Court File and Parties

Court File Nos.: CV-22-00686288-00CP; CV-22-00686289-00CP; CV-22-00687612-00CP; CV-22-00682993-00CP Date: 2024-03-04 Superior Court of Justice - Ontario

Re: Brittany Christopher And: Royal Bank of Canada

And Re: Robyn Ramanauskas And: Bank of Montreal

And Re: Sarah Louise Campbell And: Canadian Imperial Bank of Commerce

And Re: Canaan Alexander And: The Bank of Nova Scotia

Before: J.T. Akbarali J.

Counsel: Celeste Poltak, Adam Tanel, Elie Waitzer and Zara Narain, for the plaintiffs Jeremy Devereux, Eric Lefebvre and Ted Brook, for the defendant Royal Bank of Canada Katherine L. Kay and Danielle K. Royal, for the defendant, Bank of Montreal Andrea Laing and Eric Leinveer, for the defendant Canadian Imperial Bank of Commerce Laura Fric and Karin Sachar, for the defendant The Bank of Nova Scotia

Heard: In writing

Proceedings Under the Class Proceedings Act, 1992

Endorsement

Overview

[1] These four actions have all been commenced under the Class Proceedings Act, 1992, S.O. 1992, c. 6. Two of them, Christopher and Ramanauskas, have been certified on consent.

[2] The actions are similar in that they all allege that the defendants each have a practice of charging duplicative non-sufficient funds fees on a single dishonoured pre-authorized debit (“PAD”) when a payee attempts to process an already-rejected PAD for a second time. In each action, the plaintiff pleads that the defendant’s standard form contract does not permit the duplicative charges, and that the defendant’s practice violates consumer protection legislation in Ontario.

[3] The plaintiffs in the four actions are all represented by the same team of lawyers and the same firm.

[4] The plaintiffs in the four actions have all entered into identical third-party funding agreements, each of which includes an identical amendment. Collectively, I refer to the agreement and the amendment as the agreement, or the funding agreement. Each has moved before me for approval of the funding agreement.

[5] In all actions, the defendants take no position on the motions.

[6] Given the substantial overlap in the analysis required, I have chosen to release one set of reasons applicable to all four actions.

[7] For the reasons below, I grant the plaintiffs’ motions and approve the funding agreements.

Statutory Basis for Court Approval of Third-Party Funding Agreements

[8] Recent amendments to the CPA have codified the common law requirement that plaintiffs must obtain court approval of third-party funding agreements, and set out the requirements for approval. Section 33.1 of the CPA 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).

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.

Analysis

Are the funding agreements fair and reasonable?

[9] In considering whether a funding agreement is fair and reasonable, the court considers the indemnity for costs and amounts payable to the funder under the agreement to determine whether the funder will be overcompensated or unduly rewarded for assuming the risks of the litigation. One measure by which courts may assess the fairness and reasonableness of the funding agreement is as against the funding terms that are statutorily mandated for the Class Proceeding Fund: Marriott v. General Motors of Canada Company, 2018 ONSC 2535, at para. 9; David v. Loblaw, 2018 ONSC 6469, at para. 13.

[10] In this case, the funding agreements provide for a staged success fee payable to the funder, ranging between 7 – 12 % of the class’s net recovery, depending on the stage of the action at which resolution is achieved. The Class Proceedings Fund receives a levy of 10% when a successful outcome occurs at any stage of the proceeding. Thus, in this case, the funding arrangement has the potential to be more advantageous to the class than the statutory terms, and at no point is the success fee materially greater than would be paid to the Class Proceedings Fund under the statutory terms.

[11] The funding agreements provides for a reasonable reward for the funder in exchange for providing the necessary costs indemnity and disbursement funding, up to a prescribed maximum. The representative plaintiffs do not have losses of a magnitude that would make it reasonable or practical to bear these costs and risks themselves, even if they could afford it, and class counsel (who is working on a contingency fee basis) is not in a position to fund the litigation either.

Will the agreement diminish the rights of the representative plaintiff to instruct the solicitor or control the litigation or otherwise impair the solicitor-client relationship?

[12] The funding agreements specifically acknowledge that the plaintiff in each action retains complete control over the conduct of the action, and that only the plaintiff may retain and provide instructions to class counsel. The agreement acknowledges that class counsel’s professional obligations are owed to the plaintiff and the class, and not to the funder.

Is the funder financially able to satisfy an adverse costs award in the proceeding, to the extent of the indemnity provided under the agreement?

[13] The evidence filed demonstrates that the funder has sufficient assets to satisfy any adverse cost award that may be ordered against the plaintiffs to the extent of the indemnity prescribed by the funding agreement. I note that both the funder and its backer have agreed to irrevocably attorn to the exclusive jurisdiction of the Ontario courts in relation to any matters relating to the agreements. Moreover, they have irrevocably given the defendants in each action the right to recover costs awarded to them, up to the amount of adverse costs funding prescribed in the agreements, directly from the backer.

Do the agreements contain appropriate confidentiality provisions and a deemed undertaking provision?

[14] The agreements each provide an acknowledgement from the funder that it is subject to the deemed undertaking rule set out in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[15] The agreements also contain clauses requiring the funder to strictly maintain the confidentiality of privileged material, and to only use privileged material for the purposes for which it was provided. The funder also agrees to be bound to the same confidentiality requirements in respect of confidential or privileged information in the action to which the plaintiff in the action is subject.

Other Relevant Factors

[16] The agreements provide that the funder’s rights of termination are limited, and in all cases, subject to court approval.

[17] I have already averted to the fact that the representative plaintiffs could not bring these actions without the adverse costs indemnity and funding for disbursements. Their own modest losses pale in comparison to the costs exposure and the expense of funding the necessary disbursements, which will include expert evidence.

[18] The funding agreements are thus necessary to facilitate access to justice for the class, and promote behaviour modification, if ultimately a court finds the defendants, or any of them, have engaged in behaviour that ought to be modified.

Conclusion

[19] In conclusion, I grant the plaintiffs’ motions and approve the proposed funding agreements. The plaintiffs have each delivered a draft order, and each of which I have signed.

J.T. Akbarali J. Date: March 4, 2024