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Class Actions - Fees. Fresco v. Canadian Imperial Bank of Commerce
In Fresco v. Canadian Imperial Bank of Commerce (Ont CA, 2024) the Ontario Court of Appeal dismissed a class action plaintiff's fee appeal.
Here the court considers the class action doctrine of fee approval:(a) Challenges facing Motion Judges deciding Fee Approval Motions
[39] The context in which fee approval motions present themselves in class actions is not without significant challenges. Indeed, this court has frequently noted the obstacles facing judges hearing such motions. This is because class counsel fees may serve to reduce the size of the pool available to the class and because frequently there is no adversary to advance opposing submissions on an appropriate fee. In Bancroft-Snell v. Visa Canada Corporation, 2016 ONCA 896, 133 O.R. (3d) 241 (“Bancroft-Snell 2016”), Blair J.A. wrote, at para. 40:It is well-accepted that courts are charged with a broad supervisory role over the conduct of class proceedings, including the approval of settlements and the approval of fees and disbursements to be paid to class counsel. It is also well-accepted that the potential reward for class counsel must be sufficiently attractive to provide an incentive for counsel to take on such challenging cases, with their attendant risks. However, underpinning the court’s broad supervisory mandate is the need to ensure that the members of the class are protected and that outcomes are fair and reasonable and in their best interests in circumstances where the interests of class counsel and defendants may conflict with those of the class and there is no one to speak for the interests of the class. [40] In Smith Estate v. National Money Mart Co., 2011 ONCA 233, 106 O.R. (3d) 37, Juriansz J.A. addressed different approaches to preserving fairness in the approval of class counsel fees. He discussed in detail the possible appointment of amicus curiae, a monitor, a guardian ad litem, or independent counsel. He closed his discussion, at para. 33 with:It seems to me that counsel who bring and proceed with a motion without ensuring that an independent perspective is put forward have little cause for complaint if the court departs from the passive role it traditionally plays by raising new issues, dealing with arguments not advanced and actively challenging the uncontradicted evidence. A court, though, should not appear confrontational. The line between a sceptical and confrontational approach may be difficult to navigate for a court that bears the full responsibility for testing the merits of the position put forward by counsel in order to fulfill its responsibility to protect members of the class. Courts should not be reticent in resorting to one of the strategies discussed above when they consider that confrontation of counsel’s unopposed position would be helpful and reasonably warranted in the circumstances. Such resort is, of course, discretionary. Appointment of amicus or a guardian is neither necessary nor desirable in every case. [41] Again, as noted by Amicus on this appeal, a motion judge’s difficulty is exacerbated by the nature of the evidence advanced by class counsel. Here, the evidence before the motion judge consisted of two affidavits from members of class counsel and one from the appellant which, perhaps not surprisingly, extolled the virtues of counsels’ efforts. As no one opposed the motion, there was no cross-examination on the affidavits. In sum, motion judges are put in a position where they must assume a protective role in such a non-adversarial forum. As stated in Smith Estate, they must tread a fine line between scepticism and confrontation.
[42] To this, I will add two additional challenges faced by motion judges in these circumstances.
[43] First, cases abound on the need to provide compensation that is sufficient to provide a real economic incentive to lawyers to take on a class proceeding and to do it well: see e.g., Gagne v. Silcorp (1998), 1998 CanLII 1584 (ON CA), 41 O.R. (3d) 417 (C.A.), at p. 422; Lavier, at para. 35; and Sutts, Strosberg LLP v. Atlas Cold Storage Holdings Inc, 2009 ONCA 690, 311 D.L.R. (4th) 323, at paras. 27-28.
[44] However, this is not an easy estimation. The law and the practice relating to class proceedings have evolved considerably since the Class Proceedings Act was enacted in 1992. Amicus submits that there is now a large, sophisticated class action bar that has developed a business model that spreads risk over multiple firms, frequently engages in hotly contested carriage motions, and relies on funding from the Class Proceedings Fund. He submits that there is no impediment to incentivizing good lawyers to pursue class actions.
[45] Economic incentive is a function of a variety of factors, including legal compensation in comparable markets and the availability of alternative legal work to comprise any “lost opportunity”. Lawyers’ compensation in Ontario is, in large measure (though not entirely), a reflection of fees representing billable hours multiplied by billable rates. Quite apart from the assumptions that docketed billable hours accurately reflect the time spent and that lawyers’ time is spent efficiently, the fee assessment process assumes that the billable rates are appropriate measures of acceptable charges. For instance, is an appropriate hourly rate $1,500, $1,000, $500, or less and for what seniority and expertise? In this regard, there is limited information to assess whether the rates charged are fair and reasonable. Moreover, as Smith Estate discussed, the court is not well-equipped to investigate dockets and rates: at para. 36. (See also: McCarthy v. Canadian Red Cross Society (2001), 8 C.P.C. (5th) 349 (Ont. S.C.), at para. 21.)
[46] Second, the concepts of “economic incentive” and “opportunity cost” assume a never-ending flow of available legal work. There are many new players in the legal marketplace albeit in a society that demands more legal services in an increasingly complex legal environment. The tools provided to the court to assess economic incentive and opportunity cost are limited. Thus, in assessing whether the fees proposed for class counsel are fair and reasonable, the judge deciding the case faces real difficulty in considering in a meaningful way factors that are burdened with unchallenged assumptions, namely the lodestar, economic incentive, and its close relative, opportunity cost. It is within this context that motion judges are required to engage in a determination of a fair and reasonable fee for class counsel.
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[98] Timeliness in achieving settlement is a relevant consideration: Wein v. Rogers Cable Communications Inc., 2011 ONSC 7290, 38 C.P.C. (7th) 304, at paras. 24, 36; Osmun v. Cadbury Adams Canada Inc., 2010 ONSC 2752, 97 C.P.C. (6th) 169, at para. 29; McDonald v. Home Capital Group, 2017 ONSC 5195, 13 C.P.C. (8th) 213, at paras. 18, 22. That said, a quick settlement does not automatically lead to the conclusion that the result achieved was better. Consideration of whether the quick settlement was in the interests of the class remains essential to understanding the impact of this factor in the particular case: see for example, Clegg v. HMQ Ontario, 2016 ONSC 2662, at paras. 28-31; Mancinelli v. Royal Bank of Canada, 2017 ONSC 2324, at paras. 53, 55. The motion judge was entitled to consider timeliness as a factor in the exercise of his discretion and did so without error. He did not assume that quicker automatically meant better.
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[103] In closing my discussion on the grounds of appeal relating to class counsel fees, I make one other comment. Consistent with this court’s statements in Smith Estate, in the absence of an adversary and an independent perspective, class counsel should consider seeking the appointment of amicus for the purposes of fee approval motions. Although as noted in Smith Estate, appointment of amicus is neither necessary nor desirable in every case, it would be of particular assistance when dealing with mega-fund settlements with large attendant proposed class counsel fees. To a degree, the appointment of amicus would serve to alleviate some of the current challenges associated with requests for approval of counsel fees and would serve to assist the court in its consideration of proportionality. . Fresco v. Canadian Imperial Bank of Commerce
In Fresco v. Canadian Imperial Bank of Commerce (Ont CA, 2024) the Ontario Court of Appeal dismissed a class action plaintiff's fee dispute appeal.
Here the court considers the SOR for class action fee appeals:D. Standard of Review
[29] The approval of fees to be paid to class counsel following a settlement of a class proceeding is a discretionary decision. The appellants do not take issue with that proposition. However, the appellants argue that a court must properly weigh the relevant factors on a fee approval motion and that, even if a motion judge considers the applicable factors, it will be a reversible error if the judge fails to weigh them properly or ignores elements of the risk and result achieved. In this regard, the appellants state that they rely on Lavier v. MyTravel Canada Holidays Inc., 2013 ONCA 92, 359 D.L.R. (4th) 713.
[30] The appellants also submit that deference to a motion judge on fee approval is generally predicated on their long-standing involvement in, and deep familiarity with, the case. As the motion judge here only became involved at the fee approval stage, his decision does not carry the same hallmarks of deference.
[31] On the first point, as stated in 2017 by the Supreme Court in Canada (Attorney General) v. Fontaine, 2017 SCC 47, [2017] 2 S.C.R. 205, at para. 36, a discretionary decision is entitled to deference. The court wrote:As regards the exercise of discretion, “appellate intervention is warranted only if the judge has clearly misdirected himself or herself on the facts or the law, proceeded arbitrarily, or if the decision is so clearly wrong as to amount to an injustice.” P. (W.) v. Alberta, 2014 ABCA 404, 378 D.L.R. (4th) 629, at para. 15; Balogun v. Pandher, 2010 ABCA 40, 474 A.R.258, at para.7. As this Court has said, where the judge had given sufficient weight to all relevant considerations and the exercise of discretion is not based on an erroneous principle, appellate reviewers must generally defer. [Citations omitted.] [32] This standard of review is not an open invitation to reweigh the evidence and Lavier should not be read as suggesting otherwise. As Laskin J.A. wrote in Reeves v. Brand, 2018 ONCA 263, 8 R.F.L. (8th) 1, at para. 23:The exercise of discretion involves the weighing of relevant considerations…To accede to the submission that an appeal court should intervene because it would have given more weight to a relevant consideration is to abandon discretion altogether. To be justified in interfering, an appellate court would have to be satisfied that the trial judge’s exercise of discretion was unreasonable. [Citations omitted.] [33] Similarly, in O’Brien v. Chuluunbaatar, 2021 ONCA 555, 461 D.L.R. (4th) 113, this court held that the appeal judge below had erred in law in interfering with the trial judge’s discretionary decision on the basis that she had given insufficient weight to a relevant consideration. As Gillese J.A. explained “[a]n appeal court is not to reweigh the relevant considerations”: at para. 48.
[34] In sum, appellate courts should review discretionary decisions with a posture of deference and may not interfere absent the parameters described by the Supreme Court in Fontaine.
[35] Dealing with the appellants’ second point on the absence of any long-standing involvement by the motion judge in this particular case, I do not agree with this submission. Repeatedly, the Supreme Court has instructed that the standard of review of a discretionary decision is deferential: Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, [2013] 2 S.C.R. 125, at para. 27; Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 83. The concept of deference is deeply embedded in the hierarchical structure of the courts. It is not confined to cases with which the judge has long-standing or deep familiarity. As this court said of reviewing discretionary decisions in Cowles v. Balac, 2006 CanLII 34916 (ON CA), 83 O.R. (3d) 660 (C.A.), at para. 41:Appellate deference for the exercise of discretion by lower courts is justified on several bases: it serves to recognize the expertise of the lower court; it promotes the integrity and autonomy of the proceedings in the lower court; it limits the number, length and costs of appeals; and, in some cases (not this one), it recognizes the advantage that the lower courts have from firsthand observation of the evidence.
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