A 13-paragraph decision of Justice Edward Belobaba in Cannon v. Funds for Canada Foundation may kill the docket for class counsel in Ontario.
In Cannon, the judge held a “one-third contingency fee agreement, if fully understood and accepted, should be accorded presumptive validity.” The analysis employed by Belobaba starts with the agreement between the parties and a rebuttable presumption that whatever contingency is agreed upon should be considered valid. Docketed time in the analysis from Cannon is “irrelevant.”
The fee approval decision by Belobaba in Cannon is a welcome approach to class counsel fees in Ontario.
Belobaba’s decision will hopefully be the beginning of a new era of predictability in class counsel fees in Ontario. The analysis of what a reasonable fee should be has historically considered numerous differing factors. Depending on the precise articulation of the fee approval analysis, up to 11 factors could historically be at play in determining counsel’s fees, including:
• results achieved;
• the importance of the matter to the class;
• the risk undertaken;
• time expended;
• opportunity costs to class counsel; and
• factual and legal complexity, etc.
In reviewing fee approval decisions in Ontario, Belobaba noted the analysis of the appropriate fee for class counsel has often relied on “. . . arguably irrelevant or immeasurable metrics such as docketed time (irrelevant) or risks incurred (immeasurable).”
The judge’s analysis starts with the retainer and a rebuttable presumption that whatever contingency is agreed upon should be considered valid, with the added presumption a one-third fee is presumptively reasonable. The presumption the contingency fee agreed to in the retainer be considered valid would be rebuttable in the following circumstances:
• when the representative plaintiff did not truly understand the agreed fee;
• when the agreed contingency is excessive (one-third would be presumptively reasonable); or
• when a one-third contingency results in a fee so large it is unseemly or otherwise unreasonable.
While Belobaba’s approach is new for Ontario, it is not a new or novel approach in class action litigation outside Ontario. In British Columbia, the agreement entered into with the representative plaintiff has served as a starting point for the determination of fees for many years. In the United States, contingency fees of 30 per cent have also been given presumptive validity.
The approach outlined in Cannon should be welcomed by plaintiff and defendant counsel as providing future predictability to the approval of class counsel fees.
As noted in Cannon, the benefits of this predictability are fee decisions can be more principled and provide some degree of certainty at the outset of an action. The approach in Cannon also eliminates the potentially “irrelevant” and laborious task of the Court reviewing docketed time that may span a decade. If the approach in Cannon gains widespread acceptance, it will mean the end of the docket for fee approval in Ontario.