Court File and Parties

Killough et al v. The Canadian Red Cross Society et al Adrian et al v. The Attorney General of Canada, 2022 ABQB 182 McCarthy et al v. The Canadian Red Cross Society et al, 2022 ONSC 1357 Desjardins et Rochon v. Le Procureur Général du Canada

No. C976108 Vancouver Registry IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: EDWARD KILLOUGH, PATRICIA NICHOLSON, IRENE FEAD, DAPHNE MARTIN, DEBORAH LUTZ AND MELANIE CREHAN Plaintiffs AND: THE CANADIAN RED CROSS SOCIETY, HER MAJESTY THE QUEEN IN RIGHT OF BRITISH COLUMBIA AND THE ATTORNEY GENERAL OF CANADA Defendants Brought under the Class Proceedings Act, R.S.B.C. 1996, c. 50

COURT FILE NUMBER: 9903 19153 JUDICIAL CENTRE: EDMONTON COURT OF QUEEN’S BENCH OF ALBERTA PLAINTIFFS: SHIRLEY ADRIAN, DEBBIE ANDERSON, RICHARD EDWARD AUTEN, JAMES EDGAR BAKER, CONSTANCE DOREEN BAKER, JEFF BEESTON, ISABELL BRESSE, JOHN BRESSE, HARRY CHICHAK, BRIAN EDWIN FERGUSON, RON GEORGE, JANICE PATRICIA HAMMOND, DELORES HICKMOTT, GARY HICKMOTT, JAMES MILTON JOBE, BRIAN W. JOHNSON, WENDY LEE RAMEY, MARLENE DOROTHY KEEP, DENNIS KEEP, CAROL DIANNE KNOTT, BYRON KNOTT, LAURA CATHERINE KRISTIANSON, RALPH SAMUEL KRISTIANSON, KIMBERLY ANN LEBEUF, ALEXANDER PATRICK NOWOSAD, ELENA RICIOPPO, DALVINO RICIOPPO, SHANNON RICKETTS, KEVIN ROE, KATHY ROMANIW, ELLEN SANDERSON, JEAN DARLENE SNIPES, RICHARD JOSEPH LIPSCOMBE, DEBORAH ANNE STABRYLA, ELIZABETH TREAU, GUISEPPE VOLPE, JUNE VOLPE, and JOHN DOEs 1 to 100 and JANE DOEs 1 TO 100 DEFENDANTS: THE ATTORNEY GENERAL OF CANADA AS REPRESENTED BY THE MINISTER OF HEALTH FOR CANADA and HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF ALBERTA

COURT FILE NO.: 98-CV-143334CP ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: MICHAEL MCCARTHY, CHRISTINE MCCARTHY, DEREK MARCHAND Plaintiffs - and - THE CANADIAN RED CROSS SOCIETY, THE ATTORNEY GENERAL OF CANADA Defendants Proceeding under the Class Proceedings Act, 1992

CANADA PROVINCE OF QUEBÉC DISTRICT OF MONTRÉAL No.: 500-06-000065-983 (Class Action) SUPERIOR COURT GUY DESJARDINS and JEAN ROCHON Plaintiffs c. LE PROCUREUR GÉNÉRAL DU CANADA Defendant

Counsel:

• Nicola Hartigan for the British Columbia Plaintiffs
• Brian Laidlaw for the Alberta Plaintiffs
• Peter Roy for the Ontario Plaintiffs
• Michel Bélanger for the Québec Plaintiffs
• Nathalie Guilbert and Frikia Belogbi for Quebec Class Action Funds
• Victor Paolone, John Spencer, Adam Gilani, Craig Cameron, Rolinda Mack, Nathalie Drouin and Andreane Joanette-Laflamme for the Attorney General of Canada
• Luisa Ritacca, Court Monitor

Judges: HINKSON, C.J., FETH, J., PERELL, J. and CORRIVEAU, J.

Reasons for Decision

A. Preface

[1] In 1997, class actions on behalf of persons who had contracted the Hepatitis C virus (“HCV”) from blood products in Canada before January 1, 1986 and after July 1, 1990, were brought in British Columbia, Alberta, Ontario, and Québec. There was a national settlement of the class actions, and in 2007, the Courts approved the Settlement Agreement.

[2] Chief Justice Hinkson of the Supreme Court of British Columbia is case managing and administering the British Columbia class action known as Killough et al v. The Canadian Red Cross Society et al.

[3] Justice Feth of the Alberta Court of Queen’s Bench is case managing and administering the Alberta class action known as Adrian et al v. The Attorney General of Canada.

[4] Justice Perell of the Ontario Superior of Justice is case managing and administering the Ontario class action known as McCarthy et al v. The Canadian Red Cross Society et al.

[5] Justice Corriveau of the Superior Court of Québec is case managing and administering the Québec class action known as Desjardins and Rochon c. Le Procureur Général du Canada.

[6] This is our jointly written decision. While it is a jointly written decision, it may and should be read as separate decisions of the British Columbia, Alberta, Ontario, and Québec Courts.

[7] We collaborated in reaching the decision/judgment, but we independently came to our own decisions in accordance with the law and practice of our respective jurisdictions.

B. Introduction

[8] This is an application in the Courts of British Columbia, Alberta, Ontario, and Québec heard in a virtual courtroom on February 28, 2022.

[9] Class Counsel in the four Hepatitis C Class Actions seek orders: a. approving a third and final pro rata payment to eligible claimants of the PELD Fund; b. approving a payment of disbursements to Class Counsel of $16,956.37 to Klein Lawyers LLP and $8,555.21 to KBL Law LLP; c. approving a payment of $50,458.19 to the Trustee for administrative services; d. approving a budget of $2,542.50 for the Trustee’s Tax Services Fee; e. waiving the audit requirement for the Financial Year July 1, 2022 to June 30, 2023; f. approving a holdback in the amount of $100,000 to be kept in Trust in the Compensation Fund for the 2022 annual budget for administrative expenses incurred and to be incurred until the termination of the Settlement Agreement; and g. a declaration terminating the Settlement Agreement pursuant to Article 17.03 of the agreement with directions, including the direction that the Trustee notify the parties and the Court Monitor and provide a summary of what remains in the Trust and this date will be known as the “Termination Date”.

[10] Thus, the issues for the Courts to determine are: a. Should the surplus from the Administration Fund, which forms part of the Compensation Fund, be transferred to pay a third PELD Fund claim with a holdback for administrative expenses? b. Should Class Counsels’ expenses be approved and paid by the Trustee? c. Should the administrative expenses paid by the Trustee for expenses in 2021 be approved, as well as a budget for tax services for 2021? d. Should the requirement for an audit for financial year dated July 1, 2022 to June 30, 2023 be waived? e. When and how should the Termination Date be triggered?

C. Factual Background

1. A Third PELD Payment

[11] In 1997, class actions on behalf of persons who had contracted the Hepatitis C virus (“HCV”) from blood products in Canada before January 1, 1986 and after July 1, 1990, were brought in British Columbia, Alberta, Ontario, and Québec. There was a national settlement of the class actions, and in 2007, the Courts approved the Settlement Agreement.

[12] The Settlement Agreement provided compensation to: (a) Primarily Infected Class Members; and, (b) Secondarily Infected Class Members; i.e., spouses or children who have contracted HCV as a result of contact with a Primarily Infected Class Member. The Settlement Agreement also provided compensation for the Estates of HCV Infected Class Members and compensation to Family Members and Dependents of HCV Infected Class Members.

[13] Canada paid $962 million to fund compensation to the Class Members and $20 million for administration of the settlement.

[14] At the time of the settlement of the class actions, it was anticipated that approximately $80 million would be required to pay the claims for loss of income and loss of services. However, the total required for loss of income and service claims was actuarially difficult to predict, and, therefore, a segregated Past Economic Loss and Dependent Fund (PELD Fund) was created to safeguard against the possibility that an over-subscription might deplete the Compensation Fund and adversely affect the lump sum payments.

[15] Thus, $93.1 million was taken from the $962 million Compensation Fund and put into the PELD Fund. Unfortunately, the PELD Fund ultimately was deficient to pay all eligible Class Members.

[16] In December 2016, there was a joint hearing of the four courts. After the hearing, the four Courts directed that any surplus in the Compensation Fund should be transferred to the PELD Fund and that the manner of the further payments out of the PELD Fund would be determined by the courts at a future hearing.

[17] That further hearing was held in October 2019. The purpose of the hearing was to determine how to distribute the surplus in the Compensation Fund to claimants who had not received their full entitlement for their PELD claim. The Courts ordered those payments be issued proportionally to claimants in two instalments. Additionally, at that hearing, the Courts approved two protocols to assist the Administrator to resolve outstanding issues such as uncashed cheques and releases that had not been returned to the Administrator by Approved Claimants. [1]

[18] It took some time, but the Administrator has now issued the two instalments of proportional payments and the Administrator has resolved claims in accordance with the protocols. Eligible claimants received close to 25% of their original PELD entitlement.

[19] Some cheques were returned as unclaimed and others were not cashed. These cheques were cancelled under the protocols. Thus, after the two payments, some money was returned to the Administration Fund as the claimants were deemed disqualified.

[20] As of January 31, 2022, $635,414.69, remains in the Administration Fund (originally capped at $20,000,000). The Administration Fund is part of the Compensation Fund under the Settlement Agreement.

[21] The Administration of the Settlement Agreement is now substantially complete.

[22] It is estimated that the expenses to complete the settlement including the costs of another distribution of funds to PELD Fund claimants is approximately $100,000.

[23] Class Counsel submit that after paying for the last round of expenses, the remaining surplus should be allocated proportionately to the PELD Fund claimants. It is estimated that there are approximately 550 claimants. Pursuant to Article 2.07 of the Settlement Agreement, this allocation could be authorized by the Courts.

[24] It should be noted that the Courts have already ordered that no claims experience premium would be paid and that the priority of any surplus funds in the Compensation Fund is to transfer them to the PELD Fund.

[25] The Attorney General of Canada does not oppose the further PELD Fund payment.

2. Class Counsel Expenses

[26] Pursuant to Article 8.05(1) of the Settlement Agreement, Class Counsel have an ongoing role in the administration of the class actions. Until the Termination Date, one Class Counsel from each jurisdiction shall continue to act on behalf of the Class with respect to all acts required to give effect to the terms of the Agreement. Class counsel’s responsibilities include applying to the Courts for advice and directions.

[27] Article 8.05(2) provides that the fees, disbursements, and other costs of Class counsel for work done pursuant to subsection (1) will be paid out of the Trust Funds at times and in a manner and in amounts approved by the Courts.

[28] Class Counsel have not sought reimbursement for any expenses for several years. They now seek to be paid fees and disbursements incurred by Klein Lawyers LLP (BC Class Counsel) and KBL Law LLP (Alberta Class counsel) in relation to the previous joint hearings held in Toronto in 2016 and 2019, travel expenses, court filing fees, class member correspondence and time spent on discussions with the Administrator, Trustee, Court Monitor and Defence counsel.

3. Administrative Expenses and Waiving the Audit

[29] Apparently an oversight during the pandemic, but there was no annual approved budget for administrative expenses for the calendar year of 2021. During that time the Trustee paid six invoices for services relating to the 2021 calendar year without court approval. The total amount of these expenses is $50,458.19.

[30] Class Counsel advises that the invoices paid are in line with the work performed and are similar to previous years’ expenses.

[31] On behalf of the Trustee, Class Counsel is seeking approval of these already paid expenses.

[32] Additionally, the Trustee is seeking approval of a budget of $2,542.50 for the Trustee’s tax services for the tax year ending December 31, 2021.

[33] Class counsel is also seeking to waive the audit for the financial year of July 1, 2022 to June 30, 2023. a. Under the Settlement Agreement, annual audits are conducted for each “Fund Year”. b. If this audit is waived as requested, the final audit will cover the period of July 1, 2021 to June 30, 2022. c. Class Counsel submit that the audits are a significant expense to the fund and performing this audit will also involve additional fees and expenses payable to the Administrator and the Trustee as the Settlement cannot be terminated until this audit has been completed. d. If a third PELD Fund payment is approved, this third PELD payment would be included in the audit for the period of July 1, 2021 to June 30, 2022.

4. Termination of the Agreement

[34] For the Settlement Agreement to be terminated, a declaration by the Courts is required. Article 17.03 provides: “This Agreement will continue in full force and effect until the date on which the Courts have declared this Agreement to be terminated.” Pursuant to Article 5.09(b), any remaining funds in the Trust Fund on the Termination Date will be the sole property of and will be transferred to Canada within 60 days of the Termination Date.

[35] Class Counsel seeks a declaration from the Courts that the Settlement Agreement will be terminated once the Trustee advises the Parties and the Court Monitor that: (a) the third PELD Fund payments have been issued; (b) the deadlines to cash the cheques have expired; (c) any forfeited funds have been returned by the Administrator to the Trustee; and (d) the Trustee has paid outstanding administration expenses.

[36] In support of this request, Class Counsel submit that upon the remaining forfeited funds being paid to the Trustee and once the Trustee has paid outstanding administration expenses, there should be nothing further to do under the Settlement Agreement.

D. Discussion and Analysis

[37] This application is brought pursuant to Article 8.05 (1) (g) of the Agreement and specifically relies on Articles 2.07(3), 5.13, 8.05(1)(c), 8.05(2), and 17.03.

[38] The discussion can be very brief. All of Class Counsel’s requests are within the respective courts’ jurisdiction to grant in accordance with the Settlement Agreement. All the requests are sensible and reasonable. All the requests are supported by the evidentiary record. There is no opposition to any of them.

[39] We confirm that any proportional payment for the third PELD instalment below $100 should be deemed to be $100.

[40] The termination of the administration of the class actions should occur after confirmation that the third PELD payment has been made and the other administrative actions contemplated by this decision have been completed. An application to terminate the administration of the class actions may be submitted in writing at that time and will be heard as a motion in writing or desk order to come into effect on the designated date.

[41] Accordingly, we approve Class Counsel’s requests, subject to the variation for the termination of the administration of the class actions.

E. The Robert Selinger Request

[42] One additional request was made during the joint hearing. Robert Selinger, who is a class member, appeared to make a request that he be granted relief from forfeiture with respect to the second PELD payment which was mailed to him while he was outside of Canada. His return to Canada was delayed because of the Covid-19 pandemic and his personal circumstances. When he returned the cheque was stale dated and forfeited pursuant to the Court’s distribution protocol. Class Counsel supported the courts granting relief from forfeiture and Canada also consented. We agree that relief from forfeiture should be granted to Mr. Selinger and confirm that he is eligible to participate in the third PELD Instalment.

F. Conclusion

[43] Orders to go as requested, subject to the variation for the termination of the administration of the class actions.

[1]: Killough v. The Canadian Red Cross Society, 2016 BCSC 2403; Adrian v. Canada (Minister of Health), 2016 ABQB 729; McCarthy v. The Canadian Red Cross Society, 2016 ONSC 8032; Desjardins et Rochon c. Procureur Général du Canada, 22 Décembre, 2016.

Hinkson, C.J. Feth, J. Perell, J. Corriveau, J.

Released: March 1, 2022