In a creative approach to class actions, the parties in
Fulawka v The Bank of Nova Scotia askeda recently retired
Court of Appeal judge to arbitrate class counsel fees after the
parties settled the main issue (see our
earlier post ). The arbitrator awarded fees of $10.45 million
to class counsel.
This class action was commenced in December 2007. The action
claimed compensation for class members for unpaid overtime. The
class consists of approximately 14,000 people. The action was
certified in February 2010, following a contested hearing. The
defendant Bank of Nova Scotia ("BNS") sought and obtained
leave to appeal to the Divisional Court. That appeal was dismissed.
BNS further sought and obtained leave to appeal to the Ontario
Court of Appeal. That appeal was dismissed, except for a discrete
issue. BNS' motion for leave to appeal to the Supreme Court of
Canada was dismissed in March 2013.
After all of BNS' appeals had been exhausted, the parties
entered into an agreement in principal to settle the class action,
subject to two outstanding issues:
Whether prejudgment interest applies to the damages;
The amount of class counsels' fees, disbursements and
The parties agreed to seek the assistance of a third party
adjudicator in resolving the two outstanding issues. While
mediation resolved the question of prejudgment interest, the class
counsel fees issue could not be settled and required binding
The Arbitral Award
As there was no issue between the parties regarding the payment
of applicable taxes on the fees or the payment of the disbursements
by BNS, the sole issue facing the Arbitrator was the amount of fees
owed to class counsel. The parties even agreed that the multiplier
mechanism set out in the Class Proceedings Act, 1992
should be used to determine the fees, and as such, the arbitration
centered on the reasonableness of the base fee and the appropriate
Reasonableness of the Base Fee
Class counsel argued that a base fee of $3.91 million was
reasonable for a case of this complexity, particularly given the
value of the result to the client. BNS argued that the base fee
should be reduced by a third to reflect duplication in effort
because the class was represented by three separate law firms.
The Arbitrator found that "this case presented considerable
and novel complexity and the results achieved are
significant". Moreover, though there may have been some
duplication in work given that multiple firms were involved, it was
not "desirable or even possible to precisely quantify
As a result of a few docketed tasks that the client – and
therefore BNS – ought not have been charged, the Arbitrator
ordered a 3% reduction of the base fee. He therefore set the base
fee at $3.8 million.
Class counsel argued that the appropriate multiplier should be
3.75, BNS proposed 1.38. The Arbitrator held that the appropriate
multiplier was 2.75.
The risk incurred by class counsel in undertaking and
continuing the class action under a contingency agreement; and
The degree of success achieved.
Regarding the risk, the Arbitrator found that class counsel
undertook considerable risk given that there were few precedents
for large scale employment class actions, and prospects for
certification were uncertain at the time. The Arbitrator also noted
that this risk diminished when the avenues of appeal were exhausted
Furthermore, the nature of the success achieved for the class
– including the binding procedure agreed upon to evaluate and
pay individual claims for overtime and the payment of class
counsels' fees without any reduction in payment to the class
– meant that the class enjoyed a significant degree of
As such, the appropriate multiplier was determined to be 2.75,
resulting in class counsel fees of $10.45 million.
Key Take Aways
Notwithstanding that several aspects of the dispute were –
in the words of the Arbitrator – "relatively unique in
the world of class actions" – such as the agreement that
class counsels' fees be determined before the total recovery
for the class was known – four general points can be
distilled from the Arbitral Award which may impact costs awards in
class actions going forward:
Having multiple firms representing the class may not
necessarily warrant a reduction in the base fee;
Duplication of work is to some degree inevitable and impossible
to quantify, and as such may not form the basis for reducing class
Success for the class need not be absolute, only significant,
to warrant payment of class counsel fees; and most importantly
Mediation and arbitration can be effective tools to resolve
disputes in class actions, particularly if the parties focus on
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.
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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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