In Bancroft Snell v Visa, 2015 ONSC 7275
("Bancroft"), a class action involving allegedly improper
credit card merchant fees, Justice Perell approved the contingency
fee agreement of class counsel, but with an order not to pay any
sums toward a fee sharing agreement with other counsel. The fee
sharing agreement was reached between class counsel and the
Merchant Law Group regarding disputes over carriage of the action
in Alberta and Saskatchewan (the "MLG agreement").
Justice Perell's comments suggest a very negative view of fee
sharing agreements such as the MLG agreement and will likely have
an impact on the resolution of carriage disputes.
Class counsel had commenced actions in British Columbia and
Ontario. Settlement discussions were taking place between class
counsel and some of the defendants. Around this time, the Merchant
Law Group commenced rival class actions in Saskatchewan and
Alberta. The Merchant Law Group's proceedings were going
to create delay and problems for any potential settlement. To
resolve the carriage dispute, class counsel and the Merchant Law
Group attended a dispute resolution conference presided over by
Justice Martin in Alberta. At this conference the MLG agreement was
reached. It provided for payment to Merchant Law Group of various
sums depending on the size of future settlements of the class
action, in exchange for ending the actions it had commenced and not
initiating any new ones over the same allegations.
Justice Perell found the MLG agreement was unenforceable.
Justice Perell concluded, first, that the agreement appeared to be
illegal as it offended the doctrine against champerty and
maintenance and, second, that the carriage dispute should have been
fought instead of settled. In this regard it is important to note
that the MLG agreement was reached during settlement negotiations
presided over by an Alberta judge. Presumably, Justice Martin did
not consider that the agreement was illegal and supported resolving
the carriage dispute instead of fighting it.
Justice Perell's view of the MLG agreement was likely
influenced by his view that Merchant Law Group's position on
the carriage dispute was weak and that it was acting
opportunistically by commencing actions at a late stage to take
advantage of the work already done by class counsel. He believed
that the interests of the class would have been better served by
class counsel fighting the carriage dispute because the MLG
agreement resulted in Merchant Law Group receiving fees for doing
no work of benefit to the class. This is a principled position.
However, one could compare the costs and delay required by a
contested carriage battle to the efficiency of arriving at a
mediated fee sharing agreement. Without guidance from the courts on
factors relevant to being awarded carriage, opportunistic and
copycat class actions may wind up being encouraged because
effectively they would be rewarded.
It is unclear what long range impact Justice Perell's
decision will have on carriage disputes and commencement of
competing class actions. At the very least the decision
serves as a warning that fee sharing agreements may be
Subsequent to Justice Perell's decision, in a related action
in Saskatchewan, Justice Ball of the Saskatchewan Court of
Queen's Bench approved the same MLG agreement when approving a
proposed settlement. In Hello Baby Equipment Inc. v B of A
Canada Bank, 2015 SKQB 410, the Court held that it would not
look behind counsel's decision to enter a fee sharing agreement
with judicial oversight. The Court refused to find that such an
agreement was not in the best interests of the class or that such
an agreement was unlawful.
These apparently conflicting decisions create great uncertainty
over fee sharing agreements. It is appropriate for a higher court
to provide guidance or class counsel will not know if fee sharing
agreements are a viable way to resolve carriage disputes.
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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