Court File and Parties

Court File No.: CV-20-00001582-00CP Date: 2024 07 09 Superior Court of Justice – Ontario

Between: Erwin Banfi, Plaintiff And: The Corporation of the Town of Oakville, Conservation Halton, The Regional Municipality of Halton, The Corporation of the Town of Milton, His Majesty the King in Right of the Province of Ontario and Robert Burton, Defendants

Before: Justice Baltman

Counsel: G. Will, G. Marsden and M. Reid, for the Plaintiff Erwin Banfi C. Loopstra, for the Defendants The Corporation of the Town of Oakville and Robert Burton J. Olah and B. Orct for the Defendant, Conservation Halton D. Smith and D. Elman for the Defendant, The Regional Municipality of Halton S. Kugler and H. Fisher for the Defendant, The Corporation of the Town of Milton S. Gandhi, K. Kephalas, and M. Chung for the King in the Right of the Province of Ontario J. McLaughlin, Former Class Counsel

Heard: June 19, 2024

Motion for Approval of Class Action Settlement

Introduction

[1] This is the Plaintiff’s motion for approval of a class action settlement and class counsel fees. It relates to a proposed class action by Oakville property owners who allege that overdevelopment by the town has led to increased flood risk and reduced the value of their homes.

[2] In this action, the Plaintiff claims that the Defendants made development decisions – starting in 1986 – that expanded the floodplain and increased flood risks for properties within the area bounded by Burloak Drive, Lake Ontario, Winston Churchill Boulevard and Dundas Street. The action focuses specifically on 1,643 homes located within the floodplain that are particularly susceptible to flooding in the event of a regional storm. The risk of flooding is based on a number of factors, including upstream development, their proximity to water, and their respective elevation levels. The parties refer to these at-risk properties as being within the “Regulatory Flood Hazard” (RFH).

[3] As I will expand upon below, counsel seek approval of the following settlement:

• Payment of $500,000 by the Defendants to the Intact Centre on Climate Adaptation
• Class counsel fees in the sum of $495,000, including $121,649.74 for legal fees, $15,814.47 for HST, and $357,535.79 for disbursements, and
• An honorarium for Edwin Banfi, the class representative, in the amount of $5,000

The Proceeding Leading to the Settlement

[4] The action was premised on the potential impact of flood risk on the value of properties subsumed by the expansion of the RFH.

[5] However, the Plaintiff’s ongoing investigation uncovered two substantial factors that cause individual issues to overwhelm any possible class claim for property diminution. First, a significant number of class members were not aware that their property had been subsumed by the RFH. Second, during the class period, between January 1, 2005 and March 5, 2024, many of the 1,643 properties had been bought and sold – occasionally, multiple times.

[6] Those two factors create significant complications when attempting to crystalize damages.

[7] Moreover, during cross examination on his affidavit, the Plaintiff’s water resource engineer conceded that individual issues prevent a determination of the pivotal cause of the expansion of the RFH. He agreed he could not simply identify “development” as the general cause for such expansion. In fact, he allowed there were “50 or so” factors that require consideration, and which need to be analyzed on “a property by property basis.”

[8] Due to these difficulties in both crystallizing damages and isolating development as the cause of the expansion of the RFH, the Plaintiff shifted the focus of the action to a) elevating public awareness of the risks of the RFH, and b) instigating initiatives to reduce the risk of flooding.

[9] In that vein, the Settlement Agreement provides that the Defendants will allocate $500,000 to the Intact Centre on Climate Adaptation, a University of Waterloo research centre, to develop the Oakville Home Flood Education and Protection Program for class members. This program will provide class members with user-friendly and action-oriented information on flood resilience measures for their properties in order to reduce flood risk and minimize damage in the event of a flood, e.g. relocating downspouts or regrading the property to facilitate drainage and divert water away from the home’s foundation. The program also contains community outreach events and a door-to-door campaign, during which home flood protection trained professionals will visit all 1,643 properties to engage Class Members on the topic of flood risk, distribute an easy-to-install flood alarm, and provide practical tips. Any settlement funds not used by the Intact Centre will be paid to the Law Foundation of Ontario to be used to advance access to justice.

[10] Beyond that, there are two initiatives currently unfolding in Oakville that, while not formally linked to this class action, will likely have the effect of reducing flood risk for class members. First, Oakville has already begun a number of capital works projects involving storm water, shoreline, and creeks, with design and construction dates from 2023 to 2032 and a budget exceeding $134,000,000. For example, the Rebecca Street Bridge Project – designed to enable easier flow of water underneath the bridge – is currently underway.

[11] Second, the Town of Oakville is developing a Rainwater Management Strategy, which contemplates the expenditure of $639,800,000 on stormwater infrastructure over the next 30 years. At page 10 of the “Roadmap for Town-wide Rainwater Management Strategy”, dated March 15, 2022, the strategy is described as taking “a comprehensive approach to integrate the state of good repair and increase resiliency of the town’s rainwater related infrastructure.”

Objector to the Proposed Settlement

[12] There has been only one objector to the proposed settlement, Ms. Barbara Medeiros. Despite getting notice of the certification motion, she declined to attend or participate. In her email of May 30, 2024, Ms. Medeiros advised that the proposed settlement is not acceptable, as it does not address existing flooding issues affecting homes in the area or support individual homeowners with associated costs. She stated that she had recently been quoted $15,000 to address property damage caused by flooding.

[13] Plaintiff’s counsel spoke with Ms. Medeiros and learned that a) her home was newly built in the year 2000; b) she has had flooding and drainage issues since then; c) she attributes her problems to the builder’s failure to allow for sufficient drainage; and d) while her home is close to Taplow Creek she does not believe she’s had any flooding from the creek. In the early years, the builder attended to repair any deficiencies, including patching the foundation and attempting to deal with drainage issues, but once the warranty ran out, she has had no further help.

[14] Plaintiff’s counsel concluded, reasonably in my view, that her problems do not appear to be related to the expanded floodplain or upstream development, but rather to construction deficiencies, in particular improper drainage. That may be the basis for a claim against the builder – and possibly the municipality if their inspections were deficient – but her issues do not appear to implicate the expanded floodplain. In any case, counsel have agreed that she will be deemed an opt out from this lawsuit, thus preserving her rights to pursue further action should she so wish.

Analysis of the Proposed Settlement

[15] Section 27.1(3) of the Class Proceedings Act, 1992, S.O. 1992, c. 6, provides that a settlement of a class proceeding is not binding unless approved by the court. To approve a settlement of a class proceeding, the Court must find that, in all the circumstances, the settlement is fair, reasonable, and in the best interests of the Class: Lavier v. My Travel Canada Holidays Inc., 2011 ONSC 1222, at para. 19; Lowe v. Dr. Meikle Professional Corporation, 2021 ONSC 7450, at para. 18.

[16] In determining whether a settlement is reasonable and in the best interests of the class, courts have identified several factors to be considered: Lavier, at para. 21; Lowe, at para. 19. They include:

a) The likelihood of recovery or likelihood of success; b) The amount and nature of discovery, evidence, or investigation; c) The proposed settlement terms and conditions; d) The recommendation and experience of counsel; e) The future expense and likely duration of the litigation; f) The number of objectors and nature of objections; g) The presence of good faith, arm’s-length bargaining and the absence of collusion; h) The information conveying to the court the dynamics of, and the positions taken by, the parties during the negotiations; and i) The nature of communications by counsel and the representative plaintiff with class members during the litigation.

[17] I am satisfied that after arms-length negotiations through counsel, the parties negotiated a settlement that balances the risk of proceeding to certification and the goals of litigation. Importantly, this action is premised on flood risk rather than actual flooding. To that end, I accept that the action has elevated public awareness regarding preparation for and prevention of flooding, and that the settlement will further that objective by a significant payment to the Intact Centre to develop an education and protection program for class members.

[18] In arriving at that conclusion, I am mindful of the immense challenges in pursuing this action, in particular, a) determining the cause of the expansion of the Regulatory Flood Hazard, and b) quantifying the damages for any particular homeowner. On the former point – causation – there are a multitude of possible factors that come into play, including proximity, height, drainage, upstream development, and how water moves when it overflows the creek system. On the latter point – damages - the Oakville flood plain is vast and made up of numerous different streams. Factors affecting one neighbourhood might have little or no relevance to other homes nearby. Many class members are not even aware they are within the flood plain. The Plaintiff’s expert conceded that even homes within the same neighbourhood would have to be assessed individually. And some homes have been sold – and resold – within the class period, making it very difficult to crystallize damages.

[19] Settlements such as these, which do not distribute any monies directly to the class members but instead direct the funds to a public interest organization, are known as cy-près settlements. Cy-près settlements have been ordered where (i) a direct distribution to the class would be uneconomic because there is no cost effective way of determining which class members suffered damage and if so how much, (ii) the distribution is directly related to the issues in the lawsuit and will directly benefit the class members, and (iii) it is not practical to distribute the benefits in any other manner: Cass v. WesternOne Inc., 2018 ONSC 4794, at para. 91; Emond v. Google LLC, 2021 ONSC 302, at paras. 19-21.

[20] I am satisfied this case meets those criteria. Here it is not economically feasible to provide a recovery to each class member with a settlement in the range of $500,000. Based upon 1,643 properties, there would be a recovery of $304.32 per property, which would have to be shared not only amongst current owners but also prior owners since January 1, 2005. The cost of administering such a settlement would be prohibitive, particularly given the cost of identifying and verifying all of the prior owners and attempting to determine whether they had suffered a loss. A direct distribution to class members is simply not viable.

[21] With the Oakville Home Flood Education and Protection Program, the proposed settlement provides a material benefit to the class members, which relates to the issues in the litigation. I recognize that the Statement of Claim sought damages in the amount of $1,000,000,000. But that reflected the capital costs required to reduce the flood risks associated with the RFH. The magnitude of those costs is confirmed by the Rainwater Management Strategy, which contemplates the expenditure of $639,800,000 on stormwater infrastructure over the next 30 years, making the disparity between the relief sought and the ultimate result not as stark as initially appears.

[22] As such, the settlement recognizes the important issues of reducing flood risk, promoting access to justice for the class members and behaviour modification in respect of the Defendants.

[23] Finally, I note that after the dissemination of 1,643 notification letters to class members, only 32 Opt Out Forms were submitted and only 12 of those Forms expressed a dissatisfaction with the proposed settlement. The website set up by Class Counsel – www.floodriskoakville.com – has had over 860 visitors. It has links to the following documents: Long Form Notice, Settlement Agreement, Opt Out Form, Flood Home Education and Protection program of the Intact Centre, Addresses of the 1,643 properties, and the most recent Amended Statement of Claim.

[24] Given the extensive Notice Program, the limited number of Opt Outs suggests that the Class agrees that the settlement serves its best interests.

[25] For all those reasons, I am satisfied that the proposed settlement is in the best interests of the class members, and therefore approve it.

Approval of Class Counsel Fee and Honorarium

[26] Class counsel seek approval for counsel fees and disbursements in the sum of $495,000, including $121,649.74 for legal fees, $15,814.47 for HST, and $357,535.79 for disbursements.

[27] As a general rule, Class Counsel’s fees are to be fixed and approved on the basis of whether they are “fair and reasonable” in all of the circumstances. The relevant considerations include: (a) the factual and legal complexities of the matters dealt with; (b) the risks undertaken, including the risk that the matter might not be certified; (c) the degree of responsibility assumed and the skill and competence demonstrated by class counsel; (d) the monetary value of the matters in issue; (e) the importance of the matter to the class members and to the public; (f) the results achieved; (g) the ability of the class to pay; (h) the expectations of the class as to the amount of the fees; and (i) the opportunity cost to class counsel in the expenditure of time in pursuit of the litigation and settlement: Lowe, at para. 23.

[28] The “risks undertaken” include not just that the action may not be certified as a class proceeding, but also all of the liability and recovery risks. Given those risks, fair and reasonable compensation must be enough to provide economic incentive to lawyers to take on a class proceeding and do it well: Lowe, at paras. 24-25.

[29] Plaintiff’s counsel worked on this case for over five years. During that time, they incurred fees in excess of $1,000,000 and disbursements in the amount of $357,535.79. The retainer agreement with the Class Representative contemplates a contingency fee of 33%. Pursuant to the Settlement Agreement, Class Counsel may seek court approval of fees and disbursements in the amount of $500,000, without opposition from the Defendants.

[30] Will Trial Lawyers seeks approval for counsel fees and disbursements in the total sum of $495,000. Nearly three quarters of that recovery - $357,535.79 – is for disbursements. The majority of the disbursements relate to experts, including a water resource engineer and a real estate appraiser, who provided extensive affidavits and attended lengthy cross-examinations.

[31] The time docketed on the file by the plaintiff’s firm exceeds $1,000,000, making the portion allocated for legal fees - $121,649.74 - approximately 12% of the docketed time. That time included the following work by plaintiff’s counsel:

• Interviewing 65 property owners regarding issues of flooding and potential flooding;
• Attending meetings with the Class Representative regarding the issuance of the Statement of Claim, ongoing strategy, and approval of the proposed settlement;
• Researching relevant case law;
• Meeting with a water resource engineer and a real estate appraiser;
• Drafting the Statement of Claim, as well as four amendments;
• Attending case conferences;
• Drafting the motion record for certification, which contained 2,611 pages;
• Reviewing voluminous responding motion records;
• Attending at approximately 15 days of cross-examinations on the affidavits filed;
• Negotiating the Settlement Agreement;
• Drafting the motion record and factum for the draft Order certifying the action for the purposes of settlement;
• Fulfilling the notice program;
• Drafting the motion record for approval of the Settlement Agreement.

[32] I easily approve the counsel fees and the disbursements incurred. This action was a well intended effort to remedy legitimate flooding concerns. As the action progressed and cross-examinations ensued, serious questions arose regarding both causation and damages that caused individual issues to overwhelm any collective claim. While this made proceeding as a class action no longer viable, the action served to increase public awareness of the RFH and instigate government initiatives to reduce the risk of flooding.

[33] Finally, I agree with counsel that an honorarium of $5,000 should be paid to Mr. Banfi, the representative plaintiff. The uncontested evidence is that he invested significant time and energy attending meetings, reviewing documents, and communicating with class members.

Conclusion

[34] For the reasons set out above, I approve of the proposed settlement along with the Class Counsel fee and honorarium.

Baltman J. Released: July 9, 2024