CANADA Law and Practice Contributed by: David Gadsden, John Pirie, Brendan O’Grady and Anton Rizor, Baker McKenzie
Delays are common in class proceedings. Certain legislative reforms have been enacted to minimise delays. For example, in Ontario, unless the parties agree or the court orders otherwise, a class action will be automatically dismissed for delay unless, within one year of being commenced, the proposed repre- sentative plaintiff has filed a complete certification motion record. 3.9 Funding and Costs Class actions involve risk and high expenses for all parties. In some provinces, this risk is exacerbated due to adverse cost awards against the unsuccessful party. Mechanisms for class action funding, such as contingency fees and third-party litigation funding, are available but subject to court approval. Costs In Canada, a losing party usually bears a portion of the winning party’s legal costs, including in class actions in most provinces. This rule applies to each contested step within the proceeding. The amount of costs ordered is generally within the discretion of the court. For example, in Ontario, a court may reduce the cost award if the proceed- ing was a test case, raised a novel point of law, or involved a matter of public interest. Still, cost awards can be significant. Some provinces deviate from the general “loser-pays” rule in class actions. For example, British Columbia has legislated that, subject to a few exceptions, each party to a class proceeding bears their own costs. Cost awards do not usually apply to class members, except in respect of individual hearings or if they take an individual step in the proceeding, such as objecting to a settlement. Representative plaintiffs are typically indemnified by class counsel or third-party funders. Contingency Fees Contingency fees are often employed in class pro- ceedings. Class counsel and the representative plain- tiff will usually set out the contingency fee in a retainer agreement. Some provinces, such as Alberta, explic- itly mandate that contingency fee arrangements be set
out in writing, witnessed and formally served on the representative plaintiff. Class counsel’s legal fees are subject to court approv- al. Courts will consider several factors in determining class counsel fees, including: • the complexity of the case; • the risk undertaken by class counsel for bringing the case; • the degree of responsibility assumed by class counsel; • the monetary value of the matters in issue; • the importance of the matter of the class; • the results achieved; • the ability of the class to pay; and • the degree of skill and competence demonstrated by class counsel. Third-Party Litigation Funding Third-party litigation funding is permitted and increas- ingly popular in Canada. Several providers offer to indemnify plaintiffs against adverse cost awards and provide funding for disbursements like expert witness fees. In Quebec and Ontario, class action funding is also available through public sources. Third-party litigation funding is subject to court approval. For instance, in Ontario, the court will not approve a third-party funding agreement unless it is satisfied that: • the agreement, including indemnity for costs and amounts payable to the funder under the agree- ment, is fair and reasonable; • the agreement will not diminish the rights of the representative plaintiff to instruct the solicitor or control the litigation, or otherwise impair the solici- tor–client relationship; • the funder is financially able to satisfy an adverse cost award in the proceeding, to the extent of the indemnity provided under the agreement; and • any prescribed requirements and other relevant requirements are met. The funding agreement also needs to be subject to:
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