COURT FILE NO.: CV-20-00648592-00CP
DATE: 20210416
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MATTHEW HOY, JUSTIN STOREY
Plaintiffs
-and-
EXPEDIA GROUP, INC., EXPEDIA CANADA CORPORATION, TRAVELSCAPE LLC, HOTELS.COM LP, HOTELS.COM GP, LLC, HRN 99 HOLDINGS, LLP, TOUR EAST HOLIDAYS (CANADA) INC., TRIVAGO N.V., BOOKING HOLDINGS INC., BOOKING.COM B.V.
Defendants
James Bunting Anisah Hassan, and Abhishek Vaidyanathan for the Plaintiffs
Chris Naudie and Adam Hirsh for the Defendants Expedia Group, Inc., Expedia Canada Corporation, Travelscape LLC, Hotels.com LP, Hotels.com GP, LLC, HRN 99 Holdings, LLP and Tour East Holidays (Canada) Inc.
Byron Shaw and Nikiforos Iatrou for the Defendant Trivago N.V.
Nicole Henderson for the Defendant Bookings Holdings Inc. and Booking.com B.V.
Proceeding under the Class Proceedings Act, 1992
HEARD: April 16, 2021
PERELL, J.
REASONS FOR DECISION
[1] In this consumer protection and competition law proposed class action under the Class Proceedings Act, 1992,[^1] the Plaintiffs Matthew Hoy and Justin Storey sue: (a) Expedia Group, Inc., Expedia Canada Corporation, Travelscape LLC, Hotels.com LP, Hotels.com GP, LLC, HRN 99 Holdings, LLP and Tour East Holidays (Canada) Inc.; (b) Trivago N.V; and, (c) Bookings Holdings Inc. and Booking.com B.V. for alleged to be false and misleading representation about the price and availability of accommodation.
[2] The Plaintiffs seek $750 million in compensatory damages and $50 million in punitive damages.
[3] In this motion, the Plaintiffs seek court approval of a third-party funding agreement among: (a) the Plaintiffs; (b) their lawyers, Tyr LLP; and, (c) HF4, Harbour Fund IV, L.P., which is part of Harbour Litigation Funding Limited, a privately-owned litigation funding group based in London, England.
[4] The general test for approval of a third-party funding agreement is that the agreement should not be champertous or illegal and it must be a fair and reasonable agreement that facilitates access to justice while protecting the interests of the defendants.[^2]
[5] Ontario courts have developed a four-factor test to approve a third-party litigation funding agreement, which requires that the court be satisfied that: (a) the agreement must be necessary in order to provide access to justice; (b) the access to justice facilitated by the third-party funding agreement must be substantively meaningful; (c) the agreement must be a fair and reasonable agreement that facilitates access to justice while protecting the interests of the defendants; and (d) the third-party funder must not be overcompensated for assuming the risks of an adverse costs award because this would make the agreement unfair, overreaching, and champertous.[^3]
[6] Third-party litigation funding is acceptable as promoting the important objectives of class proceedings, including promoting access to justice and behaviour modification, and may be justified in class proceedings as a matter of necessity.[^4]
[7] On October 20, 2020, the Plaintiffs entered into a Class Proceedings Contingency Fee Retainer Agreement with Tyr LLP setting out the terms of Tyr LLP retainer to be Class Counsel. Under the contingency fee agreement, which is subject to court approval, Tyr LLP agreed to prosecute the action in exchange for a 20.8 per cent contingency fee. The contingency fee agreement contains the usual terms that the plaintiffs retain the right to make all decisions regarding the conduct of the action, provided the decisions are in the best interests of the class.
[8] The Plaintiffs are persons of modest means and do not have the resources to finance the class action, and it is obvious that any individual recovery is a trifling small part of the aggregate of the defendants’ exposure to liability. Neither the Plaintiffs nor Tyr LLP are prepared to proceed with the class action without third-party funding. A funding agreement is necessary for access to justice.
[9] On October 24, 2020, the Plaintiffs and Tyr LLP signed a third-party funding agreement with Harbour Fund IV. It is a litigation investment fund with capital of £350 million (approximately $520 million) to invest in litigation-related activities worldwide. However, it does not have assets in Canada.
[10] Harbour Fund IV is one of the funds advised by Harbour Litigation Funding Limited.
[11] Harbour Litigation Funding Limited is subject to the regulatory oversite of the United Kingdom’s financial services industry. It is a founding member of the Association of Litigation Funders (“ALF”), the self-regulatory body responsible for third-party litigation funding in England & Wales.
[12] Harbour Fund IV has adopted and abides by the ALF’s Code of Conduct for Litigation Funders, which sets out best practice standards for litigation funders. The Code includes provisions to ensure non-interference in the conduct of litigation, confidentiality of information, and capital adequacy.
[13] Before signing the agreement, the Plaintiffs received independent legal advice from Paul Davis of Paliare Roland Rosenberg Rothstein LLP. Mr. Davis is a litigation lawyer with extensive experience in class actions.
[14] The third-party funding agreement with Harbour Fund IV, which is labelled an Investment Agreement, is similar to other litigation funding agreements that have been approved in other class actions.[^5] Pertinent terms of the Investment Agreement for which approval is sought in the immediate case are the following:
a. Harbour Fund IV agrees to pay 80 per cent of Class Counsel’s legal fees as they become due, 100 per cent of disbursements related to the Action, and any adverse cost award (by way of indemnity), all subject to a confidential prescribed maximum (which has been disclosed to the court in an unredacted copy of the agreement).
b. Harbour Fund IV’s adverse cost indemnity expressly includes an order for security for costs.
c. Harbour Fund IV agrees that any order to enforce its adverse costs indemnity may be enforced in any jurisdiction.
d. In the event of any settlement or judgment in favour of the Class, Harbour Fund IV is entitled to recover the amounts it has invested plus 12.5 per cent of the proceeds of the settlement or judgment up to a maximum total payable amount set out in clause 10.2 of the agreement.
e. The combined total of Class Counsel’s contingency fee and Harbour Fund IV’s recovery from the proceeds shall not exceed 33.3 per cent of the proceeds.
f. The Plaintiffs retain exclusive control of the action and the exclusive right to instruct Class Counsel.
g. Harbour Fund IV is entitled to information (within the confines of the deemed undertaking rule), but cannot interfere with the litigation, and the decision to settle, continue, or discontinue the Action is at all times within the exclusive control of the Plaintiffs.
h. Harbour Fund IV agrees to maintain confidentiality and privilege over information received.
i. The parties’ rights to terminate the Investment Agreement are narrowly prescribed, and termination requires approval of the Court to become effective.
[15] Following receipt of the Plaintiffs’ motion, which included a redacted copy of the Investment Agreement, the defendant Expedia Canada raised a number of concerns relating to the enforcement of the terms of the Investment Agreement and Expedia Canada’s ability to recover costs in the event of a future costs order in favour of the defendants.
[16] Expedia Canada requested that Harbour Fund IV agree to an undertaking and a form of order similar to the undertaking and the form of order that was approved by Justice Morgan in David v. Loblaw.[^6] In that case, Justice Morgan reviewed an unredacted copy of the funding agreement to assess the adequacy of the indemnity having regard to the funding cap, which was not disclosed to the defendants.
[17] While taking the position that it was under no obligation to do so, Harbour Fund IV volunteered to provide the undertaking that is attached as Schedule “A” to these Reasons for Decision and the Plaintiffs indicated that they would request the court to grant an Order in the form of the Order as set out in in Schedule “B” to these Reasons for Decision, which was the form of the Order that Expedia Canada had proposed.
[18] The key terms of the undertaking and the form of order are: (a) Harbour Fund IV attorns to the jurisdiction of the Ontario Superior Court for the purposes of the action; (b) Harbour Fund IV shall not assign the Investment Agreement without notice to the Defendants and leave of the Court; (c) Harbour Fund IV shall be bound by any confidentiality/protective order issued by the Court; (d) Harbour Fund IV shall be bound by the deemed undertaking rule in respect of any evidence obtained by the Defendants; and (e) Harbour Fund IV will undertake to be bound by any cost order issued by the Court in favour of the Defendants, up to but not exceeding the redacted funding cap with respect to cost orders set out in Investment Agreement.
[19] Expedia Canada submitted that the Court should review the funding cap to assess whether it is sufficient to cover any likely cost awards and if the Court determines that the redacted funding cap is sufficient, then Expedia Canada would take no further position on this motion, subject to the issuance of the proposed form of order and the delivery of the related undertaking by Harbour Funding IV.
[20] The other Defendants took no position on the funding motion.
[21] Courts do not bargain with the parties about the form of an Order, and courts do not have obligations to give assurances to the parties about the adequacy of funding agreements to protect the interests of the defendants.
[22] That said, having reviewed the unredacted version of the Investment Agreement, I am satisfied that the immediate case is an appropriate one for the approval of the third-party funding agreement. I am satisfied that in accordance with the law the agreement is not champertous or illegal and is a fair and reasonable agreement that facilitates access to justice while protecting the interests of the defendants.
[23] Order accordingly.
Perell, J.
Released: April 16, 2021
Schedule “A”
UNDERTAKING
Capitalized terms used in this document and not defined herein will have the respective meanings ascribed to them in the Investment Agreement, dated October 24, 2020 (the "Investment Agreement").
PARTY
NAME
Harbour Fund IV, L.P. (“HF4”)
ADDRESS
Ugland House, PO Box 309, Grand Cayman, Cayman Islands KY1-1104
ATTENTION
Oliver Way, Mark King and the Legal Team
Oliver.Way@Harbourlf.com, Mark.King@Harbourlf.com & Legal@Harbourlf.com
DEFINITIONS
COURT ORDERED COSTS
Means any legal fees and disbursements (including any interest thereon) that the Court orders the Claimants to pay to one or more of the Defendants, whether such order is made before or after the effective date of any termination of the Agreement, up to but not exceeding in aggregate the redacted amount specified at section 3.5 of the Agreement for all Defendants, provided that the applicable legal fees and disbursements were incurred by the Defendants after being served with the Statement of Claim and prior to the effective date of any termination of the Agreement.
CLAIMANTS
Matthew Hoy and Justin Storey
COURT
The Ontario Superior Court, or any other court in Canada having jurisdiction over the Proceedings.
INVESTMENT AGREEMENT
The Investment Agreement dated October 24, 2020 between HF4, the Claimants and Tyr LLP.
PROCEEDINGS
The legal proceedings in connection with all claims, actions and/or proceedings under the case captioned Hoy and Storey v. Expedia Group, Inc. et al., pending in Ontario Superior Court, File No. CV-20-00648592-00CP, including any appeals therefrom.
DEFENDANTS
Means, individually or collectively, Expedia Group, Inc., Expedia Canada Corporation, Travelscape LLC, Hotels.com LP, Hotels.com GP, LLC, HRN 99 Holdings, LLP, Tour East Holidays (Canada) Inc., Trivago N.V., Booking Holdings Inc., Booking.com B.V.
GOVERNING LAW
The law of the Province of Ontario
BY THIS UNDERTAKING, HF4 for the benefit of each Defendant:
(a) agrees to comply with and satisfy any Court Ordered Costs made by the Court;
(b) attorns and submits to the jurisdiction of the Court:
(i) in relation to any order of the Court in the Proceedings that HF4 pay any Court Ordered Costs; and
(ii) for the purposes of the Defendant enforcing any obligation of HF4 to pay the final, quantified amount of any Court Ordered Costs.
(c) in the event that any Court Ordered Costs is not paid by Claimants within twenty-eight (28) days of falling due, hereby consents to any joinder application made by any of the Defendants in the Proceedings for the purpose of seeking an order that HF4 pay any Court Ordered Costs, and agrees that this Undertaking is good and sufficient proof of such consent;
(d) agrees to pay to the Defendant the final, quantified amount of any Court Ordered Costs such that the Defendant may enforce the payment of that amount as a debt due and owing by HF4 to the Defendant;
(e) agrees to notify the Defendants in writing of any termination of the Investment Agreement within 3 days of the court approving such termination. For the purpose of this paragraph, HF4's obligation will be satisfied by delivery of the required notice by email to counsel of record for the Defendants in the Proceedings.
(f) agrees that this Undertaking shall survive any termination of the Investment Agreement until any Court Ordered Costs that accrued up to and as of the effective date of termination have been paid in full and to the satisfaction of the Defendant, regardless of the timing of the court's order;
(g) agrees that it will not revoke or withdraw this Undertaking prior to meeting any accrued obligations to pay Court Ordered Costs in favour of the Defendant; and
(h) acknowledges having received valuable consideration for this Undertaking.
DATED this ____ day of April, 2021
Executed as an undertaking
By Harbour Fund IV, LP By its general partner, Harbour Fund IV GP, Ltd.
Name and Title:
Schedule “B”
Court File No. CV-20-00648592-00CP
ONTARIO
SUPERIOR COURT OF JUSTICE
THE HONOURABLE
FRIDAY, THE 16TH
JUSTICE PERELL
DAY OF APRIL, 2021
B E T W E E N:
MATTHEW HOY, JUSTIN STOREY
Plaintiffs
and
EXPEDIA GROUP, INC., EXPEDIA CANADA CORPORATION,
TRAVELSCAPE LLC, HOTELS.COM LP, HOTELS.COM GP, LLC, HRN 99 HOLDINGS, LLP, TOUR EAST HOLIDAYS (CANADA) INC., TRIVAGO N.V., BOOKING HOLDINGS INC., BOOKING.COM B.V.
Defendants
Proceeding under the Class Proceedings Act, 1992.
ORDER
THIS MOTION, made by the Plaintiffs, Matthew Hoy and Justin Storey, for an Order approving the terms of an investment agreement (the “Investment Agreement”) dated October 24, 2020 made among the Plaintiff, Tyr LLP (“Class Counsel”), and Harbour Fund IV, L.P. (“HF4”), a redacted version of which is attached as Schedule “A” to this Order, was heard on April 16, 2021.
ON READING the Motion Record of the Plaintiffs containing the Affidavit of Matthew Hoy affirmed March 3, 2021 and the Affidavit of Oliver Way affirmed March 2, 2021 and on hearing the submissions of the lawyers for the Plaintiffs as to whether the Investment Agreement should be approved, and if so on what terms;
AND UPON being advised that subject to the terms of this Order and the delivery of the Undertaking attached as Schedule “B” to this Order, the Defendants do not take a position in respect of this motion;
AND UPON concluding that, in the circumstances, the Plaintiffs’ motion should be granted on the following terms;
- THIS COURT ORDERS that:
(a) Capitalized terms not defined in this Order bear the meanings ascribed to them in the Investment Agreement;
(b) The Investment Agreement is approved, including HF4’s entitlement as a Trust Beneficiary calculated pursuant to Schedule 2 of the Investment Agreement, subject to the terms and conditions herein;
(c) The Plaintiffs and/or HF4 shall not assign the Investment Agreement in whole or in part to any other party without prior notice to the Defendants and Court approval of such assignment;
(d) HF4 submits and attorns to the jurisdiction of the Ontario Superior Court of Justice for all purposes related to this action, including in relation to the enforcement of any costs order made in favour of the Defendants or any of them;
(e) To the extent that any evidence obtained from the Defendants is provided to HF4, then HF4 shall be bound by Rule 30.1.01 of the Rules of Civil Procedure and shall be deemed to be a party for the purposes of that Rule;
(f) To the extent that any documents or information disclosed to and/or used by HF4 pursuant to the Investment Agreement are governed by a confidentiality order and/or other protective order issued by the Court, HF4 shall be bound by the terms of such order(s). For greater certainty, no documents or information relating to the action produced or disclosed by a Defendant to the Plaintiffs and designated by a Defendant as confidential when so produced or disclosed shall be disclosed to HF4 unless and until a confidentiality and/or other protective order has been issued by the Court;
(g) To the extent that HF4 provides such documents to its insurer or legal advisors, the insurer or legal advisors shall be similarly bound by any such confidentiality order and/or other protective order(s) issued by the Court;
(h) If there is any inconsistency between the terms of the Investment Agreement and those in any confidentiality order and/or any other protective order(s) issued by Court with respect to documents and information relating to this action, the terms of the confidentiality order and/or other protective order(s) will prevail; and
(i) The form of Undertaking attached to this Order as Schedule "B" is approved.
- THIS COURT ORDERS THAT there shall be no costs of this motion.
The Honourable Justice Perell
COURT FILE NO.: CV-20-00648592-00CP
DATE: 20210416
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MATTHEW HOY, JUSTIN STOREY
Plaintiffs
- and -
EXPEDIA GROUP, INC., EXPEDIA CANADA CORPORATION, TRAVELSCAPE LLC, HOTELS.COM LP, HOTELS.COM GP, LLC, HRN 99 HOLDINGS, LLP, TOUR EAST HOLIDAYS (CANADA) INC., TRIVAGO N.V., BOOKING HOLDINGS INC., BOOKING.COM B.V.
Defendants
REASONS FOR DECISION
PERELL J.
Released: April 16, 2021
[^1]: S.O. 1992, c. 6.
[^2]: Flying E Ranche Ltd. v. Canada (Attorney General), 2020 ONSC 8076; Drynan v Bausch Health Companies Inc., 2020 ONSC 4; JB & M Walker Ltd./1523428 Ontario Inc. v. TDL Group, 2019 ONSC 999; David v. Loblaw, 2018 ONSC 6469; Marriott v General Motors of Canada Company, 2018 ONSC 2535; Houle v. St. Jude Medical Inc., 2017 ONSC 5129 affd 2018 ONSC 6352 (Div. Ct.); Bayens v. Kinross Gold Corp., 2013 ONSC 4974; Dugal v. Manuflife Financial Corp., 2011 ONSC 1785.
[^3]: Drynan v Bausch Health Companies Inc., 2020 ONSC 4; JB & M Walker Ltd./1523428 Ontario Inc. v. TDL Group, 2019 ONSC 999; Houle v. St. Jude Medical Inc., 2017 ONSC 5129 affd 2018 ONSC 6352 (Div. Ct.).
[^4]: Drynan v Bausch Health Companies Inc., 2020 ONSC 4; David v. Loblaw, 2018 ONSC 6469; Houle v. St. Jude Medical Inc., 2017 ONSC 5129, affd 2018 ONSC 6352 (Div. Ct.); Bayens v. Kinross Gold Corp., 2013 ONSC 4974; Dugal v. Manuflife Financial Corp., 2011 ONSC 1785.
[^5]: Flying E Ranche Ltd. v. Canada (Attorney General), 2020 ONSC 8076; Drynan v. Bausch Health Companies Inc., 2020 ONSC 4379; JB & M Walker Ltd./1523428 Ontario Inc. v. TDL Group, 2019 ONSC 999; Houle v St Jude Medical Inc., 2018 ONSC 6352 (Div. Ct.), aff’g 2017 ONSC 5129; Bayens v. Kinross Gold Corp, 2013 ONSC 4974.
[^6]: David v. Loblaw, 2018 ONSC 6469.