of Canada Limited Robert Thornton and Rachel Bengino, for the Proposed Interim Receiver FTI Consulting Canada Inc.
HEARD: July 27 and September 18, 2018
Endorsement
[1] This endorsement deals only with two issues:
- approval of the plan of distribution and claims process; and
- the approval of the retainer agreement between Class Counsel and Trillium, as well as fees and disbursements of Class Counsel.
Approval of Plan of Distribution and Claims Process
[2] For the reasons that follow, I approve the plan of distribution and claims process proposed by Class Counsel.
[3] The only real area of contention involves Class Counsel’s proposal to distribute the proceeds of the judgment to each of the 141 Class Members on a proportional basis. Each share of the proceeds will be equal as a percentage to the amount of the wind-down payment that each Class Member received from General Motors of Canada Limited (“GM”) pursuant to the Wind-Down Agreement (the “WDA”) compared to the total of the wind-down payments received by all Class Members.
[4] Class Counsel gave notice of its proposal to the Class Members. In response, it received 13 comments: 7 support Class Counsel’s plan of distribution, and 6 oppose.
[5] At the hearing, in addition to Class Counsel, two former dealers attended and made submissions.
[6] Mr. Robert Bell, a former Saturn dealer, opposed the proportional distribution. He argued that an equal distribution of the proceeds of the judgment between all 141 Class Members was more equitable. His view is in keeping with the others who oppose the distribution on a proportional basis.
[7] Mr. Bell made a number of submissions. He focused primarily on the fact that it was the Saturn dealers who initiated proceedings against GM. He also submitted that equal distribution was fairer since Saturn dealers did not have the benefit of fleet sales and other sales advantages available to the GM dealers since they dealt strictly with retail.
[8] Another dealer, Mr. Richard Tassé, also made submissions. He supported Class Counsel’s position. Mr. Tassé submitted that a proportional distribution should reflect the WDA payments that were paid, since the larger dealers presumably would have received a greater amount in a hypothetical negotiation than the smaller dealers.
[9] Class Counsel also made a number of submissions focusing on the fact that Class Members likely did not suffer equal losses. I accept the argument that larger high-volume dealers likely suffered greater losses given their higher sales. Further, a proportional distribution does not materially decrease the amounts the smaller dealers would receive, but an equal distribution would greatly diminish the amount the larger dealers would receive in comparison to their WDA payments.
[10] I therefore agree with Class Counsel and Mr. Tassé. While Mr. Bell raises interesting arguments for the Saturn and smaller dealers, in my view it is overall fairer to allow for a greater recovery for the larger dealers for the reasons outlined by Mr. Tassé and Class Counsel.
[11] No plan is perfect but, in my view, the plan proposed by Class Counsel and Mr. Tassé is overall fairer and more proportional.
[12] I also accept Class Counsel’s submission that honourariums ought to be paid to Trillium and to Sheridan Chevrolet Cadillac Ltd. in the amounts of $50,000.00 and $25,000.00, respectively. This was not opposed. I accept the submissions that Sheridan was instrumental in raising money from Class Members to pay for disbursements and security for costs. Similarly, there is no doubt that Trillium had a significant involvement in the proceedings both by way of discovery and trial.
[13] Under these circumstances, the honourariums are justified and ought to be paid.
[14] I am also of the view that the Class Member contributions received by Class Counsel ought to be reimbursed to the contributors with an interest rate of 15% from the date of the contribution. These monies were paid when the risk was great. Some of those payors did not receive the benefit of the judgment. Overall, it is fair to compensate them at a rate of interest higher than the norm to take into account their significant contribution in the face of the aforementioned significant risk.
[15] With respect to the Notice of Judgment proposed by Class Counsel, Class Counsel can arrange for an appointment before me to settle the wording of the Notice in light of these reasons and my previous reasons concerning quantum. At that meeting any details concerning particulars of the Notice can be settled.
Motion for Approval of the Retainer Agreement, Fees and Disbursements
[16] The retainer agreement executed in May 2011 is approved as are the proposed fees and disbursements pursuant to s. 32(2) of the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the “CPA”).
[17] The retainer agreement complies with the provisions of s. 32(1) of the CPA.
[18] Furthermore, the amount that Class Counsel sought to recover is less than the amount of fees they expended pursuing the action and no Class Members oppose. The action was hotly contested and Class Counsel took on significant risk. The proposal by Class Counsel to receive the costs payable by Cassels, Brock plus 20% of the judgment amount and interest, is very fair and reasonable in these circumstances.
[19] This approval, however, is without prejudice to GM’s outstanding application to have a trustee or receiver appointed and to obtain payment of the costs that I awarded to Trillium payable by Cassels, Brock. This dispute will be dealt with shortly by me by way of a subsequent decision.
[20] This approval should, however, allow for the payment of the 20% of the judgment amount and interest to Class Counsel which is not being contested by GM. The remaining funds can be distributed as per the recent November 23, 2018, Consent Order, with the exception of the costs paid by Cassels, Brock which are subject to the outcome of the priority dispute.
[21] Last, I should acknowledge that GM and the proposed receiver, FTI Consulting Canada Inc. (“FTI”), made submissions with respect to the approval of the retainer agreement and the approval of the fees and disbursements.
[22] I agreed to hear those submissions even though Class Counsel submitted that GM and FTI had no standing.
[23] In the unique circumstances of this case it was appropriate to hear from GM and FTI only with respect to the issue as to how this approval could affect the dispute concerning priority. Otherwise, I accept Class Counsel’s submission that in normal circumstances unrelated persons, such as creditors, typically do not have a role to play in the approval process.
[24] Notwithstanding GM’s claim that it ranks in priority to Class Counsel, there is no basis not to approve the retainer agreement and the fees and disbursements as per ss. 32(1-2) of the CPA. The agreement is clearly enforceable and what remains is a contest between Class Counsel and GM with respect to priority.
[25] I do not accept GM’s submission that the approval should take place as per s. 32(4) of the CPA. The retainer agreement complies with s. 32(1) of the CPA and, to the extent necessary, with the Solicitors Act, R.S.O. 1990, c. S.15. GM’s proposal would undermine Class Counsel’s argument that it has priority pursuant to s. 32(3) of the CPA. Approving the retainer agreement still preserves GM’s right to argue that its security interest ranks in priority to Class Counsel’s first charge.
[26] In my view, since s. 32(1) has been complied with, the approval should be granted as per s. 32(2) with the priority dispute to be determined in that context.
[27] As noted, separate reasons will follow with respect to the priority dispute between GM and Class Counsel. In the interim I have protected GM’s interest.
Disposition
[28] For the reasons above, I approve the plan of distribution and claims process purposed by Class Counsel.
[29] I also approve the retainer agreement, proposed fees and disbursements pursuant to s. 32(2) of the CPA.