“This case appears to be the first time that Canada has agreed to pay counsel fees without affecting compensation, where the amount was not negotiated — either in part, within a certain range, or up to a cap — as part of a settlement agreement,” wrote Justice Peter George Pamel, as one of his last decisions before retirement.
Percival v. Canada, 2024 FC 2098, released Dec. 27, related to the approved settlement agreement of the Indian Boarding Home Program class action. From 1951 to 1992, Indigenous children were taken from their families and placed in boarding homes to attend school.
Justice Pamel noted in the settlement approval decision that a large number of these children did not complete high school due to suffering extensive abuse and could not fit in when they tried to return to their communities.
“Justice Pamel applied established principles in setting a fair and reasonable fee for this mega-fund class action settlement,” said class counsel David Klein of Klein Lawyers LLP.
“Class action settlements with a value of $100 million or more involve unique considerations to ensure that the fee awarded is fair to the parties and provides sufficient incentive for lawyers to take on these complex cases.”
The settlement, approved in May 2024, provided that class counsel fees will be determined by the court independent of the settlement fund. The latest estimate of the class size was 33,000 members, the court said, and the settlement included $50 million to establish a foundation to support class members.
“The affidavits of the Representative Plaintiffs describe the importance and significance of this Settlement Agreement to them, their families, and their communities,” wrote Justice Pamel. “The importance of this matter to the Class members is unquestionable.
“This is more than a lawsuit for them; it is an official recognition of the harm they suffered as children, and the wounds they carried with them throughout their lives. It also represents a healing path forward for the plaintiffs and their families.”
The applicants moved for an order to approve class counsel fees of $50 million plus taxes, which included in $10,000 respective honoraria to representative plaintiffs. The Attorney General of Canada took no position on the matter or amount and left it to the court to determine whether the amount was fair and reasonable.
“The two most important factors in setting fees for cases of this type are risk and result,” added Klein. Justice Pamel praised the settlement as innovative and an excellent result for the class. He assessed the risk as moderate.
“As result, the fee awarded was lower than some prior settlements, but still a sizeable fee with a premium on the time expended. Justice Pamel’s detailed analysis of the underlying litigation and the judicial considerations in setting fees will be an important precedent for future cases of this type,” said Klein.
The cause of action in the case related to loss of language, culture and identity. However, these were no longer novel at the time that counsel had accepted to take on the case in 2018, the court noted. At that point, Canada had considered this cause of action as a basis for settlement in Indigenous child education policy-related litigation, as confirmed by the Sixties Scoop (Riddle v. Canada, 2018 FC 641) class action settlement.
The applicants had argued that the risk level they were taking on were similar to that of the Residential Schools (Baxter et al. v. The Attorney General of Canada 83 O.R. (3d) 481); Quatell v. Attorney General of Canada, 2006 BCSC 1840; Northwest v. Canada (Attorney General), 2006 ABQB 902), Day Scholars (Tk'emlúps te Secwépemc First Nation v. Canada, 2021 FC 988), Day Schools (McLean v. Canada, 2019 FC 1075) and Sixties Scoop class action settlements. Justice Pamel disagreed, reiterating that the issue was no longer novel. Class counsel was also involved in the latter two actions.
They further argued the risky nature of the cause of vicarious liability, framing it “in the context of the fault of the boarding home families,” such that “Canada’s vicarious liability would flow from the abuse undertaken by the families towards the boarding home survivors.”
Justice Pamel noted that the vicarious liability asserted in the pleading related to the “alleged negligence of Canada’s staff in conducting the Program,” rather than the fault of boarding home parents, nor was such outlined in the common issues.
He noted that there was no “vigorous adversarial posture taken by Canada,” and it was prepared to consent to certification in 2019, engaged in judicial mediation sessions and later signed an agreement in principle. While there was risk before the Attorney General signaled his mandate to settle, the issue of liability “was not being seriously challenged by Canada,” as Canada took on a collaborative approach.
Justice Pamel said the overall risk profile of Indigenous child policy-based class actions shifted considerably in the period between 2016 and 2018, and that the shifting of policy decisions and how the government considered reputational risk informed the process leading to eventual settlement.
Both parties understood the history of the program along with scope and size of the class with the archival research and expert reports, he later added. In this case, parties were looking for solutions rather than procedural victories in a lengthy legal battle, as was the case with the previous settlements. He further noted that the settlement at hand was significantly modeled after Day Schools, with improvements.
The applicants argued that there was complexity of the case, as there was “uncertainty surrounding the expansive nature of the Program and the number of victims involved, and how little available information existed at the time the underlying class proceeding was filed.” The court agreed.
“It did take thousands of documents — mostly from archival records disclosed by Canada during documentary disclosure — and a myriad of expert reports retained to grasp the magnitude of the Program thus allowing Canada to appreciate its involvement and risk exposure, and also allowing for the parties to agree to the deeming provision to overcome the uncertainty surrounding the transfer of responsibility from Canada to Indigenous groups,” Justice Pamel wrote.
The $50 million request of counsel fees was inclusive of post-settlement work, actual fees billed to-date of $7.7 million and an estimate of $2.5 million for post-settlement work plus disbursements. This represented counsel fees of 2.6 per cent of recovery and a 5.4 multiplier based on actual fees incurred.
The court noted that a direct comparison with fees awarded in similar class actions is of “limited utility in mega-fund cases,” and to be given a lower weight in consideration. There is further difficulty where different cases for comparison have differing structures of calculating class counsel fees.
Time sheets are “notoriously unreliable in assessing value,” Justice Pamel said, being based on the misconception that each hour worked has the same value. There was also “no assessment as to whether the dockets reflect what would be the most efficient use of time.”
He found that the amount of $32.5 million was a fair and reasonable amount to compensate counsel for their efforts and skills in the actions and approved the honorarium. It represented an estimated 1.7 per cent of the expected settlement value and a 3.2 multiplier, both noted to be at the lower end of the scale.
Class counsel were also Aden Thompson-Klein, Brent Ryan and Douglas Lennox of Klein Lawyers LLP.
Counsel for the Quebec subclass were David Schulze, Léa Lemay Langlois and Rose Victoria Adams of Dionne Schulze.
Counsel for the Attorney General were Catharine Moore, Travis Henderson, Sarah Dawn Norris and Thomas Finlay.
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