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Fees ruling could have access to justice implications

|Written By Robert Todd

A lawyer involved in a class action lawsuit that allowed same-sex couples to collect Canada Pension Plan survivor funds says he hopes the Ontario Court of Appeal will understand the access to justice implications of a Superior Court decision blocking lawyers in the case from collecting fees, estimated to exceed $15 million.

Doug Elliott predicts a decision blocking lawyers from collecting fees will have a ‘chilling effect.’

“I am deeply disappointed in the ruling,” Doug Elliott of Roy Elliott Kim O’Connor LLP tells Law Times. “Not only because of the impact on the great team of lawyers that worked so hard to achieve an enormous and landmark victory for our clients, but also because of the chilling effect I’m convinced this will have

on class actions of this type.”

Justice Ellen Macdonald last month ruled that a retainer agreement she approved for the case, Hislop v. Canada (Attorney General) in 2004 doesn’t comply with provisions of the pension plan. The case was originally brought forward by gay activist George Hislop and is considered the first class action in the world to put forth the claim that gay and lesbian rights had been violated. There are believed to be about 1,500 claimants involved.

Under the retainer agreement, the class action lawyers’ fees were to be covered by a payout of half of prejudgment arrears owed to the survivors, with half of that amount going to Elliott’s firm. While the class action lawyers accrued over $5.3 million in fees in the seven-year case, Macdonald awarded them for their hard work by adding a multiplier of 4.8 to their fees, leaving the total at over $15 million.

But in her Feb. 29 ruling, Macdonald agreed with the attorney general’s argument that s. 65 of the CPP - which states, “A benefit shall not be assigned, charged, attached, anticipated, or given as security, and any transaction purporting to a assign, charge, attach, anticipate, or give as security a benefit is void” - cancels out the payment plan.

Macdonald rejected the class action lawyers’ argument that s. 32(3) of the Ontario Class Proceedings Act which states, “Amounts owing under an enforceable agreement are a first charge on any settlement funds or monetary award” - should prevail over s. 65 of the CPP.

Macdonald noted, “The s. 65 issue was not foreseen by any of the parties” when the fee was approved in 2004. “Indeed, it became an issue very late in the day in the history of these proceedings.”

Elliott says they will appeal the decision.

“I hope that the Court of Appeal will understand the tremendous negative ramifications for access to justice if this is sustained,” says Elliott, adding that the Court Challenges Program has been cancelled and that the Supreme Court in the Little Sisters case said, “It’s virtually impossible to get advance costs.

“There aren’t a whole lot of options for minority groups who are denied their rights to get access to the courts, and class actions are the last best hope for them. If the message is that lawyers who succeed in constitutional class actions are still not going to get paid, then I don’t think we’re going to see many.”

In her approval order for the fee, Macdonald noted that a class action was the only way for the claim to move ahead: “Individual class members could not afford to mount a legal challenge on their own to obtain CPP survivor’s pension.”

But Macdonald disagreed with the suggestion the ruling would lead to a chill, writing: “I am not persuaded that this result will deter future class actions or frustrate the access to justice principles embodied in the CPA. While I am sympathetic to [the group of class action lawyers’] position and the possible difficulties it will face in collecting the fees it deserves, it also seems prudent to suggest that future class counsel confirm that the s. 32(3) charge is available and not negated by other legislation such as s. 65 of the CPP.”

Crown attorney Paul Vickery says it was necessary to protect s. 65 of the CPP.

“It’s really a question of balancing the interests of the class counsel with the interests of the people who are entitled to claim the pensions,” says Vickery. “In this case, protection of the people who are entitled to claim the pensions wins out, you could say.”

Elliott says the lawyers have met with Macdonald to “devise something that, while less effective, may provide some results and some solutions to the problem.” But he says the lawyers’ main concern is the government’s withholding of “some or all” payments to class members until the issue is resolved.

“I find that position legally unjustifiable and morally reprehensible. It’s the first time, in my recall, that someone has received an award from the Supreme Court of Canada and the government has elected not to comply with it.”

Dimitri Lascaris, a class action lawyer with Siskind Cromarty Ivey & Dowler LLP, says the situation should serve as a caution.

“This drives home how risky a practice area this is. I think sometimes the community of defendants out there tend to understate the level of risk that we as class counsel have to assume in prosecuting these cases. If anyone needed a reminder of how significant and real those risks are, one can hardly imagine a more potent reminder than this.”

He says lawyers will now have to look beyond the Class Proceedings Act and the Rules of Professional Responsibility when drafting retainer agreements.

“I don’t think most law firms typically look beyond the procedural rules and ethical rules governing the conduct of class action lawyers in determining what terms of a retainer may or may not be enforceable,” he says. “But I think now that’s going to have to occur.

We’re going to have to look at the underlying legislation upon which the claims are based to ascertain whether there’s anything within that legislation which could potentially pose an impediment to our being fairly compensated.”

“The one small positive note in all of this gloom is that it’s been very gratifying to me, the reaction I’ve had from others. Most people don’t think much of lawyers and they think even less of lawyers’ fees. But the reaction I’ve had to this story has been universally sympathetic. Most average people I run into don’t understand how a lawyer can win a case and then be denied payment. It makes no sense to them.”

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