Court File and Parties
Court File No.: CV-21-00671950-00CP Date: 2023-06-15 Ontario Superior Court of Justice
Between: Adrian Wasylyk, Plaintiff And: Lyft, Inc. and Lyft Canada Inc., Defendants Proceeding under the Class Proceedings Act, 1992
Counsel: Michael J. Peerless, Sabrina Lombardi, Paul Edwards, and Evan Edwards for the Plaintiff
Heard: In writing
Perell, J.
Reasons for Decision
A. Third-Party Funding Motion
1Pursuant to s. 33.1 of the Class Proceedings Act, 1992, the Plaintiff, Adrian Wasylyk, brings this motion for approval of a Litigation Funding Agreement with Omni Bridgeway (Fund 5) Canada Investments Ltd. (“Omni Bridgeway”).
2The Litigation Funding Agreement was entered into between Mr. Wasylyk, McKenzie Lake Lawyers LLP and Duboff Edwards Schachter Law Corporation (collectively “Class Counsel”), and Omni Bridgeway as the “Funder” on February 14, 2023.
3The factual background to Mr. Wasylyk’s proposed class action is as follows:
- Mr. Wasylyk entered into an agreement with the Defendants to provide ride sharing services.
- Mr. Wasylyk commenced the action on behalf of persons who entered into agreements with the Defendants to provide rideshare services in Ontario. He alleges that the relationship between Class Members and the Defendants is misclassified as an independent contractor relationship and that it is properly classified as an employment relationship. He alleges that as a result of the misclassification, Class Members are deprived of the protections and benefits pursuant to the Employment Standards Act, 2000, and Canada Pension Plan and Employment Insurance contributions.
- Mr. Wasylyk retained McKenzie Lake Lawyers LLP and Duboff Edwards Schachter Law Corporation as Class Counsel to prosecute the proposed class action.
- The motion record for certification was delivered on January 20, 2023.
- In advance of the hearing of the certification motion, the Defendants have brought a preliminary motion to stay the action in favour of arbitration. The motion is scheduled to be heard on December 5 and 6, 2023.
- Mr. Wasylyk understands that class actions are expensive and uncertain, but he does not have the means to fund this litigation personally nor to pay any potential adverse costs awards. He was informed by Class Counsel that third-party litigation funding could be available to ensure that the class has the resources available to prosecute the action.
- Mr. Wasylyk instructed Class Counsel to negotiate terms of a Litigation Funding Agreement with the Funder and negotiations followed.
- During the negotiation process, the Funder conducted its own due diligence with respect to the action and Class Counsel considered the anticipated disbursement budget and level of litigation risk.
- Mr. Wasylyk retained Golnaz Nayerahmadi, an experienced class actions lawyer, to provide independent legal advice about the Litigation Funding Agreement. She reviewed the Agreement and explained its terms to him.
- On February 14, 2023, the parties signed the Agreement.
- Class Counsel is of the opinion that the Agreement is fair, reasonable and in the best interests of the Class and that it will level the playing field with the Defendants at a fair cost to the Class.
- The Defendants take no position with respect to the Agreement.
4The Agreement provides that the Funder will pay disbursements and court-ordered costs, up to the amounts set out in the Agreement. The quantum of the maximum amounts, which I have reviewed in an unredacted copy of the agreement, is privileged information that could impact the Plaintiff’s litigation strategy if publicly disclosed. Class Counsel has advised that the maximum amounts for disbursements and adverse costs awards are sufficient to prosecute the action through trial.
5Under the Agreement, if the action is successful and results in a payment to the class, the Funder is entitled to be repaid its expended amount and certain investment-related and administrative costs. The Funder is also entitled to receive 8-10% of the litigation proceeds, up to a maximum of $20 million on a sliding scale that is set out in the Agreement.
6If the litigation is not successful, the Funder will not receive any return and will pay the committed adverse costs.
7The Agreement requires that only the Plaintiff is to instruct Class Counsel and Class Counsel owe their obligation to the Plaintiff. The Agreement does not create a solicitor client relationship with the Funder and Class Counsel’s professional obligations are owed exclusively and solely to the Class.
8The Funder can only terminate the Agreement with court approval.
9The Agreement requires the Funder to comply with the deemed undertaking of confidentiality in respect of any information or material it may receive as a result of its rights under the Agreement. The Funder will maintain all documents and information it may receive in strictest confidence.
10Under the Agreement, the Funder has agreed to sign an undertaking and procure that Omni Bridgeway Limited (“OBL”) will sign an undertaking for security for costs, in the form attached as Exhibit C to the Agreement, a form that has been found by Canadian courts to be sufficient to satisfy any requirement that security for costs be provided. The Undertaking provides, among other things, that the Funder and OBL will agree to comply with any court-ordered costs award; attorn to the jurisdiction of this Court; and agree to pay the Defendants the final, quantified amount of any court-ordered costs such that the Defendants may enforce the payment of such amount as a debt due and owing by the Funder to the Defendants.
11OBL is a large, publicly traded company based in Australia that has extensive experience providing financing for litigation and arbitration, including class actions, intellectual property claims, and commercial disputes. OBL (through its funding entities) has provided funding for more than 800,000 individuals in class actions and group claims in Europe, Australia and Canada. OBL’s market capitalization is over AUD $770 million and has significant funds to dedicate to litigation.
12Omni Bridgeway Capital (Canada) Limited is a wholly-owned subsidiary of OBL and is a sub-investment adviser to the Funder. Omni Bridgeway Canada has nine Canadian lawyers in its Toronto and Montreal offices.
13The investment in this proceeding is through OBL’s Fund 5. Fund 5 was launched in June 2019 and has aggregated committed capital of USD $500 million. Fund 5 has an After-the-Event insurance policy, which will respond to claims above the indemnity limit for adverse costs orders exceeding the self-insured retention.
1. Discussion and Analysis
14Third party funding of class proceedings has been permitted in Ontario as an acceptable way to promote access to justice for representative plaintiffs and class members. 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. Heller v. Uber Technologies Inc., 2021 ONSC 5434; Lilleyman v. Bumble Bee Foods LLC, 2021 ONSC 4968; 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. Manulife Financial Corp., 2011 ONSC 1785.
15Ontario Courts have considered factors including whether the agreement is necessary to provide access to justice; whether the access to justice provided by the agreement is substantively meaningful; whether the agreement is fair and reasonable in promoting access to justice while protecting the interests of the defendants; and whether the third-party funder is overcompensated for assuming the risks of an adverse costs award. Heller v Uber Technologies Inc, 2021 ONSC 5434.
16Consistent with this jurisprudence, recent amendments to the Class Proceedings Act, 1992 expressly address third party funding by codifying the common law requirement that plaintiffs must obtain court approval and setting out the requirements for approval. Lochan v Binance Holdings Limited, 2023 ONSC 2142. Section 33.1 of the amended Act states:
Third-party funding agreements
33.1 (1) In this section,
“third-party funding agreement” means an agreement in which a funder who is not a party to a proceeding under this Act agrees to indemnify the representative plaintiff or provide money to pursue the proceeding under this Act, in return for a share of any monetary award or settlement funds or for any other consideration.
Contingent on court approval
(2) A third-party funding agreement is subject to the approval of the court, obtained on a motion of the representative plaintiff made as soon as practicable after the agreement is entered into, with notice to the defendant.
No force or effect unless approved
(3) A third-party funding agreement that is not approved by the court is of no force or effect.
Agreement to be provided to defendant and filed
(4) For the purposes of the motion, the representative plaintiff shall serve on the defendant, or provide in any other way the court orders, a copy of the third-party funding agreement, and shall file the copy with the court.
Permissible redaction
(5) The representative plaintiff may, subject to the regulations, redact from the copy of the third-party funding agreement provided and filed under subsection (4) information that may reasonably be considered to confer a tactical advantage on the defendant, but no other information shall be redacted from the copy.
Agreement to be provided to judge
(6) The representative plaintiff shall provide to the judge who will be presiding at the hearing of the motion a copy of the complete and unredacted third-party funding agreement, which shall not form part of the court file.
Requirement to disclose
(7) The court may order the representative plaintiff to disclose to a defendant any information in the third-party funding agreement that has been redacted in accordance with subsection (5). 2020, c. 11 , Sched. 4, s. 31.
Submissions
(8) The defendant is entitled to make submissions at the hearing of the motion.
Factors
(9) The court shall not approve a third-party funding agreement unless,
(a) the court is satisfied that,
(i) the agreement, including indemnity for costs and amounts payable to the funder under the agreement, is fair and reasonable,
(ii) the agreement will not diminish the rights of the representative plaintiff to instruct the solicitor or control the litigation or otherwise impair the solicitor-client relationship,
(iii) the funder is financially able to satisfy an adverse costs award in the proceeding, to the extent of the indemnity provided under the agreement, and
(iv) any prescribed requirements and other relevant requirements are met; and
(b) it is a term of the agreement that the funder shall be subject to,
(i) the same confidentiality requirements in respect of confidential or privileged information in the proceeding to which the representative plaintiff would be subject, and
(ii) the deemed undertaking rules set out under the rules of court, as if the funder were a party to the proceeding.
Same, independent legal advice
(10) In determining whether a third-party funding agreement meets the requirements of clause (9) (a), the court shall consider whether the representative plaintiff received independent legal advice with respect to the agreement.
Indemnity for costs
(11) If costs are ordered to be paid by the representative plaintiff, the defendant has the right to recover the costs directly from the funder, to the extent of the indemnity provided under an approved third-party funding agreement.
Security for costs
(12) The defendant is entitled, on motion, to obtain from the funder security for costs to the extent of the indemnity provided under an approved third-party funding agreement, if,
(a) the funder is ordinarily resident outside Ontario;
(b) the defendant has an order against the funder for costs in the same or another proceeding that remain unpaid in whole or in part; or
(c) there is good reason to believe that the funder has insufficient assets in Ontario to pay the costs.
Directions
(13) The court may give any necessary directions respecting a dispute or question that arises in relation to a third-party funding agreement.
Changes to agreements
(14) This section applies, with necessary modifications, with respect to any changes to an approved third-party funding agreement that are agreed to by the parties to it.
Notice of termination
(15) The representative plaintiff shall give notice to the court and to the defendant if,
(a) an approved third-party funding agreement is terminated; or
(b) the funder becomes insolvent.
Non-application
(16) This section does not apply with respect to funding provided out of the Class Proceedings Fund established under the Law Society Act.
17In the immediate case, the Agreement satisfies all of the requirements set out in section 33.1. The Agreement is substantively similar to the litigation funding agreement that was approved in David v. Loblaw, 2018 ONSC 6469, with the funder agreeing to cover disbursements and adverse costs awards for the representative plaintiff and class members in return for reimbursement of all payments advanced and a percentage of the litigation recovery if the litigation is successful.
18In the immediate case, the procedural and technical requirements of s. 33.1 of the Class Proceedings Act, 1992 for funding approval are satisfied; namely: (a) Mr. Wasylyk has received independent legal advice; (b) the retainer and third-party funding agreements have been disclosed to the court; (c) the retainer and third-party funding agreements have been disclosed to the defendant with appropriate redactions; (d) there are appropriate confidentiality provisions in the third-party funding agreement; (e) there is the willingness and the ability of the third-party funder to post security for costs; (f) evidence of the background factual circumstances has been proffered; and (g) the affected parties have been given notice and an opportunity to be heard.
19In the immediate case, the Agreement is fair, reasonable and appropriate. It is consistent with other funding agreements that have been approved in Ontario, and it provides the class members the resources needed to pursue the action against well-funded Defendants. The Agreement satisfies all requirements of the CPA and factors outlined in precedent decisions.
20Accordingly, I grant Mr. Wasylyk’s motion as requested.
Perell, J.
Released: June 15, 2023