July 4th, 2012
On July 4, 2012, the Ontario Court of Appeal affirmed the importance of finality and efficiency in the implementation of class action settlements. The Court released its decision in Fontaine v. Duboff Edwards Haight & Schachter (2012 ONCA 471), which concerned the national settlement of class actions related to residential schools in Canada.
The national settlement provides that class members may collect compensation through an independent assessment process (“IAP”). Many IAP claimants retain counsel to assist them. The formal orders implementing the settlement set out a comprehensive claims administration process. A limit is imposed on the legal fees that counsel may charge an IAP claimant. In addition, an Adjudicator may assess the “fairness and reasonableness” of legal fees charged for an IAP claim.
In Fontaine, the appellant, a Manitoba law firm, sought to challenge the Chief Adjudicator's assessment of its legal fees. The national settlement specifically provides that a claimant or counsel may make “Request for Direction” from a designated Administrative Judge. Since the settlement preserves the supervisory jurisdiction of the courts, the appellant argued that a judge could review an assessment decision by the Chief Adjudicator.
The Court of Appeal agreed with Winkler C.J.O. and held that there is no right to appeal or judicially review a decision of the Chief Adjudicator. Rouleau J.A. explained that the claims administration process is a “creature” of the settlement agreement; the only appeal routes are those expressly set out in its terms. Further, Justice Rouleau emphasized that the court's supervisory jurisdiction does not provide an “implicit right to appeal each determination” made in the claims administration process. Instead, the parties intended that the settlement would be “expeditious and not mired in delay and procedural disputes.” He emphasized that expediency and finality is required to protect vulnerable claimants.
Justice Rouleau held that, where legal fees for an IAP are in issue, recourse to the courts may only be obtained in very limited circumstances. In particular, a “Request for Direction” may only be made where the Chief Adjudicator fails to comply with (i) the terms of the settlement, (ii) the implementation orders, or (iii) the principles of natural justice. Any other appeal opportunities would raise concerns about finality, efficiency, and judicial resources.
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