In Bayens v. Kinross Gold Corporation, 2013 ONSC 4974, Justice Perell granted an
unopposed motion to allow the use of third party litigation funding
in an Ontario class action. Trustees of the Musician's Fund of
Canada (the "Pension Fund") brought a securities market
misrepresentation claim against the Kinross Gold Corporation and
The Pension Fund approached Harbour Litigation Funding
("Harbour"), a private litigation funder from the UK,
after being rejected for funding by the Ontario Class Proceedings
Fund. The Pension Fund's lawyers agreed to act on a contingency
fee basis, but were not prepared to bear the additional risk of
indemnifying the Pension Fund against adverse costs awards.
Harbour agreed to indemnify the Pension Fund in return for a
fixed percentage of any net recovery in favour of the class.
Specifically, Harbour indemnified the class for up to $1 million on
the certification and leave motions in return for 7.5% of any net
settlement achieved pre-certification, and it pledged another $5
million for a common issues trial in return for 10% of any
settlement or award post-certification.
In holding that the Pension Fund's agreement with Harbour
should be approved by the Court, Justice Perell focused on the role
of class proceedings in enhancing access to justice and the
particular problem posed by adverse cost awards in the class action
context. "[S]ome form of funding for adverse costs is, as a
practical matter, a necessity in most every class
proceeding...[since] no 'rational' plaintiff in a class
proceeding would risk an adverse cost award that would far exceed
his or her potential recovery in the action".
The legislature and the class action bar have attempted to
address this problem in a number of ways. First, under the
Class Proceedings Act,1992, the court can exercise
discretion not to award costs to a successful defendant if it
believes the "proceeding was a test case, raised a novel point
of law, or involved a matter of public interest". Second, a
representative plaintiff can apply to the Class Proceedings Fund
for litigation funding, which includes indemnification against
adverse costs awards, in return for 10% of any settlement or award
in favour of the class. And third, plaintiff lawyers have
historically sometimes indemnified representative plaintiffs.
However, "Class Counsel are no longer as willing to assume
both the risks associated with a contingency fee agreement and also
the risk of the indemnity for a catastrophically high adverse costs
Thus, in cases such as this, where neither the Class Proceedings
Fund nor the plaintiff lawyers are willing to indemnify the class,
an option for mitigating the substantial litigation risk is to turn
to third party funders. Justice Perell extracted several principles
from the developing case law to guide the court in assessing
funding agreements. These included, amongst others:
"plaintiffs must obtain court approval to enter into a
third party funding agreement";
to be approved, "the agreement must not compromise or
impair the lawyer-client relationship" or interfere with the
lawyer's professional judgment;
to be approved, the agreement "must not diminish the
plaintiff's rights to instruct counsel and control the
"the court must be satisfied that the agreement is
necessary in order to provide the class with access to
"the court must be satisfied that the agreement is fair
and reasonable to the class"; and
if the Class Proceedings Fund has refused litigation
funding," nothing can be taken from this fact".
However, in addition to identifying these general guidelines,
Justice Perell cautioned the class actions bar that the concept of
third party funding is still "a work in progress" and
subsequent cases may identify problems not yet
It's not often that our little blog intersects with such titanic struggles as the U.S. presidential race – and by using the term "titanic" I certainly don't mean to suggest that anything disastrous is in the future.
J.J. v. C.C., is an interesting case in which the court held that an automotive garage owes a duty to minor children to secure the vehicles on the premises by locking the cars and safely storing the car keys...
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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