Law Times

PAGE 4 NEWS may 11/18, 2009 • Law Times collect Canada Pension Plan sur- vivor funds are taking their fi ght over legal fees to the Supreme Court of Canada, saying a recent Court of Appeal decision could restrict access to justice. "We are seeking leave to ap- Leave being sought in battle over legal fees L BY ROBERT TODD Law Times awyers involved in a land- mark class action that al- lowed same-sex spouses to prejudgment arrears owed to the survivors, with half of that amount owing to Elliott's fi rm. Th e lawyers accrued over $5.3 million in fees during the seven- year case, which was the fi rst suc- cessful constitutional class action in Canadian history. Macdonald rewarded the lawyers for their hard work by adding a multi- plier of 4.8, bringing their total payout to over $15 million. Th e appeal court agreed with peal," Roy Elliott O'Connor LLP founding partner Douglas Elliott, a member of the plain- tiff s' counsel group in Hislop v. Canada (Attorney General), tells Law Times. "We feel that this is an im- portant issue of access to justice, and it's not something that has arisen before, and we think it's important to have the guidance of the Supreme Court on the cir- cumstances under which the fi rst charge for class action lawyers can be displaced. Because the implications for access to justice are really pretty grim if this deci- sion is allowed to stand." He added, "To quote my partner Peter Roy on the sub- ject, he said, 'We really owe it to the class action bar not to leave this decision out there the way it is now.'" Th e Ontario Court of Ap- peal recently upheld Superior Court Justice Ellen Macdonald's February 2008 decision on the matter. She ruled that a retainer agreement she approved in 2004 does not comply with s. 65 of the CPP, which prevents funds from being assigned to others. Under the agreement, the class action lawyers' fees were to be covered by a payout of half of Macdonald's rejection of the law- yers' argument that s. 32(3) of the Ontario Class Proceedings Act should prevail over s. 65 of the CPP. It states, "Amounts owing under an enforceable agreement are a fi rst charge on any settle- ment funds or monetary award." Ontario Court of Appeal Justice David Watt, writing for a panel that also included Jus- tice Susan Lang and Justice Paul Rouleau, off ered the following in determining that s. 94A of the Constitution Act does not back the class action lawyers' position: "In this case, the CPP quali- fi es as a law 'in relation to old age pensions and supplementary benefi ts.' But the CPA cannot claim any such constitutional foundation. Th e CPA is a stat- ute of general application, a law that deals with procedure in civil matters. Th e CPA, in its cur- rent form, is not and does not purport to be a law 'in relation to old age pensions and supple- mentary benefi ts.' In the result, the conditions precedent to the rule establishing provincial para- mountcy are not established." Elliott says he is "very disap- pointed" with various aspects of the eight-page ruling. "Given the length of the reserve, which is seven months, frankly I was expecting a lot more detailed and comprehen- sive analysis of the very impor- tant public policy issues," he says. "Th e analysis, with all due respect to Justice Watt, I think is pretty superfi cial. It gives short shrift to the evidence we put forward that was unchal- lenged about the negative im- pact on access to justice of this interpretation." Elliott fears that some who read the decision will view it as a "trite situation that doesn't seem to be much of an argu- ment from our perspective. But, in fact, there is a consid- erable argument." Elliott noted that the case could only have succeeded as a class action, a point acknowl- edged by Macdonald upon approving lawyers' fees in the case. He adds that class mem- bers would have, in violation of the Charter, never received their pensions if the class ac- tion were not pursued. "Th at just doesn't seem to have hit the Court of Appeal's radar screen in this decision," he says. "And it wasn't for lack of trying, I can tell you. Th ese are not ar- guments that we failed to make to the Court of Appeal. Th ey are just arguments that they didn't seem to take into account." While the class action law- yers can still collect their fees, the appeal court's decision means they must go to each of the 1,000 claimants to collect, notes Elliott. "It's the diff erence between a bank having a mortgage, and a bank having a credit card debt," he says. "You still owe Douglas Elliott says the impli- cations for access to justice are 'pretty grim' if the fees deci- sion stands. the money to the bank one way or the other, but it's a lot easier for the bank to collect on your mortgage than it is for them to collect on your credit card debt. And there's a much greater chance that they won't recover on your credit card debt." He says that collecting from individual claimants is "expen- sive, time consuming, and fraught with risk. And that is exactly what the lien under the Class Proceed- ings Act is intended to avoid. It's intended to ensure that when you're successful — and we in- vested millions of dollars try- ing to recover these pensions for these folks, which we would not have recovered if we had failed — you get your money off the top, before the client sees a penny. So you have that comfort of knowing that you won't face any collection problems if you're successful." Adds Elliott, "We all know when we start a class proceed- ing that we face the risk of los- ing. Th is is the fi rst time that we have faced the risk of winning." Elliott suggests that while the case was the fi rst success- ful constitutional class action in Canadian history, it could be the last. "No law fi rm is going to in- vest $7 million in a pro bono exercise," he says. "It's just not going to happen." Stikeman Elliott LLP part- ner and class action lawyer Adrian Lang says, "Th e issue on the pension benefi ts side is there is a very clear prescrip- tion against being able to put liens on people's pensions and benefi ts, for good reason." She says, "I certainly thought it was the right decision for a whole bunch of reasons. As a constitutional question, it seemed to me to be a bit of a no-brainer that they weren't going to be able to fi nd that the Class Proceedings Act was go- ing to overrule that provision of the Canada Pension Plan." Th omson Rogers managing partner and class action law- yer Alan Farrer says the appeal court "took a very narrow ap- proach that the provincial Class Proceedings Act, which as a provincial statute, gets trumped by the federal statute, and they were quite comfortable just deciding it on that basis." Farrer, like Elliott, would have liked further discussion on access to justice implications. "It could have used some light being shone on that par- ticular aspect of things," he says. "But this is a very peculiar situ- ation and probably is not going to come up in very many class actions going forward." Th e underlying case was Prosecutorial Misconduct Defining the limits of legal prosecution originally brought by gay ac- tivist George Hislop and is believed to be the fi rst class ac- tion in the world to put forth the claim that gay and lesbian rights had been violated. Elliott acknowledged the dif- This is the essential text for Crown counsel who need to operate within the rules of law and for defence counsel who need to identify when prosecutorial misconduct occurs and the remedies that are available. Essential knowledge for all criminal practitioners This comprehensive and thought-provoking treatise covers prosecutorial misconduct at every stage of the criminal process and impartially and objectively identifies its elements with specific reference to case law. In addition, Prosecutorial Misconduct provides expert commentary on the tort of malicious prosecution and related civil actions against prosecutors. Includes a CD-ROM with relevant Canadian case law to facilitate research. Order your copy today! Hardbound with CD-ROM • Approx. 350 pp • July 2009 • Approx. $99 P/C 0171010000 • ISBN 978-0-88804-487-7 fi culty the lawyers will face in ob- taining leave to appeal from the top court. "We hope that because of the importance of the access to justice issues — and there's also some related constitutional questions that have never really been considered by the Supreme Court either — that they'll fi nd these issues of interest and that we will have better luck in Ottawa," he says. LT For a 30-day, no-risk evaluation call: 1.800.263.2037 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. www.lawtimesnews.com Frater_Prosecutorial Misconduct (LT 1-3x4).indd 1 5/6/09 12:12:03 PM LT0511 Robert J. Frater

• Cover
• LSUC Financially Stable
• Statement Analysis
• Focus On Securities Law