In Ontario, a settlement in a class action must be approved by
the Court. The same is true of class counsel's fees. What
happens when the Court makes an order refusing to approve a
settlement and class counsel's fees? In its January 28, 2015
decision in Waldman v. Thomson Reuters Canada Limited, the
Ontario Court of Appeal determined that such an order is
interlocutory. Therefore, an appeal must be brought in the
Divisional Court, with leave, instead of the Court of Appeal.
In the underlying case, the representative plaintiff alleged
that the defendant infringed the copyright of the class members (a
group of lawyers) by republishing their work without their
permission. After certification, the representative plaintiff and
the defendant agreed to terms of a settlement. The Superior Court
refused to approve the settlement.
The representative plaintiff appealed the decision to the Court
of Appeal. The Ontario Class Proceedings Act does not specify the
Court to which an appeal of an order dismissing a motion to approve
a settlement is to be brought. As such, the Courts of Justice Act
("CJA") had to be analyzed. Section 6(1) of the CJA
grants the Court of Appeal appellate jurisdiction over final orders
of the Superior Court unless the appeal lies to the Divisional
Court under another Act. The Divisional Court, on the other hand,
has jurisdiction over interlocutory appeals.
The representative plaintiff argued the Court of Appeal had
jurisdiction in this case because the Superior Court's order
was "final". In the alternative, he argued that even if
the refusal to approve the settlement was an interlocutory order,
the refusal to approve class counsel's fees was a final order.
The Court of Appeal, pursuant to s. 6(2) of the CJA, can assume
jurisdiction to hear an appeal of an order that would normally lie
to the Divisional Court if another appeal in the same proceeding
lies to and is taken to the Court of Appeal.
An Order Refusing to Approve Class Counsel's Fees is Not
Justice MacFarland, for a unanimous Court of Appeal, held that
an order refusing to approve class counsel's fees will not
always be a "final" order. She distinguished this case
from an earlier decision which held that an order approving a
settlement, but reducing the fees sought by class counsel, is
final. In that case, the litigation was ended by the order
approving the settlement. This is not the case when, as here, a
settlement is not approved.
An Order Refusing to Approve a Settlement is Interlocutory
The representative plaintiff argued that the order refusing to
approve the settlement was final because the settlement agreement
was a contract that bound the parties and refusal to approve it
"puts an end to these contractual rights." Justice
MacFarland rejected this position. She thus distinguished this case
from an instance where a Court declines to enforce minutes of
settlement or determines whether a settlement has or has not been
reached – in such an instance, litigation ends. In the class
action context, however, a settlement is not binding unless and
until Court approval is obtained, meaning that a proposed
settlement cannot create final legal rights.
The fact that this particular settlement could not be
reconsidered did not make the order the final. Were that position
accepted, any distinction between final and interlocutory orders
would be suspect, because every interlocutory order
"finally" determines the narrow issue raised by the
motion or application that prompted it.
A settlement finally disposes of legal rights – but only
once the settlement itself is finalized and enforceable. And in the
class action context, a settlement is not finalized and enforceable
until approved by the Court. Waldman recognizes this and is a
reminder that litigants should be cognizant of the distinctions
between class action settlements and settlements in other
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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This paper discusses contract law issues including decisions of relevance to commercial lawyers and business leaders giving a snapshot of particular principles of interest that arose in case law over the past 12 months.
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