Canada: Class Actions: New Decisions Send A Strong Warning To Class Counsel On Fee Premiums

In two significant rulings in Ontario, the Courts have sent a strong signal to plaintiff class action firms that they will not be entitled to claim a fee premium following a successful settlement unless they can demonstrate that they achieved real results for class members.

In Lavier v. MyTravel Canada Holidays Inc. the Ontario Court of Appeal soundly rejected a plaintiff's request for an additional fee premium in light of the relatively low take-up by class members following a settlement. In Eidoo v. Infineon Technologies AG, the Ontario Superior Court also significantly reduced a request for a fee award on a substantial class settlement, on the grounds that the plaintiffs had not yet presented any plan for distributing the balance of the funds to class members.

These separate rulings represent a welcome deterrent to future strategic claims, and they serve as an important reminder that class proceeding statutes were adopted to benefit class members and not only enterprising lawyers. In light of these rulings, class counsel should be reluctant to ask the Court for a fee premium unless and until they have secured a significant settlement and have developed a distribution plan that will benefit actual class members.

In Lavier, the class consisted of about 4000 travellers who were allegedly exposed to a contagious disease while on vacation at resorts booked through MyTravel. The defendant, MyTravel, agreed to pay up to $2.25 million into a settlement fund and an additional $600,000 to class counsel for fees. Class members had to submit claims to the settlement fund to receive any payment. To the extent that not all of the $2.25 million fund was claimed or used for expenses, MyTravel agreed that class counsel could apply to court to claim additional fees from that surplus, though it reserved the right to oppose any such claim. Whatever residue remained in the fund would revert to MyTravel.

Ultimately, the "take-up rate" by class members was just under 9%, resulting in only $333,000 from the $2.25 million settlement fund being paid to class members. Class counsel then sought approval of an additional $395,000 fee, which Justice Perell approved. MyTravel appealed.

On February 14, 2013, the Court of Appeal held that the additional fee was "grossly disproportionate" to the results achieved for the class and the risks undertaken by class counsel. According to the Court of Appeal, the key consideration in the circumstances of the case to determining the proportionality of class counsel fees was the settlement fund take-up rate – which, in the Court's view,indicated the actual value delivered to the class members from the settlement – as opposed to the full value of the $2.25 million fund made available to class members. If class counsel were to have been awarded the addition $395,000, the total class counsel fee would have represented nearly three times the value of the settlement to the class members. The Court objected to what it characterized as a "manifestly disproportionate" result and emphasized that if the goal of class proceedings is to compensate class members who have been injured, then "courts should ensure it is they and not class counsel who are benefitting."

In the context of this case, the take-up rate was a crucial factor in determining the premium.The Court held that the original $600,000 fee to class counsel (which was two times the recovery of the class) was fair and reasonable.

At the same time, the Court of Appeal did emphasize that determining premiums is an "art and not a science" and that a number of factors can be considered in any case: no one factor will be determinative.

Slightly different considerations were engaged in the Eidoo v. InfineonTechnologies AG decision. In that case, class counsel sought approval of significant fees without having proposed a scheme for the distribution of the settlement funds.

Eidoo was one of several related antitrust class proceedings commenced in jurisdictions across Canada against foreign manufacturers of DRAM, a type of semiconductor memory found in many commonly-used electronic devices. After hard-fought certification hearings in Ontario and Quebec, the plaintiffs reached a settlement with one defendant in the amount of $5.75 million. Courts in Ontario, British Columbia and Quebec approved the settlement and awarded a 30% fee to Class Counsel, totalling $2,256,183.

More recently, the plaintiffs reached a number of additional settlements with other defendants totalling roughly $23 million. Given that there still remained a number of non-settling defendants, class counsel determined that it was premature to implement a distribution plan at this time. However, class counsel nonetheless sought a substantial fee award in the amount of roughly $7 million, which represented 30% of the amount of the settlements. In a decision dated February 6, 2013, Justice Perell approved the settlements, but balked at class counsel's fee request. Justice Perell ultimately awarded Class Counsel a fee of roughly $4.2 million, which was closer to 20%.

While the 30% fee was not excessive in the circumstances per se, Justice Perell ruled that he could not find that such an amount was fair and reasonable because Class Counsel had not yet developed a plan for the distribution of the remaining funds to the class members. Instead, as they had done in respect of the first settlement, Class Counsel proposed to transfer the remaining settlement funds to a trust account for the benefit of the class. While Class Counsel advised the Court that they were keen to begin work on a distribution plan, Justice Perell held that this "trust us" approach to creating a plan was unsatisfactory, particularly given what were expected to be "enormous challenges to developing a fair distribution scheme" in light of the significant difficulty in identifying class members.

While Justice Perell left open the possibility that, following further settlements or judgments in the proceedings, Class Counsel may ultimately be awarded 30% of the total amount recovered, his ruling stands as a clear warning to class counsel that they should be wary about seeking a fee premium in the absence of a concrete scheme to deliver value to class members.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
McCarthy Tétrault LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
McCarthy Tétrault LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions