COURT FILE NO.: CV-15-53262500-CP Reddock v. Canada (Attorney General), 2021 ONSC 8158 COURT FILE NO.: CV-17-570771-00CP DATE: 2021-12-10
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
CHRISTOPHER BRAZEAU and DAVID KIFT Plaintiffs
- and -
ATTORNEY GENERAL OF CANADA Defendant
Proceeding under the Class Proceedings Act, 1992
AND BETWEEN:
JULLIAN JORDEA REDDOCK Plaintiff
- and -
ATTORNEY GENERAL OF CANADA Defendant
Proceeding under the Class Proceedings Act, 1992
Counsel: James Sayce, Nathalie Gondek, Charlotte-Anne Malischewski, and Jamie Shilton for the Plaintiffs Lucan Gregory for the Defendant Shantona Chaudhury for the Law Foundation of Ontario Michael Rosenberg, James Sayce, Nathalie Gondek, Charlotte-Anne Malischewski, and Jamie Shilton for the Plaintiff Lucan Gregory for the Defendant Shantona Chaudhury for the Law Foundation of Ontario
HEARD: November 23, 2021
PERELL, J.
REASONS FOR DECISION
A. Introduction
[1] This motion requires the court to consider the authority of the Law Foundation of Ontario in administering its Class Proceedings Fund when a class action enters the individual issues stage. Because most class actions settle, this motion requires the court to explore largely unexplored legal territory about the administration of a class action at the individual trials stage, a stage which rarely occurs in practice. This motion requires the court for the first time to undertake an intensive interpretative analysis of the interrelationship between the Class Proceedings Act, 1992,[^1] sections 52 to 59.5 of the Law Society Act,[^2] and Ont. Reg. 771/92, a regulation made pursuant to the Law Society Act.
[2] The factual background to this motion is that there were summary judgments in two Ontario class actions. The actions were brought by representative plaintiffs on behalf of inmates of federal penitentiaries who had been unlawfully placed in solitary confinement. From the summary judgments, the class members recovered an aggregate damages award of approximately $41 million. Individual issues trials were ordered for the inmates/class members to recover additional compensation for their injuries.
[3] From the aggregate damages award and costs awards, the Law Foundation was reimbursed its disbursements of approximately $0.5 million, and it received statutory levies, i.e., a share of the class members’ judgments. The levies recovered by the Law Foundation totaled approximately $2.7 million.
[4] The two class actions are continuing for a distribution of the net aggregate damages awarded and for individual issues trials. It is the Law Foundation’s position that as a matter of statutory interpretation, it cannot provide litigation support or adverse costs protection for the individual issues trial stage. The Law Foundation, nevertheless, submits that it is entitled to a 10% levy from what a class member recovers at his or her individual issues trial.
[5] This motion requires the court to answer the following questions: (a) Does the Law Foundation have the statutory authority to provide litigation support for the individual issues stage of a class proceeding? (b) Does the Law Foundation have the statutory authority to provide adverse costs protection at the individual issues stage of a class action should the individual class member fail to prove his or her individual claim? (c) If the Law Foundation provides litigation support for the common issues stage, is it then obliged to provide litigation support for the individual issues stage of the proceeding? and (d) Does the Law Foundation’s statutory levy extend to a recovery of a share of the class member’s individual issues judgment regardless of whether the Law Foundation provides litigation support or adverse costs protection for the individual issues trial?
[6] As I shall explain below, the answers to these questions are: (a) yes; (b) yes; (c) no; and (d) yes.
[7] The following exegesis of the legislation reveals that: (a) the Law Foundation may (not must) approve litigation support for individual issues trials if its Class Proceedings Committee approves litigation support; and (b) the Law Foundation’s levy encompasses all of the collective and individual award recoveries in a class proceeding.
B. The Background to the Motion
[8] Without getting into the granular factual details - which it is not necessary to do to decide this motion - the underlying dispute between class counsel and the Law Foundation arose in the context of three class actions, two in Ontario and one in Québec. Acting in concert, these three class proceedings had together entered into the individual issues stage after successful summary judgment motions.
[9] However, without getting into the granular factual details, it is necessary to contextualize the interpretative issues in the immediate case with some information about how and why the dispute between class Counsel and the Law Foundation of Ontario comes before the court.
[10] For present purposes, the following background details are sufficient.
a. I have been case managing two Ontario class actions, Brazeau v. Canada (Attorney General) and Reddock v. Canada (Attorney General).
b. Pursuant to the Québec Code of Civil Procedure,[^3] Justice Masse, of the Superior Court of Québec has been case managing the Québec class action, Gallone c. Canada (Attorney General).[^4]
c. On March 25, 2019, the Brazeau representative plaintiffs were granted a summary judgment in which the class members were awarded aggregate Charter damages of $20 million for vindication and deterrence.[^5]
d. On March 9, 2020, the Ontario Court of Appeal affirmed the judgment on liability but not the methodology of the Charter damages award in Brazeau.[^6] The Court of Appeal remitted the matter of the Charter damages for redetermination, and on March 28, 2020, I awarded the Brazeau class members $20 million for vindication, deterrence, compensation, and pre-judgment interest pursuant to the Courts of Justice Act[^7].[^8] For the purposes of individual issues trials, the damages award was deemed to be compensatory damages.
e. Previously, (on August 9, 2019), based on the original $20 million aggregate award in Brazeau, I awarded class Counsel a fee award of $6,660,000 plus $865,800 for HST.[^9]
f. Based on the original $20 million aggregate award in Brazeau, pursuant to s.10 of Ont. Reg. 771/92 of the Law Society Act, the Law Foundation was paid a levy of $1,280,857.23. The Law Foundation was also reimbursed for disbursements, and it received $435,627.66, inclusive of applicable taxes.
g. The outcome was that the net aggregate damages award to be distributed in Brazeau was approximately $11.5 million.
h. On August 29, 2019, the representative plaintiff in Reddock, was granted a summary judgment in which the class members were awarded aggregate damages of $20 million for vindication, deterrence, and compensatory damages with additional compensatory damages to be payable after individual issues trials.[^10] The class members also received pre-judgment interest of $1,120,797 on the compensatory portion of the damages award, so that the base aggregate damages judgment was approximately $21 million.
i. On October 10, 2019, Mr. Reddock was awarded costs of $1,122,590.33, all inclusive, for the summary judgment motion,[^11] and on December 5, 2019,[^12] the class counsel fee was approved. Class counsel received a total fee of $7,947,544.70.
j. Also approved in Reddock was the statutory levy payable to the Law Foundation pursuant to s.10 of Ont. Reg. 771/92 of the Law Society Act. The amount of the statutory levy was $1,395,097.68.
k. The outcome of the awards in Reddock was that the net amount to be distributed to class members was approximately $13 million.
l. The Ontario Court of Appeal heard the Brazeau appeal and the Reddock appeal together, and on March 9, 2020, the Ontario Court of Appeal affirmed the judgment and the Charter damages award in Reddock.[^13]
m. There was no trial in the Gallone action. However, Canada agreed to a consent judgment in which Canada agreed to liability proportionate to its liability in Brazeau and Reddock. On September 10, 2020, Justice Masse ordered aggregate damages in Gallone be determined for the same purpose and in the same manner as in Brazeau and Reddock, on a pro rata basis for the class size in Gallone. Thus, on consent, the Gallone class members recovered a judgment of $5,948,769.23.
n. In each of Brazeau, Reddock, and Gallone, class counsel brought motions for court approvals of: (a) Distribution Protocols for the Aggregate Award of Damages; and (b) an Individual Issues Protocol setting out the procedure for the individual issues determinations. In Ontario, the Distribution Protocol and the Individual Issues Protocol would be settled pursuant to the authority provided by the Class Proceedings Act, 1992, the Rules of Civil Procedure[^14] and the Charter. In Québec, the Distribution Protocol and the Individual Issues Protocol would be settled pursuant to Québec Code of Civil Procedure and the Charter.
o. Since it was desirable for efficiency, economy, administration, management, and fairness to co-ordinate the determination of the Distribution Protocol and the Individual Issues Protocol, the Superior Courts of Ontario and Québec agreed to hold a joint hearing. The joint hearing developed into a four-stage hearing procedure, in which Justice Masse and I wrote combined judgments.
p. In Part 1, Justice Masse and I prepared a Draft Distribution and Individual Issues Protocol, (the Draft D&I Protocol,).[^15] Part 1 of our joint decision included the invitation to the parties to make submissions in writing before the hearing was concluded and then a final order would be made by our respective courts.
q. In Part 2, after Justice Masse and I received and reviewed the written submissions of the parties, we released what was to be a final decision.[^16] The decision included as a schedule the approved D&I Protocol.
r. After the release of our Part 2 decision, the parties set about settling the terms of the courts’ formal orders, and as a part of that effort, the parties had further consultations about the D&I Protocol, including discussions with the administrator. Those further consultations resulted in consensual revisions to the protocol, which the parties asked the courts in Ontario and Québec to approve. In Part 3[^17] and Part 4[^18] of the joint decision, with some revisions of our own, Justice Masse and I approved revisions to the D&I Protocol.
s. The D&I Protocol is an elaborate example of the resources of s.24 and s.25 of the Class Proceedings Act, 1992 to shape the individual issues stage of a class action. (Similar resources are available under Québec’s Code of Civil Procedure.) The D&I Protocol had three tracks. The first track was a distribution scheme. The second track was akin to a class action claims process settlement where an administrator determines eligibility and the quantum of compensation in accordance with a compensation grid. The third track comprised individual summary judgment motions or trials.
t. The four stages of the determination of the D&I Protocol revealed that class counsel and the Law Foundation were not on the same page, so to speak, about the Foundation’s role in the individual issues trial stage for the Brazeau and Reddock class members.
u. In this last regard, for reasons that for present purposes I need not elucidate, class counsel had the understandings that: (a) the Law Foundation could and had already agreed to provide litigation support to individual class members for their individual issues trials; (b) the Law Foundation had committed to providing litigation support for the individual issues trials because it had supported the action through the common issues stage notwithstanding that no formal application had been made to the Class Actions Committee for the individual issues stage; and (c) a necessary condition for the Law Foundation to extract a levy was that it provide litigation support; i.e., while the Law Foundation was entitled to a levy on the recovery from the common issues stage, it was entitled to a further levy only if it continued to provide litigation support for the individual issues trials.
v. In this last regard, it was the Law Foundation’s position that class counsel’s understandings were misapprehensions. It was the Law Foundation’s submission that class counsel misunderstood the Law Foundation’s statutory authority under the Law Society Act and its regulation.
w. By this motion, the Law Foundation is seeking directions to resolve what precisely is its authority, if any, to provide support at individual issues trials of a class action.
C. The Legislative History of the Class Proceedings Fund
[11] For present purposes, the legislative history that led to the establishment of the Class Proceedings Fund can be very briefly summarized. It is necessary to have this synopsis because the legislative history formed the most prominent part of the Law Foundation’s submissions about the interpretation of its enabling legislation.
[12] In 1982, after a comprehensive study of class proceedings around the world, the Ontario Law Reform Commission published its three-volume 880-page Report on Class Actions.[^19] In its report, a major policy consideration, indeed perhaps the paramount consideration of the Commission, was how to overcome the obstacles to access to justice when a defendant injured masses of persons, but the injured could not afford to pursue their individual claims given the small monetary value of the claims and/or the enormous costs of litigation, including the plaintiff’s legal fees and the prospect of an adverse costs award to the defendant.
[13] In its report, the Ontario Law Reform Commission concluded that the then current law of representative actions was inadequate and required reform. The Commission recommended a regime that would overcome the barriers to access to justice and also provide behaviour modification and the efficient use of court resources that would avoid a multiplicity of proceedings all the while being procedurally fair to defendants and not encouraging meritless so-called strike suits.
[14] In its report, the Ontario Law Reform Commission recommended a class action regime model where: (a) a representative plaintiff could represent a class of claimants; (b) the representative plaintiff would be allowed to retain a lawyer pursuant to a contingency fee retainer (these were prohibited in Ontario at the time as being champerty and maintenance), and thus the representative plaintiff would be spared the expense of paying for a lawyer; (c) the representative plaintiff would not be exposed to an adverse costs award, should he or she fail in the class proceeding; and (d) class members would be insulated from costs during the representative stages of the class proceeding, but they would not be insulated from the costs consequence of individual proceedings.
[15] Thus, the Ontario Law Reform Commission recommended a regime in which representative plaintiffs (with an entrepreneurial lawyer acting on a contingency fee) would be insulated from an adverse costs award during the common issues phase of a class proceeding. The Ontario Law Reform Commission did not recommend a no-costs regime for individual issues trials.
[16] Almost a decade passed until 1989, when then Attorney General Ian Scott announced the appointment of an Advisory Committee to assist his ministry in moving forward on class action law reform. In February 1990, the Attorney General’s Advisory Committee of Class Action Reform released its report. The report included a draft of a proposed Class Proceedings Act.
[17] In its report, the Advisory Committee disagreed with the Ontario Law Reform Commission’s recommendation that representative plaintiffs be insulated from an adverse costs award. Instead, the Advisory Committee recommended that concurrent with the introduction of the class action legislation, the government should establish a “Costs Assistance Fund” to provide litigation support to representative plaintiffs. The assistance would be for disbursements and protection from adverse costs awards. Legal fees would be addressed by permitting contingency fees.
[18] The Advisory Committee did not draft the legislation for the Costs Assistance Fund but made numerous recommendations or suggestions about the drafting.
[19] Two years later, the Legislature accepted some but not all of the drafting of the Class Proceedings Act proposed by the Advisory Committee. The Legislature enacted the Class Proceedings Act, 1992. Contemporaneously, the Legislature enacted the amendments to the Law Society Act that are the subject matter of this motion.
[20] Pursuant to sections 52 to 59.5 of the Law Society Act, and Ont. Reg. 771/92, the Law Foundation was recruited to administer what the Advisory Committee had described as a Costs Assistance Fund.
[21] It is the Law Foundation’s submission that it is empowered by the Law Society Act to provide litigation support only to representative plaintiffs in connection with the common issues phase and any ancillary collective matters for the class as a class. It is the submission of the Law Foundation that it is not empowered to provide litigation support to individual class members for individual issues trials. Class counsel submits that the Law Foundation can and should provide litigation support in the circumstances of the Brazeau and Reddock individual issues trials.
D. The Stages of a Class Action
[22] As is no doubt already abundantly apparent, the dispute between class counsel and the Law Foundation in the immediate case revolves around the bifurcated nature of class proceedings. Class proceedings do differentiate between common issues for the collective formed by the class members, and individual issues associated with individual class member’s discrete claims or the quantification of their claims. For present purposes, it is necessary to explicate the stages of a class action more closely.
[23] Section 11 of the Class Proceedings Act, 1992 divides a class action into two stages; i.e.: (1) the determination of the common issues; and (2) the determination of the individual issues in accordance with ss. 24 and 25 of the Act. The first stage actually has two parts and so it is analytically preferable to divide class actions into three stages: (1) the pre-certification stage; (2) the common issues stage; and (3) the individual issues stage. Depending on the particular class action, the individual issues stage may include: settlement approval hearings, approval of distribution schemes, or individual issues determinations as designed under s. 25, which may include individual issues trials.[^20]
[24] The relationship between class counsel, the plaintiff, and class members varies from stage to stage in a class proceeding.
[25] At the outset of a class action and throughout, there is a genuine plaintiff who has a lawyer and client relationship with the lawyer of record.[^21] The plaintiff is a putative class member, and he or she will be the class members’ representative if the action is certified.
[26] Before certification, there is no lawyer and client relationship between a putative class member and the lawyer of the putative representative plaintiff; however, there is a potential lawyer and client relationship. The needs of the Class Proceedings Act, 1992, require that there be a sui generis relationship between lawyer and potential class members and that there be some responsibilities imposed on the lawyer acting for the proposed representative plaintiff that are owed to the potential class members.[^22]
[27] After certification, there is a lawyer and client relationship between class counsel and the class members.[^23] However, the class members do not have litigation autonomy in the sense that class members do not instruct class counsel. Instructions are given by the representative plaintiff on behalf of the class members, who will kept advised of the progress of the litigation.
[28] In the individual issues stage, the lawyer and client relationship may continue between class counsel and individual class members, but if there are going to be individual issues trials, the individual class members are free to be self-represented or to retain new lawyers for the individual issues trials.[^24]
[29] The individual issues stage of a class proceeding is governed by s. 25 of the Class Proceedings Act, 1992, which states:
Individual issues
- (1) When the court determines common issues in favour of a class and considers that the participation of individual class members is required to determine individual issues, other than those that may be determined under section 24, the court may,
(a) determine the issues in further hearings presided over by the judge who determined the common issues or by another judge of the court;
(b) appoint one or more persons to conduct a reference under the rules of court and report back to the court; and
(c) with the consent of the parties, direct that the issues be determined in any other manner.
Directions as to procedure
(2) The court shall give any necessary directions relating to the procedures to be followed in conducting hearings, inquiries and determinations under subsection (1), including directions for the purpose of achieving procedural conformity.
Idem
(3) In giving directions under subsection (2), the court shall choose the least expensive and most expeditious method of determining the issues that is consistent with justice to class members and the parties and, in so doing, the court may,
(a) dispense with any procedural step that it considers unnecessary; and
(b) authorize any special procedural steps, including steps relating to discovery, and any special rules, including rules relating to admission of evidence and means of proof, that it considers appropriate.
Time limits for making claims
(4) The court shall set a reasonable time within which individual class members may make claims under this section.
Idem
(5) A class member who fails to make a claim within the time set under subsection (4) may not later make a claim under this section except with leave of the court.
Extension of time
(6) Subsection 24 (9) applies with necessary modifications to a decision whether to give leave under subsection (5).
Determination under cl. (1)(c) deemed court order
(7) A determination under clause (1) (c) is deemed to be an order of the court.
[30] In the main, s. 25 requires the court to do four things. First, the court must define the issues to be resolved in the further hearing that will constitute the individual issues stage of the class action. Second, the court must decide who will decide those issues. The court’s choices as to a decision-maker are limited to: (a) the judge who determined the common issues; (b) another judge, possibly the judge who was case managing the class action but potentially other judges; (c) one or more referees under the rules of court (this is an allusion to Rules 54 and 55 of the Rules of Civil Procedure); and (d) with the consent of the parties another adjudicator, whose determination of the individual issues will be given the authority of a court order. Third, the court must give any necessary directions relating to the procedures for the individual issues stage. Fourth, the court shall set a reasonable time limit for individual claims.
[31] Absent the consent of the parties, the design of the procedure for the individual issues stage cannot be a no-costs regime or a regime in which the defendant pays costs in any event of the outcome.
[32] Under the scheme of the Class Proceedings Act, 1992, class members are not exposed to costs during the common issues stage, but the Act expressly exposes class members to adverse costs awards for the individual issues stage. Section 31(2) of the Act states:
- (2) class members, other than the representative party, are not liable for costs except with respect to the determination of their own individual claims.
[33] For present purposes, the points to keep in mind are under the Class Proceedings Act, 1992; (a) pre-certification, the plaintiff is exposed to an adverse costs award; (b) post-certification, the representative plaintiff is exposed to an adverse costs award; and (c) after the common issues determination, individual class members are exposed to an adverse costs award for their own individual claims. The Class Proceedings Act, 1992 is silent about litigation support for plaintiffs, representative plaintiffs, and class members.
[34] Litigation support by way of payment of disbursements and protection from adverse costs awards is the subject of sections 52 to 59.5 of the Law Society Act, and Ont. Reg. 771/92, to which I now turn. The amendments to the Law Society Act and Ont. Reg. 771/92 were introduced at the same time as the Class Proceedings Act, 1992.
E. Sections 52 to 59.5 of the Law Society Act, and Ont. Reg. 771/92
[35] For present purposes, the pertinent provisions of the Law Society Act are set out below:
Definitions
52 In this section and in sections 53 to 59.5,
“class proceeding” means a proceeding certified as a class proceeding on a motion made under section 2 or 3 of the class Proceedings Act, 1992;
“Committee” means the class Proceedings Committee referred to in section 59.2;
“defendant” includes a respondent;
“Foundation” means The Law Foundation of Ontario referred to in section 53;
“plaintiff” includes an applicant;
Foundation continued
53 (1) The corporation known as The Law Foundation of Ontario is continued as a corporation without share capital under the name The Law Foundation of Ontario in English and Fondation du droit de l’Ontario in French and shall consist of the trustees for the time being of the board.
Objects and funds
Objects
55 (1) The objects of the Foundation are to establish and maintain a fund to be used for any or all of the following purposes:
- The provision of costs assistance to parties to class proceedings and to proceedings commenced under the class Proceedings Act, 1992.
Derivation of funds
(2) The funds of the Foundation shall be derived from,
(d) money paid to the Foundation under subsection 59.7 (3); and
Powers of Foundation
56 (1) In addition to the powers and privileges mentioned in section 92 of Part VI (Interpretation) of the Legislation Act, 2006, the Foundation has power,
(a) to invest the funds of the Foundation;
(b) to pay out of the funds of the Foundation the costs, charges and expenses necessarily incurred in the administration of the Foundation and in carrying out its objects;
(c) to enter into agreements with any person and pay and apply any of its funds for the implementation of its objects;
class Proceedings Fund
59.1 (1) The board shall,
(a) establish an account of the Foundation to be known as the class Proceedings Fund;
(b) within sixty days after this Act comes into force, endow the class Proceedings Fund with $300,000 from the funds of the Foundation;
(c) within one year after the day on which the endowment referred to in clause (b) is made, endow the class Proceedings Fund with a further $200,000 from the funds of the Foundation; and
(d) administer the class Proceedings Fund in accordance with this Act and the regulations.
Purposes of the class Proceedings Fund
(2) The class Proceedings Fund shall be used for the following purposes:
Financial support for plaintiffs to class proceedings and to proceedings commenced under the class Proceedings Act, 1992, in respect of disbursements related to the proceeding.
Payments to defendants in respect of costs awards made in their favour against plaintiffs who have received financial support from the Fund.
class Proceedings Committee
59.2 (1) The class Proceedings Committee is established and shall be composed of,
(a) one member appointed by the Foundation;
(b) one member appointed by the Attorney General; and
(c) three members appointed jointly by the Foundation and the Attorney General.
Applications by plaintiffs
59.3 (1) A plaintiff to a class proceeding or to a proceeding commenced under section 2 of the class Proceedings Act, 1992 may apply to the Committee for financial support from the class Proceedings Fund in respect of disbursements related to the proceeding.
Same
(2) An application under subsection (1) shall not include a claim in respect of the fees of a person practising law or providing legal services.
Committee may authorize payment
(3) The Committee may direct the board to make payments from the class Proceedings Fund to a plaintiff who makes an application under subsection (1), in the amount that the Committee considers appropriate.
Idem
(4) In making a decision under subsection (3), the Committee may have regard to,
(a) the merits of the plaintiff’s case;
(b) whether the plaintiff has made reasonable efforts to raise funds from other sources;
(c) whether the plaintiff has a clear and reasonable proposal for the use of any funds awarded;
(d) whether the plaintiff has appropriate financial controls to ensure that any funds awarded are spent for the purposes of the award; and
(e) any other matter that the Committee considers relevant.
Supplementary funding
(5) A plaintiff who has received funding under subsection (3) may apply to the Committee at any time up to the end of the class proceeding for supplementary funding and the Committee may direct the board to make further payments from the class Proceedings Fund to the plaintiff if the Committee is of the opinion, having regard to all the circumstances, that it is appropriate to do so.
Applications by defendants
59.4 (1) A defendant to a proceeding may apply to the board for payment from the class Proceedings Fund in respect of a costs award made in the proceeding in the defendant’s favour against a plaintiff who has received financial support from the class Proceedings Fund in respect of the proceeding.
Board shall make payments
(2) The board shall make payments applied for in accordance with subsection (1) from the class Proceedings Fund, subject to any limits or tariffs applicable to such payments prescribed by the regulations.
Plaintiff not liable
(3) A defendant who has the right to apply for payment from the class Proceedings Fund in respect of a costs award against a plaintiff may not recover any part of the award from the plaintiff.
Regulations
59.5 (1) The Lieutenant Governor in Council may make regulations,
(a) respecting the administration of the class Proceedings Fund;
(b) establishing procedures for making applications under sections 59.3 and 59.4;
(c) establishing criteria in addition to those set out in section 59.3 for decisions of the Committee under section 59.3;
(d) establishing limits and tariffs for payments under sections 59.3 and 59.4;
(e) prescribing conditions of awards under section 59.3;
(f) providing for the assessment of costs in respect of which a claim is made under section 59.4;
(g) providing for levies in favour of the class Proceedings Fund against awards and settlement funds in proceedings in respect of which a party receives financial support from the class Proceedings Fund.
Idem
(2) A regulation made under clause (1) (d) may provide for different limits and tariffs for different stages and types of proceedings.
Idem
(3) A regulation made under clause (1) (g) may provide for levies that exceed the amount of financial support received by the parties to a proceeding.
Idem
(4) A regulation made under clause (1) (g) may provide for levies based on a formula that takes the amount of an award or settlement fund into account.
[36] Ontario Regulation 771/92 states:
Definitions
- In this Regulation,
“defendant applicant” means an applicant for payment under section 59.4 of the Act;
“plaintiff applicant” means an applicant for financial support under section 59.3 of the Act;
“plaintiff recipient” means a recipient of an award of financial support under section 59.3 of the Act.
Applications by Plaintiffs under section 59.3 of the Act
A plaintiff applicant shall make a separate application for financial assistance in respect of each of the following stages in a proceeding:
Steps taken up to the end of the hearing of a motion for an order certifying the proceeding as a class proceeding.
Appeals of orders relating to certification.
Steps other than those described in paragraphs 1 and 2 taken up to the end of discovery or cross-examination on affidavits.
Steps other than those described in paragraphs 1 to 3 concerning the determination of common issues.
Appeals from a judgment on common issues.
Steps other than those described in paragraphs 1 to 5.
(1) Every plaintiff applicant shall provide six copies of the following information and documents to the Committee:
Criteria for decisions respecting Plaintiff’s Applications
In making a decision under subsection 59.3 (3) of the Act, the Committee may have regard to the following matters:
The extent to which the issues in the proceeding affect the public interest.
If the application for financial support is made before the proceeding is certified as a class proceeding, the likelihood that it will be certified.
The amount of money in the Fund that has been allocated to provide financial support in respect of other applications or that may be required to make payments to defendants under section 59.4 of the Act.
Conditions of Financial Support for Plaintiffs
- (3) The plaintiff recipient shall notify the defendant in the proceeding,
(a) that the recipient has received financial support from the class Proceedings Fund in respect of the proceeding;
(b) that there is a charge in favour of the Fund on any award and settlement funds in the proceeding; and
(c) that the amount of the charge is determined under section 10.
Levies against awards and settlement funds
- (1) This section applies in a proceeding in respect of which a party receives financial support from the class Proceedings Fund.
(2) A levy is payable in favour of the Fund,
(a) when a monetary award is made in favour of one or more persons in a class that includes a plaintiff who received financial support under section 59.3 of the Act; or
(b) when the proceeding is settled and one or more persons in such a class is entitled to receive settlement funds.
(3) The amount of the levy is the sum of,
(a) the amount of any financial support paid under section 59.3 of the Act, excluding any amount repaid by a plaintiff; and
(b) 10 per cent of the amount of the award or settlement funds, if any, to which one or more persons in a class that includes a plaintiff who received financial support under section 59.3 of the Act is entitled.
F. Principles of Statutory Interpretation
[37] The issues on the motion are matters of statutory interpretation and of statutory application. Pursuant to the Legislation Act,[^25] legislation shall be interpreted as being remedial and legislation shall be given such fair, large and liberal interpretation as best ensures the attainment of its objects.
[38] The approach to interpretation of a statute is teleological or purposeful, and to interpret a statute, the words of the statute are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the statute, the object of the statute, and the intention of the legislator.[^26] To interpret a statute, the court should look at the Act as a whole and attempt to find an interpretation that is in harmony with the entire legislative scheme including the regulations and forms.[^27] The contextual nexus for the interpretation of a statute includes the problem or the mischief that the statute was intended to address.[^28]
[39] The context for statutory interpretation is multi-layered, encompassing the purpose of the legislation, the mischief the statute was intended to address, the statutory provision in issue, the statute as a whole including its forms and regulations, other related statutory provisions, applicable legal norms, and the Legislation Act.[^29]
[40] Where the provision under consideration is found in an Act that is itself a component of a larger statutory scheme, the principles of interpretation presumes a harmony, coherence, and consistency between statutes dealing with the same subject matter.[^30]
[41] Regulations and other types of subordinate legislation must be interpreted in the context of the purpose and scheme of the enabling statute.[^31]
[42] The ordinary grammatical sense of a word as understood by a competent reader is used to interpret the word, and to interpret a statute, the words of the statute are interpreted in their ordinary grammatical sense unless there is something to show that the Legislature intended to use the words in a special sense.[^32]
[43] If the words of the statute when read in their context are precise and unambiguous, then the words should be given their natural and ordinary sense.[^33] The court’s role is to interpret the statute not enact it; if the sense of the words of the statute is clear and unambiguous, then the court must interpret the words literally and in accordance with their plain meaning even if the consequences are absurd or unjust.[^34] Recognition of the proper roles of the legislature and the judiciary requires that courts give effect to the plain meaning of the words of a duly enacted statute, and a court should not interfere merely because it does not approve of the result produced by the statute in a particular case.[^35] It is presumed that every word in a statute has a role to play and a statute should not be interpreted to leave words superfluous or meaningless.[^36] In interpreting a statute, it is presumed that the constituent elements of a legislative scheme are meant to work together logically and teleologically, each contributing to the achievement of the legislator's goal without contradictions or inconsistencies among the constituent elements.[^37]
[44] The legislative history, Parliamentary debates, Hansard, government publications may be considered in order to facilitate the determination of the legislator’s intent and purpose provided it is relevant and reliable and provided it is used cautiously and not given undue weight.[^38] Ministerial comments in Hansard, although of limited weight, if reliable, are relevant to an understanding of the background and purpose of the legislation.[^39]
G. Does the Law Foundation have Statutory Authority to Provide Litigation Support Funding for the Individual Issues Stage of a Class Proceeding?
[45] The Law Foundation is a special act corporation continued under s. 53(1) of the Law Society Act. Its affairs are managed and controlled by a Board of Trustees appointed by the Law Society of Ontario and the Attorney General of Ontario. Its mandate is to establish and maintain a fund to be used for specified statutory purposes, including the provision of costs assistance to parties to class proceedings and to proceedings commenced under the Class Proceedings Fund, 1992.
[46] The powers of a special act corporation are limited to those expressly or impliedly granted by its statute and any activities beyond its statutory authority are invalid.[^40]
[47] The Law Foundation’s argument is that s. 59 (3) of the Law Society Act empowers it through the Class Proceedings Committee to provide funding for a “plaintiff,” which includes the plaintiff that commences the proposed class action and the representative plaintiff, should the action be certified as a class proceedings.
[48] The Law Foundation submits that the legislative history, including the work of the Ontario Law Reform Commission and the Attorney General’s Advisory Committee, the speeches made by Attorney General Ian Scott when the class actions legislation was being introduced, and the plain meaning of the Law Society Act reveal that the Class Proceedings Fund was introduced to assist plaintiffs exclusively acting in a representative capacity. Visualize, the Law Foundation submits in paragraph 33 of its factum.
- The 1982 Ontario Law Reform Commission Report on class Actions, the 1990 Report of the Attorney General’s Advisory Committee, and the remarks of Attorney General Ian Scott when introducing the proposed Class Proceedings Act in the Legislative Assembly lead to the same conclusion: the Class Proceedings Fund was created to assist plaintiffs acting in a representative capacity. The intention was to facilitate class proceedings by alleviating the financial strain on the representative plaintiff that would result from assuming the costs of prosecuting an action and assuming the risk of adverse costs awards on behalf of others. The Class Proceedings Fund was meant to benefit class members indirectly, but was not designed to assist them directly.
[49] I agree with the Law Foundation that the Class Proceedings Fund was introduced to assist plaintiffs acting in a representative capacity. However, I disagree with the Law Foundation’s submission that this assistance is exclusively for plaintiffs acting in a representative capacity. As I will shortly demonstrate, the plain language of the Act supports the interpretation that the Law Foundation is empowered to accept applications from individual class members for litigation support and assistance.
[50] As I will shortly demonstrate, the access to justice policy reasons for providing litigation support for representative plaintiffs from pre-certification to the end of the common issues phase apply equally to class members, who are represented plaintiffs in the class proceeding once the action is certified. But, at the individual issues stage of the same class proceeding, they become plaintiffs with their own litigation autonomy to instruct the lawyer of their choice.
[51] The legislative history summarized above - which would not override the language of the legislation in any event - does not preclude litigation assistance to class members. At worst, the work of the Law Reform Commission and the Attorney General’s Advisory Committee and the remarks of the Attorney General beg the question of whether class members may also apply for litigation assistance.
[52] Turning then to the language of sections 52 to 59.5 of the Law Society Act, s. 52 defines plaintiff to include an applicant. That definition just begs the question of whether a class member is a plaintiff.
[53] As noted above, in so far as class members have a legal relationship with the lawyer for the plaintiff, the quality or nature of that relationship changes as the class proceeding develops. The measure of difference or change in the status of class members can be explained as a matter of litigation autonomy.
[54] In the pre-certification stage and through the common issues phase, the representative plaintiff has litigation autonomy and instructs class counsel. The class members are represented in the class proceeding, but they do not have litigation autonomy. The class members are obviously part of the class action, but they are not the boss of it pre-certification nor for the common issues stage of the proceeding. This all changes for the individual issues phase. Class members instruct the lawyer of their choice and with this litigation autonomy, the class members complete what is throughout a class proceeding governed by the Class Proceedings Act, 1992.
[55] The points to keep in mind are: (a) the pre-certification phase, the common issues phase, and the individual issues phase are all parts of a proceeding under the Class Proceedings Act, 1992; (b) where there is litigation autonomy, there is exposure to adverse costs consequences; and (c) in the individual issues phase, the class member is a claimant that resembles a plaintiff.
[56] Continuing with the exegesis of sections 52 to 59.5 of the Law Society Act, s. 55 states that the objects of the Foundation are to establish and maintain a fund to provide “costs assistance to parties to class proceedings and to proceedings commenced under the Class Proceedings Act, 1992.”
[57] But for in Dabbs v Sun Life Assurance Co of Canada[^41] and Bancroft-Snell v. Visa Canada Corporation,[^42] which are authority for the proposition that a class member is not a party for the purposes of an appeal of a court’s decision during the representative plaintiff part of a class proceeding, I would have thought that class members would come within the language of being “parties to class proceedings” and hence within the assistance purposes of the Law Foundation under the Law Society Act. However, I need not resolve that point because individual issues trials are themselves “proceedings commenced under the Class Proceedings Act, 1992” and hence within the ambit of the purposes of the Law Foundation to provide costs assistance to “proceedings commenced under the Class Proceedings Act, 1992.”
[58] There are other indications that the authority of the Law Foundation extends into the individual stages of a class proceedings. Section 56 (c) of the Law Society Act empowers the Law Foundation “to enter into agreements with any person and pay and apply any of its funds for the implementation of its objects.” In my opinion, s. 56 (c) is an indication that the Legislature intended the Law Foundation to have the power to assist class members advancing individual issues claims, which would further the access to justice purposes of the Class Proceedings Fund.
[59] Further still, s. 59.1 (2) paragraph 1 of the Law Society Act provides that the Class Proceedings Fund shall be used for “financial support for plaintiffs to class proceedings and to proceedings commenced under the Class Proceedings Act, 1992, in respect of disbursements related to the proceeding.” There is a distinction drawn in s. 59.1 (2) between “plaintiffs to class proceedings,” and “proceedings commenced under the Class Proceedings Act, 1992.” I grant that it is arguable that the phrase “plaintiffs to class proceedings,” may just refer to representative plaintiffs and not include class members, but the phrase “plaintiffs to … proceedings commenced under the Class Proceedings Act, 1992,” in my opinion encompasses the class members in individual issues trials, which are the continuation and completion of proceedings governed by the Class Proceedings Act, 1992 (See s. 25 of the Act).
[60] The Law Foundation’s argument, however, is that s. 59.1 (2) authorizes financial support exclusively to representative plaintiffs or to plaintiffs who may become representative plaintiffs. Thus, it interprets “financial support for plaintiffs to class proceedings” to mean plaintiffs in certified class proceedings and it interprets “for plaintiffs … to proceedings commenced under the Class Proceedings Act, 1992” to mean plaintiffs who are applying to have their action certified as class proceedings.
[61] The Law Foundation’s argument, however, makes one or the other of the phrases being interpreted redundant or unnecessary because a plaintiff to a certified class proceeding (a representative plaintiff) is also a plaintiff to a proceeding commenced under the Class Proceedings Act, 1992, and a plaintiff to a proceeding commenced under the Class Proceedings Act includes a representative plaintiff. This is tautological redundancy, but perhaps more to the point, there is nothing here that speaks to the exclusivity of a plaintiff to a proceeding commenced under the Class Proceedings Act, 1992 to the particular putative class member that is the plaintiff that commenced the potential class action. There is nothing that expressly excludes a class member from being a plaintiff to a proceeding commenced under the Class Proceedings Act, 1992.
[62] This pattern of no evidence of exclusivity to the plaintiff that commenced the class action and to the representative plaintiff is repeated in s. 59.3 of the Law Society Act, which deals with applications for financial support. The pattern is repeated in s. 59.4, which deals with applications by defendants “in respect of a costs award made in the proceeding in the defendant’s favour against a plaintiff who has received financial support from the Class Proceedings Fund in respect of the proceeding.” There is nothing in these sections, that disqualifies a class member from being a plaintiff for the purposes of completing the class proceeding.
[63] Pausing here, it should be emphasized that the Law Foundation is not exposed to any indeterminate exposure to responsibility for a defendant’s costs because whoever is encompassed as a plaintiff in a class proceeding, the Class Proceedings Committee of the Law Foundation decides whether or not to provide him, her, or it with financial support.
[64] The interpretation that the Law Society Act empowers the Law Foundation to provide assistance to individual class members at the individual issues stage of the proceeding is also supported by the Lieutenant Governor in Council’s authority to make regulations found in s. 59.5 of the Law Society Act.
[65] Section 59.5 (2) of the Act provides that “a regulation made under clause (1)(d) (which establishes limits and tariffs for payments) may provide for different limits and tariffs for different stages and types of proceedings. Individual issues trials are “a different stage” and a “different type of proceeding” from the common issues stage of the class proceeding. The inference here is that the authority of the Law Foundation extends to these different stages of a class proceeding including the non-representative plaintiff stages.
[66] Turning next to Ont. Reg. 771/92, section 2 of the regulation provides applications for funding and prescribes separate applications for the different stages in a proceeding. The Law Foundation argues that section 2 does not encompass applications for the individual issues stage of the proceeding. However, if my opinion above about the interpretation of the Law Society Act (the legislation that parents the regulation) is correct, then the individual issues stage falls within paragraph 6 of the regulation “steps other than those described in paragraphs 1 to 5.”
[67] The above interpretation of the Law Society Act and its regulation is supported by the public policy that led to the establishment of the Class Proceedings Fund.
[68] The elements of the Legislature’s policy were that the representative plaintiff should be exposed to costs but access to justice would be facilitated by an entrepreneurial model under which the representative plaintiff could retain a lawyer based on a contingency fee agreement and the representative plaintiff should be able to apply to the Law Foundation’s Class Action Committee for disbursement support and insulation from an adverse costs award if the Committee approved the application.
[69] The same access to justice policy rationale applies for class members at the individual issues stage of the class proceeding. It is at this juncture of the class proceeding that like the representative plaintiff, the class member becomes exposed to an adverse costs award, and it is at this juncture of the class proceeding that the class member may have the same access to justice concerns that inhibited the representative plaintiff. This is to say that the class member who now has litigation autonomy, may need to have a contingency fee agreement, which agreements are now available under the Solicitors Act[^43], and may also need to have litigation support assistance for the individual issues phase of a proceeding that is still being governed by the Class Proceedings Act, 1992.
[70] The case at bar is a perfect example. Track 3 claimants under the D&I Protocol will have significant claims that may need litigation support to prosecute against Canada. The Class Proceedings Committee without being obliged to do so might determine that it is in the public interest to help these claimants.
[71] The argument of the Law Foundation that litigation support is only available with respect to the representative parts of the class proceeding relies heavily on Attorney General Ian Scott’s and his advisory committee’s recommendations about the creation of a Costs Assistance Fund. The Law Foundation submits that these remarks and other remarks made in the Legislature provide evidence that the intention of the Legislature was to exclude individual class members from receiving litigation assistance.
[72] This reliance on these interpretative aids, however, is misplaced for five reasons.
[73] First, the canons of statutory interpretation direct that legislative history are to be used cautiously and tend to be given little weight.
[74] Second, the report of the Advisory Committee never expressly precludes individual class members from receiving the assistance of a Costs Assistance Fund.
[75] Third, a close reading of the Advisory Committee’s Report reveals statements that indicate that the Advisory Committee did not intend to confine litigation support to representative plaintiffs. The following passages from the report, with my emphasis added, speak more generally about litigation support:
The Committee’s retention of the existing costs regime for class actions was based in part on a number of considerations including:
(i) […]
(ii) that the Government, in co-operation with non-government sources and through a variety of combination of methods, should establish a fund to assist parties to class proceedings.
However, the Committee is also of the opinion that the existing costs regime should not be completely restructured simply to accommodate class proceedings. The answer to accessibility is not the removal of all risk of the obligation for costs, but rather, the support of worthwhile class proceedings through assistance with disbursements and protection against adverse costs awards.
[…] The Committee concluded that if the Government is committed to reform in this area and committed to increasing access to justice it will provide whatever assistance it can to establish the fund, adequately endowed, to assist class litigants.
[…] The procedure should be accessible because it lowers the unit cost of litigation, economizes judicial resources and, finally, allows otherwise uneconomical claims to obtain their day in court. In this last respect, the Committee concluded that to achieve this type of accessibility, singling out class procedure for special treatment was not the answer. Rather, the answer lies in making a commitment to assisting litigants in mass litigation to bring their disputes forward, thereby benefiting the public at large.
[76] Fourth, on a case-by-case basis, individual Class Members may need litigation support as much as the collective represented by the plaintiff needed litigation support to achieve access to justice.
[77] Fifth, and most significantly, the plain language of the Law Society Act and the policy behind the language support an interpretation that once a class member achieves litigation autonomy, he or she is a candidate for litigation support from the Class Proceedings Fund.
[78] I, therefore, conclude that there is an affirmative answer to the question: Does the Law Foundation have statutory authority to provide litigation support funding for the individual issues stage of a class proceeding?
H. Does the Law Foundation have the Statutory Authority to Undertake to Pay the Defendant’s Costs at the Individual Issues Stage of a Class Proceeding?
[79] It follows from the above analysis, which I shall not repeat, that there is also an affirmative answer to the question: Does the Law Foundation have the statutory authority to undertake to pay the defendant’s costs at the individual issues stage of a class proceeding?
I. If the Law Foundation Provides Litigation Support for the Common Issues Stage, is it Obliged to Provide Litigation Support for the Individual Issues Stage of the proceeding?
[80] The next question to answer is: If the Law Foundation provides litigation support for the common issues stage, is it obliged to provide litigation support for the individual issues stage of the proceeding?
[81] This question can be quickly answered. And the answer is no. As the above analysis reveals, the design of the Law Society Act and its regulations is that an applicant must apply progressively at each stage of the class proceeding to be approved for litigation assistance.
[82] That the applicant is granted funding for one stage does not entail that he or she is entitled to funding for the next stage.
[83] I agree with the Law Foundation’s submission that interpreting s. 59.4 as requiring the Law Foundation to cover adverse costs awards made against individual class members would expose the Class Proceedings Fund to indeterminate liability, obliterating the Class Proceeding Committee’s ability to assess risk in making its funding decisions and thus defeating the legislative purpose of creating a viable, self-sustaining fund.
J. Does the Law Foundation’s Statutory Levy Extend to a Recovery of a Share of the class member’s Individual Issues Judgment?
[84] The last question is also readily answerable. The language of Ont. Reg. 771/92 enacted pursuant to the Law Society Act is unambiguous. Pursuant to s. 10 (3) of the regulation:
The amount of the levy is the sum of,
(a) the amount of any financial support paid under section 59.3 of the Act, excluding any amount repaid by a plaintiff; and
(b) 10 per cent of the amount of the award or settlement funds, if any, to which one or more persons in a class that includes a plaintiff who received financial support under section 59.3 of the Act is entitled.
[85] The amount of the award is 10 percent of the sum payable to “one or more persons in a class.” The sum payable to one or more class members would include the sum paid as an aggregate damages award and also the sum payable at individual issues trials.
[86] Further, s. 8(3)(b) of Ont. Reg. 771/92 stipulates that if the proceeding is certified, the representative plaintiff who received support under s. 59.3 must notify the other class members “that there will be a levy that reduces the amount of any award or settlement funds to which the class members become entitled”. This provision reveals that the levy applies to any entitlement be it an aggregate award of damages, a class-wide lump-sum settlement, an individual distribution in a claims process, damages awarded in an individual claim, or any other arrangement.
[87] The Law Foundation made an elaborate necessity argument to support this interpretation. Its argument was that the legislature intended the Class Proceedings Fund to be sustainable and self-funding after the $500,000 in seed money was allocated to it. The Law Foundation argued that it would not be able to sustain the Fund if its levy did not extend to the individual issues recoveries. There was no actuarial underwriting evidence to support the Law Foundation’s submission but, in any event, I do not see this submission as being necessary or particularly helpful in interpreting the language of the statute.
[88] During argument, Class Counsel argued that if it were the case that the Law Foundation could charge a levy against individual class members, this would cause problems in the administration of the awards from individual trials because it was submitted that the disbursements paid by the Law Foundation was be paid first and thus the first individual claimants to have their individual issues tried would have their awards depleted by the disbursements.
[89] This problem, if it genuinely exists, however, would not be a reason to depart from the clear language of the Law Society Act and its regulation. And, the problem would not appear to exist in the immediate case because the Law Foundation has no outstanding disbursements and it has not granted litigation support for the individual issues phase of the Brazeau and Reddock class actions.
[90] In any event, the language of the Law Society Act establishes that the Law Foundation is entitled to a share of any kind of recovery made by the class members as a collective or as individuals.
K. Conclusion
[91] For the above reasons, the answers to questions (a), (b), (c), and (d) set out above are yes, yes, no, and yes.
[92] There shall be no order as to costs of this motion for directions.
Perell, J.
Released: December 10, 2021
COURT FILE NO.: CV-15-53262500-CP Reddock v. Canada (Attorney General), 2021 ONSC 8158 COURT FILE NO.: CV-17-570771-00CP DATE: 2021-12-10
ONTARIO SUPERIOR COURT OF JUSTICE
Between:
CHRISTOPHER BRAZEAU and DAVID KIFT Plaintiffs
- and -
ATTORNEY GENERAL OF CANADA Defendant
Proceeding under the Class Proceedings Act, 1992
And Between:
JULLIAN JORDEA REDDOCK Plaintiff
- and -
ATTORNEY GENERAL OF CANADA Defendant
Proceeding under the Class Proceeding Act, 1992
REASONS FOR DECISION
PERELL J.
Released: December 10, 2021
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