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The Role of the Law Foundation of Ontario and the Class Proceedings Fund at the Individual Issues Stage of a Class Action

9 minute read
Also authored by: Jon Wakelin

In the Ontario Superior Court of Justice’s recent decision in Brazeau v. Canada (Attorney General),[1] Perell J. considered the role of the Law Foundation of Ontario (the “LFO”) in administering the Class Proceedings Fund (the “Fund”) when a class action enters the individual issues stage of a class proceeding.

The Fund was established after an Ontario Law Reform Committee initiative in the 1990s designed to overcome barriers in access to justice for mass plaintiffs. Reforms to the Law Society Act (the “LSA”) followed that empowered the LFO to administer the Fund, which provides monetary litigation support by paying disbursements and affording protection from adverse costs awards. The scope of the LFO’s obligation to administer the Fund at the individual issues stage of a class proceeding has been largely unexplored.

In this case, the parties brought a motion for directions at the individual issues stage of two class actions in Ontario involving inmates of federal penitentiaries who had been unlawfully placed in solitary confinement. A similar class action proceeded in Quebec. The Ontario actions proceeded to summary judgment where the classes recovered an aggregate damages award of approximately $41 million. Class Counsel were correspondingly approved for fees net of $7.9 and 6.7 million.[2] Approximately $0.5 million and $2.7 million was awarded to the LFO for disbursements and statutory levies, respectively. Individual issues trials were ordered for class members to recover additional compensation for their injuries.[3]

Following the successful summary judgment motions, Class counsel brought motions seeking the court’s guidance to approve the remaining phases of the individual issues stage, including (a) Distribution of the aggregate damages award; and (b) Individual Issues determinations procedure. The Quebec and Ontario courts held four-stage joint hearings to address the motions. When the matters reached the individual issues stage, the LFO took the position that it lacked the statutory jurisdiction to provide further litigation support beyond the common issues stage, but was nonetheless entitled to collect further statutory levies for individual issues proceedings, being a 10% share of the class members’ recoveries.[4] Class Counsel and the LFO disagreed on whether the LFO had the statutory authority to continue providing litigation support under the Fund at the individual issues stage.

Perell J. undertook a comprehensive review of the class proceedings regime to interpret the statutory source of the LFO and its powers to deliver the Fund to answer the four questions set out on this motion and summarized below.

Question (a): Does the LFO have the statutory authority to provide litigation support for the individual issues stage of a class proceeding?

Yes. Justice Perell disagreed with the LFO’s interpretation that Fund assistance was restricted for plaintiffs acting in a representative capacity (for the class as a whole at the common issues stage). The plain language of the CPA supports that the LFO is generally empowered to accept applications for “any of its funds” from “any person,” which should be construed to include individual class members for litigation support and assistance.[5] At the individual issues stage, class members obtain newfound autonomy. They can instruct their counsel of choice, which implies exposure to potential costs and risks resembling those of a non-class plaintiff.

As a result, it was overly narrow to suggest the scheme of the Fund was intended to be restricted to plaintiffs applying at the common issues stage. The access to justice policy rationale, which underpins Ontario’s class actions regime, is advanced by incentivizing entrepreneurial plaintiffs with insulation from costs exposure. Therefore, if costs could reasonably also become prohibitive at the individual issues stage (if access to the Fund were restricted), the Fund should be available given the purpose of the CPA. On this point, Justice Perell noted these three class actions Brazeau, Reddock (Ontario), and Gallone (Quebec) were the perfect examples because the LFO might decide, but not be obligated, to administer the Fund in the public interest to protect the rights of the wronged inmate litigants.[6]

Question (b): Does the LFO have the statutory authority to provide adverse costs protection at the individual issues stage of a class action should the individual class member fail to prove his or her individual claim?

Yes, for the same reasons as in Question (a).[7]

Question (c): If the LFO provides litigation support for the common issues stage, is it then obliged to provide litigation support for the individual issues stage of the proceeding?

No. The LSA and its regulations require applicants to seek approval for litigation assistance at each progressive stage.[8] If LSA section 59.4 required it to indiscriminately cover adverse costs awards made against individual class members, the Fund would be exposed to potentially indeterminate liability.[9] Just because an applicant is granted funding at one stage does not entail any entitlement to funding for the next stage.[10]

Question (d): Does the LFO’s statutory levy extend to a recovery of a share of the class member’s individual issues judgment regardless of whether the LFO provides litigation support or adverse costs protection for the individual issues trial?

Yes. Ontario Regulation 771/92 under the LSA unambiguously reads that sums payable to one or more class members would include the sum paid for aggregate damages in addition to those payable at individual issues trials.[11] Clause 8(3)(b) of the same regulation requires that individual class members notify the class of a “levy that reduces the amount of any award to which the class members become entitled.”[12] In other words, the LFO is entitled to a share of the recovery achieved by class members as a collective or as individuals where it provides Fund assistance.[13]

In conclusion, the court has clarified that when it comes to the individual issues stage of a class proceeding, the LFO may (not must) approve litigation support for individual issues trials if its Class Proceedings Committee approves litigation support; and the Law Foundation’s levy encompasses all of the collective and individual award recoveries in a class proceeding. This decision has addressed important questions about legislative interpretation and clarifying the role both the Law Foundation of Ontario, and the Class Proceeding Fund may have at the individual issues stage of a class proceeding.

[1] Brazeau v. Canada (Attorney General), 2021 ONSC 8158.

[2] $6.7 million in the Brazeau action and $7.9 million in the Reddock action at paras 10(d) and (h).

[3] Brazeau v. Canada (Attorney General), 2021 ONSC 8158 at para 2.

[4] At subparagraph 10(s), the court described the D&I Protocol as being an “elaborate example of the resources at s.24 and s.25 of the Class Proceedings Act, 1992 to shape the individual issues stage of a class action.” It further stated “the D&I Protocol had three tracks. The first track was a distribution scheme. The second track was akin to a class action claims process settlement where an administrator determines eligibility and the quantum of compensation in accordance with a compensation grid. The third track comprised individual summary judgment motions or trials.”

[5] Brazeau v. Canada (Attorney General), 2021 ONSC 8158 at paras 59, 61, 69 and 77.

[6] Brazeau v. Canada (Attorney General), 2021 ONSC 8158 at para 70.

[7] Brazeau v. Canada (Attorney General), 2021 ONSC 8158 at para 79.

[8] Brazeau v. Canada (Attorney General), 2021 ONSC 8158 at para 81.

[9] Brazeau v. Canada (Attorney General), 2021 ONSC 8158 at para 83.

[10] Brazeau v. Canada (Attorney General), 2021 ONSC 8158 at para 82.

[11] Brazeau v. Canada (Attorney General), 2021 ONSC 8158 at para 86.

[12] Brazeau v. Canada (Attorney General), 2021 ONSC 8158 at para 86.

[13] Brazeau v. Canada (Attorney General), 2021 ONSC 8158 at para 90.

Jacqueline M. Palef

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