In a recent decision by the Ontario Superior Court of Justice,
Justice Belobaba reiterated the need for parties seeking court
approval of a settlement in a class proceeding to provide concrete
details and substantive evidence that demonstrates that a
settlement in a class proceeding falls within a reasonable range
and is in the best interests of the class.
Approval of Settlement under Class Proceedings Act in
In Ontario, a class plaintiff must seek judicial approval for
any settlement under the Class Proceedings Act, and the
Court must be satisfied that the settlement is fair and reasonable
and in the best interests of the class. Similar provisions are
found in other class action legislation across Canada. In the past,
many plaintiff's counsel have sought and have obtained
settlement approval of class settlements by adducing evidence that
is focused on the process of settlement – namely, the
settlement was reached by experienced counsel negotiating at
arm's length in an environment of mutual risk, and that the
settlement should be considered reasonable in light of the outcome
of a fair bargaining process.
But as we have
previously posted, a number of class action judges have
recently indicated that they are no longer willing to rely on such
procedural evidence alone, particularly in a non-adversarial forum
where both the plaintiff and defence counsel are seeking settlement
approval. Rather, these judges have indicated that they will expect
concrete details and substantive evidence to be filed on the
approval motion relating to the reasonableness of the settlement.
While the courts have underscored that it is not the place of the
Court to second guess the quantum of settlement, the Court can and
should demand sufficient information to ensure that the quantum of
settlement falls within the "zone of reasonableness."
Rosen v BMO Nesbitt Burns
In Rosen v BMO Nesbitt Burns Inc., 2016 ONSC 4752, Justice Belobaba approved the
settlement of a significant employment misclassification class
action – namely a class action against an investment firm for
unpaid overtime obligations in respect of its investment advisors.
The case was the first misclassification class action that was
certified on a contested basis in Ontario, and after six and a half
years of litigation, the investment firm settled the case for a
settlement payment of $12 million.
Justice Belobaba approved the settlement, but he reiterated that
class counsel are expected to adduce substantive evidence of the
reasonableness of the settlement at the settlement approval motion.
In this case, the evidence submitted included data from comparable
US settlements (since Canadian data was not available). Justice
Belobaba found that this hard evidence established that the quantum
of the settlement fell squarely within the zone of reasonableness.
Justice Belobaba also indicated that he was more inclined to rely
on class counsel's assessment of the risks of a class action in
a "late stage settlement", particularly after class
counsel has conducted significant investigation and discovery of
the merits of the case.
This decision serves as a reminder to counsel that a motion to
approve settlement requires concrete details of substantive
evidence to demonstrate not only that the settlement was to the
benefit of the parties, but also to demonstrate that the quantum of
the settlement falls within the zone of reasonable amounts. While
the burden of seeking settlement approval falls on class counsel,
this emerging line of authority may create challenges for defence
counsel in disclosing settlement details in court, particularly
where the defendant is facing litigation in multiple forums in
Canada or around the world. In the absence of such details, there
may be a significant risk that the Court will withhold settlement
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
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).