A. Introduction

[1] This is a certified and settled class proceeding against Talon International Inc. on behalf of abortive purchasers of hotel units in what was known as the Trump Tower in downtown Toronto.[^1] In November 2022, I approved the settlement and made a partial fee approval order.[^2]

[2] The settlement is essentially about the return of the deposits of the Class Members to them. I approved a class counsel fee to a maximum of $2.2 million, all inclusive, of which $1.25 million, inclusive of fee, taxes, and disbursements, was payable forthwith from the settlement fund, with the balance payable, if at all, subject to court approval, after the distribution of the settlement is completed and the actual take-up by the Class Members was determined.

[3] The terms of the settlement are described in detail in my settlement approval Reasons for Decision.

[4] For present purposes, the key terms of the settlement agreement are as follows:

The Defendant makes no admission of liability. The Defendant pays $5.75 million, all inclusive, (the “Settlement Amount”) to a Claims Administrator. The payment is reversionary.
The “Net Settlement Amount” means the Settlement Amount minus (1) approved Class Counsel fees (including HST and disbursements) and (2) a $150,000 holdback intended to pay for Claims Administration and Claims Adjudication Expenses.
RicePoint Administration Inc. is appointed and act as the Claims Administrator.
Clifford Hendler is appointed and acts as the Claims Adjudicator.
The claims bar deadline is 100 days after the date on which the Notice of Settlement Approval is first provided in accordance with the Notice Plan.
The Claims Administrator will make the initial determination as to whether a Class Member is an Eligible Claimant.
If there is a dispute as to who is an Eligible Claimant, it will be determined by the Claims Adjudicator. The Claims Adjudicator shall have 10 days to make a determination as to whether the Eligible Claimant is an Approved Claimant.
The Claims Adjudicator shall determine if an Eligible Claimant is an Approved Claimant on the basis of the documentation produced by the Claimant and the written response provided by the Defendant’s Counsel.
An Approved Claimant will be entitled to compensation based on whether they were a Direct Purchaser or Indirect Purchaser of the Hotel Unit.

a. A Direct Purchaser’s share of the Settlement Fund is limited to a pro rata basis up to 75% of the total original deposit amount paid, with no interest payable under the Condominium Act, 1998, or the Courts of Justice Act, and no payment towards costs. (The reduction reflects the litigation risk facing each Direct Purchaser should he or she be required to participate in an individual issues trial.)

b. The recovery of an Indirect Purchaser is limited to a pro rata basis up to 25% of the total original deposit amount paid, with no interest payable under the Condominium Act, 1998 or the Courts of Justice Act, and no payment towards costs. (The reduction reflects the much more significant litigation risk facing each Indirect Purchaser should he or she be required to participate in an Individual Issues Trial.)

Any surplus amounts remaining in the Escrow Account following the payment of Claims Administration and Claims Adjudication Expenses and Class Counsel Fees, and which are not distributed to Approved Claimants pursuant to the Distribution Protocol shall be considered further deposit monies that are forfeited to and in favour of the Defendant and shall accordingly revert to the Defendant and be paid to such entity as the Defendant may direct.

[5] For present purposes, it is also necessary to repeat what I said in partially approving Class Counsel’s fee. At paragraphs 102-108, of my Reasons for Decision, I stated:

As noted in the introduction section in these Reasons for Decision, a troublesome feature complicating the determination of the appropriate counsel fee is that a portion of the settlement may remit to Talon, and it remains to be determined how much of the net settlement fund will be taken up by Class Members.
If the whole net settlement fund were to be taken up, then in my opinion, Current Class Counsel would truly have earned a counsel fee of $2.2 million. Current Class Counsel took on the high-risk litigation and they achieved a settlement that I have found to be fair and reasonable and in the best interests of the Class Members. I have described the settlement as a mediocre success, but it was a success, and it was the product of a hard-fought litigation and hard-fought negotiations.
Further, regardless of what the take-up may eventually turn out to be, Current Class Counsel has truly earned an immediately payable counsel fee of $1.25 million, and they deserve some considerable credit for taking on the case after I disqualified Former Class Counsel.
In the circumstances of the immediate case, because the amount of the take-up is uncertain, in my opinion, the appropriate approach is to approve a counsel fee of $2.2 million, all inclusive, and make $1.25 million, inclusive of fee, taxes, and disbursements, payable forthwith, and to holdback $950,000. The holdback shall be payable, if at all, subject to court approval, after the distribution of the settlement is completed and the actual take-up by the Class Members is determined.
In my opinion, Current Class Counsel has underestimated the work that they will have to do to implement the settlement and to assist Class Members in making claims to the Claims Administrator and the Claims Adjudicator. The holdback of approximately $1 million will incentivize Current Class Counsel to take on these tasks. If take-up and success is improved, the holdback will provide Current Class Counsel with the source for remuneration for the services rendered.
Residual settlements are not as common as they once were, but when there is a residual settlement, it has been common to use the approach of holdbacks to better determine the worth of the contingency fee and to encourage Class Counsel to increase the take-up, which, in turn, increases the access to justice, which is the primary purpose of a class proceeding.
I, therefore, approve a counsel fee of $2.2 million with a holdback of $0.95 million. Current Class Counsel may apply for court approval for a further payment of the counsel fee after the Claims Administrator reports to the court about the implementation of the settlement.

[6] RicePoint administered the settlement. Pursuant to the Class Proceedings Act, 1992, the administrator of a settlement is obliged to submit a report to the court. Sections 27.1 (16) and (17) of the Act state:

Report

(16) No later than 60 days after the date on which the settlement funds are fully distributed, including any distribution under section 27.2, the administrator or other person or entity who administered the distribution shall file with the court a report containing their best information respecting the following:

The amount of the settlement funds before distribution.
The total number of class or subclass members.
Information respecting the number of class members identified in each affidavit filed under subsection 5 (3) in the motion for certification.
The number of class members who received notice associated with the distribution, and a description of how notice was given.
The number of class or subclass members who made a claim under the settlement and, of them, the numbers of class or subclass members who did and who did not receive settlement funds.
The amount of the settlement funds distributed to class or subclass members and a description of how the settlement funds were distributed.
The amount and recipients of any distribution under section 27.2, and the amount, if any, that was subject to reversion or otherwise returned to the defendant.
The number of class or subclass members who objected to the settlement and the nature of their objections.
The number of class or subclass members who opted out of the class proceeding.
The smallest and largest amounts distributed to class or subclass members, the average and the median of the amounts distributed to class or subclass members, and any other aggregate data respecting the distribution that the administrator or other person or entity who administered the distribution considers to be relevant.
The administrative costs associated with the distribution of the settlement funds.
The solicitor fees and disbursements.
Any amount paid to the Class Proceedings Fund established under the Law Society Act or to a funder under a third-party funding agreement approved under section 33.1.
Any other information the court requires to be included in the report. 2020, c. 11, Sched. 4, s. 25.

Same

(17) Once the court is satisfied that the requirements of subsection (16) have been met with respect to a filed report, the court shall make an order approving the report and append the report to the order.

[7] Pursuant to s. 27.1.(17) of the Class Proceedings Act, 1992, RicePoint submitted its Claims Administration Report dated November 23, 2023. The complete report is set out below.

RicePoint

Claims Administration Report

Summary

The purpose of this report is to provide a summary of claims administration for the Talon Class Action.

On February 19, 2023, RicePoint caused the settlement website and online interactive claim portal to be made live to class members. Class members were issued a notice which provided a unique claim id and pin so that they could log into the online claim portal and submit a claim.
The deadline for submitting claims was May 19, 2023, and the interactive claim portal was deactivated on this date.
RicePoint received a total of 93 claim submissions. Of this total, RicePoint determined that 18 of these claim submissions were an exact duplicate submission of another claim already submitted. RicePoint also deemed 2 claim submissions to be ineligible as insufficient supporting documentation was provided to prove they were a valid class member. After rejecting these 20 claims, a total of 73 claims were deemed eligible by RicePoint. The gross value of deposits for the 21 Direct Purchaser claims received totaled $13,724,399.27. The gross value of deposits for the 52 Indirect Purchaser claims received totaled $5,209,710.92.

Please note that there are three factors that limit RicePoint’s ability to accurately report the gross value of eligible claims, and these factors were noted to both Plaintiff and Defense counsels. The first factor is that many claimants submitted their claim submission in currencies that were not in Canadian dollars. The gross value reported has not been converted to CAD. The second factor which affects Indirect Purchasers, is that many claimants have claimed the total paid which includes the amount paid to the Assignee which is higher than the actual deposit received by Talon. The third factor is that many claim submissions were submitted for the same hotel unit(s). In many instances, claimants have indicated the total shared deposit amount for a hotel unit deposit rather than their specific amount paid.

On July 20, 2023, RicePoint sent all 73 claims deemed eligible to the Defendants for their opportunity to review and challenge the status of these claims.
On August 22, 2023, RicePoint received Defense counsel’s position on the 73 claim submissions RicePoint deemed eligible. Defense counsel drafted two summaries one for Direct Purchaser claims and the other for Indirect Purchaser claims outlining their position on all claims.
Of the 21 Direct Purchaser claims, a total of 12 claims were disqualified. The reasons these claims were disqualified include: (1) the claimant previously opted out of the settlement as of the November 16, 2020, deadline, (2) the claimant previously entered into a Release with Talon, (3) or the claimant was subject to the terms of Justice Dow’s Order dated February 14, 2018, which resulted in valid Judgments being obtained against various individuals and companies. Plaintiff counsel have acknowledged that these claims are deemed ineligible pursuant to the approved Settlement Agreement.
Of the remaining claims, a total of 7 were not challenged by the Defendants based on eligibility. All these claims were in the Direct Purchaser category.
On September 14, 2023, RicePoint sent 40 claims to the Court Appointed Adjudicator. The list of claims sent to the Adjudicator removed duplicate claim submissions made by husband and wife for the same hotel unit. Of these 40 claims, 2 were Direct Purchaser claims and the remaining 38 were Indirect Purchaser claims. These claims were reviewed by Class Counsel who provided a summary of their position on the challenged claims.
On November 6, 2023, the Court Appointed Adjudicator returned his decision on claims that were challenged. All 40 of the claims sent to the adjudicator were approved.
The gross value of deposits for Direct Purchaser claims that were not challenged by the Defendants totals $1,084,230.00. After factoring this amount by 75% as per the Distribution Protocol the value of these Direct Purchaser claims is $813,172.50. Please note these reported values are subject to further quantum review and are therefore subject to change. To provide more accurate reporting deposit amounts for the same hotel unit have only been counted once to not inflate the reported values.
The gross deposit value of Direct Purchaser claims that were challenged but approved by the adjudicator totals $343,760.50. After factoring this amount by 75% as per the Distribution Protocol the value of these Direct Purchaser claims is $257,820.38. Please note these reported values are subject to further quantum review and are therefore subject to change.
The gross deposit value of Indirect Purchaser claims approved by the adjudicator totals $5,378,596.78. After factoring this amount by 25% as per the Distribution Protocol the value of these Direct Purchaser claims is $1,344,649.20. Please note these reported values are subject to further quantum review and are therefore subject to change. To provide more accurate reporting deposit amounts for the same hotel unit have only been counted once to not inflate the reported values.
The sum of all factored deposits from approved Direct and Indirect Purchasers totals $2,415,642.08.
After reserving for future approved claimant payments, future administration and adjudicator fees, class counsel fees which have been held in trust and taxes remittance for interest earned while with RicePoint it is anticipated that there will be a residual balance of $1,020,934.51 which will revert to the Defendants. The chart table below provides a summary of all settlement fund accounting along with further details on the administrator and adjudicator reserve fund.

Talon Settlement Fund

Total Settlement Amount

$5,750,000.00

Less Counsel Fees

-$2,200,000.00

Less Admin & Adjudication Fees

-$150,000.00

Interest Earned on Funds Received by Rice Point

$60,478.57

Trust Tax

-$32,374.18

Admin & Adjudication Fees remaining

$8,472.20

Less Unchallenged Direct Claims

-$813,172.50

Less Challenged but Approved Direct Claim (75%)

-$257,820.38

Less Challenged but Approved Indirect Claim (25%)

-$1,344,649.20 $1,020,934.51

Talon Administration & Adjudicator Reserve Fund

Administration & Adjudicator Reserve

$150,000.00

-$47,729.40

-$29,447.80

-$7,644.31

-$33,900.00

-$22,806.29

$8,472.20

RicePoint Invoice - 7/10/2023

RicePoint Invoice - 9/19/2023

RicePoint Invoice - 11/01/2023

Estimate of Adjudicator Invoice (HST incl.)

RicePoint Estimate to Complete (HST incl.)

[8] In summary, 73 claims were deemed eligible by RicePoint. The gross value of deposits for the 21 Direct Purchaser claims received totaled $13,724,399.27. The gross value of deposits for the 52 Indirect Purchaser claims received totaled $5,209,710.92. Of the 21 Direct Purchaser claims, 12 claims were disqualified because: (1) the claimant previously opted out of the settlement; (2) the claimant previously entered into a Release with Talon; (3) or the claimant was subject to the terms of Justice Dow’s Order dated February 14, 2018 which resulted in valid Judgments being obtained against the claimant. Subject to a further quantum review, $2,415,642.08 will be paid to claimants and assuming no reduction in the counsel fee holdback, $1,020,934.51 will be remitted to the Defendant.

[9] As a result of the concerted efforts of Class Counsel, the take-up rate was 71%. However, compensation was unavailable for some claimants because of the judgments obtained by Talon against class members.

[10] Cumulatively, Flaherty McCarthy LLP and Mack Lawyers, spent almost 275 hours between November 2022 and the present seeking to maximize the recovery for the class members who went through the administration process. This included working directly with class members to gather necessary information and assisting in the submission of claims. There has also been considerable communication with RicePoint over the past year.

[11] I agree with their submission that Class Counsel have earned their fee, including the remaining $950,000 held in trust.

[12] Accordingly, I approval the further payment of $950,000 (inclusive of HST).

[13] Pursuant to s. 27.1(17) of the Class Proceedings Act, 1992, I approve the Claims Administration Report.

[14] Order accordingly.

Perell, J.

Released: November 30, 2023

COURT FILE NO.: CV-17-569023-00CP

DATE: 20231130

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ASHLEKA PERSAUD and TEN EIGHT VACATIONS LTD.

Plaintiffs

and –

TALON INTERNATIONAL INC.

Defendant

REASONS FOR DECISION

PERELL J.

Released: November 30, 2023

[^1]: Persaud v. Talon International Inc., 2018 ONSC 5377 and 2020 ONSC 2362.

[^2]: Persaud v. Talon International Inc., 2022 ONSC 6359.

Persaud v. Talon International Inc., 2023 ONSC 6781

Case Summary

A. Introduction

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues