Law Times

Law TiMes • March 5, 2012 COMMENT queen is blocked in. Th e next move could be fatal or it could be the path to freedom and victory. If Premier Dalton McGuinty moves T to the leſt and seeks support from the NDP's Andrea Horwath, he'll likely not make the most of cuts suggested by Don Drummond to scale back spend- ing and address the ballooning defi cit and debt. If he lurches to the right with Conservative Clock ticking on austerity program he clock is ticking and it's get- ting louder. It's as if all of Queen's Park is a chess game and the white Queen's Park Th e unlikely gaff e came from the Conservatives who slammed recom- mendations to cut $345 million in subsidies to the horse-racing industry. While that refl ects their rural constitu- ency, supporting horse racing isn't go- ing down well in urban centres where voters could care less. As such, those cuts are certainly on the table. In the meantime, the NDP is de- Ian Harvey Leader Tim Hudak, he'll alienate the coalition of unions supporting his party. Alternatively, he could blunder by turning both parties against him and forcing a non-confi dence motion. Th e last option being fl oated around is to blame the federal government by leaking an old report that notes this province gets short- changed by about $5 billion a year under the redistribution system. We'll see how that fl ies with Prime Minister Stephen Harper's government. Meanwhile, Drummond's report has been kicking around the public domain for weeks now both in its formal incarnation and informally as it circulated to a select few at Queen's Park. Some reports suggest the premier and cabinet have had the report's main points in hand for six weeks. Why the wait? Looking back at that chess game, the premier appears in checkmate limbo. All we've heard about so far is the recommendations he won't be imple- menting: all-day kindergarten will stay at a cost of $1.5 billion, for example. On the leſt , the unions are decrying the threats to their jobs. To maintain their support and that of the NDP in propping up the minority govern- ment, the Liberals will likely lean towards them. manding the elimination of the sched- uled reduction in corporate taxes to 10 per cent from 11.5 per cent. It's not a novel idea. British Columbia, for example, recently raised corporate taxes by one per cent. It's also the best bet short of raising taxes and McGuinty's next big move will come when the government unveils the provincial budget this spring. In the meantime, it seems to be telegraph- ing the message that the process of announcing cuts will be ongoing rather than one big bang. Politically, McGuinty must be decisive and be seen to be so. Doing nothing isn't an option. An- nouncing a series of cuts in a controlled fashion over time allows the government to control the story and the message, although a big splash in the budget where it announces some of the less palat- able adjustments is also likely. Taxes won't go up but they won't go down and then there's the stealth method of seeking new lev- ies, tariff s, and bigger profi t margins from existing government-controlled agencies. Licence-renewal fees will rise; LCBO and beer prices will go up; and gas prices and the hated health-care levy could increase. Either way, we're going to pay the tab. LT Ian Harvey has been a journalist for 34 years writing about a diverse range of issues including legal and political aff airs. His e-mail address is ian harvey@rogers.com. u Letter TO THE EDITOR LETTERS.indd 1 PAGE 7 LAO HIGHLIGHTS LONG-TERM STRATEGY Further to the editorial, "Crunching the numbers at LAO" on Feb. 13, it is important to emphasize that Legal Aid Ontario's transformation has been ongoing since 2008. It is based on making bet- ter use of technology, streamlining administration, expanding access for clients, and increasing value for taxpayers. Recently, the auditor general observed that LAO's long-term strategy 3/1/12 4:39 PM was "well defined" and the organization "has moved to increase access to legal aid services beyond the issuing of certificates, such as through expanded use of duty counsel available at courthouses and through its new call centre." Some of the significant transformative changes to the legal aid program in Ontario include: • Simplifying the legal aid application process to make it simpler and faster for clients to apply. • Establishing a toll-free client service centre that connects callers to a variety of services, including legal information, referrals, legal aid applications, and criminal and family summary legal advice from a lawyer, in more than 200 languages. • Opening 56 courthouse offices to provide easy access to legal aid services. • Increased web resources. • Opening six family law services centres across Ontario. • Expanding family mediation services to provide more options to low- income Ontarians. • Introducing family summary legal advice over the phone . • Launching the family law information program. • Creating a new complex-case rate and panel to help legal aid clients with serious and complicated matters retain quality legal representation. • Introducing block fees to reduce red tape and make it simpler and faster for lawyers to get paid. • Providing summary criminal legal advice over the phone. • Launching LawFacts, an online public legal information resource for people with matters before the criminal courts. • Enhancing duty counsel services. • Introducing professional interpretation and translation services in more than 200 languages for community legal clinics. • Establishing an innovation program to assist community clinics in devel- oping and implementing new programs and service-delivery channels that expand client access and provide more effective use of funding. Kristian Justesen Director of communications Legal Aid Ontario BY JASMINKA KALAJDZIC For Law Times I n his opening address at a conference on class actions last March at the University of Windsor, for- mer Supreme Court of Canada justice Frank Iacobucci asked two fundamental questions: What is access to u SPEAKER'S CORNER participatory rights for affected investors. Importantly, Winkler found that regulatory bodies like justice in the context of class actions? Are class actions try- ing to do too much? On Jan. 27, the Ontario Court of Appeal offered a response to those two questions: access to justice is access to substantive and procedural justice and, by securing both, class action litigation legitimately plays a regulatory enforcement function. In Fischer v. IG Investment Management Ltd., the Court of Appeal held that the certification motion judge erred when he refused to certify the action on the basis that it did not offer access to substantive justice to the class members. The proposed class action against CI Mutual Funds Inc. and AIC Ltd. claims that investors lost hundreds of mil- lions of dollars when the defendants allegedly engaged in market-timing practices. After a year-long investigative and enforcement pro- ceeding, the Ontario Securities Commission found the practice to be in contravention of the Securities Act and entered into settlement agreements with the defendant fund managers. The settlement was approved in cam- era before a panel of the OSC. Although the defendants paid more than $200 million to investors in five mutual funds, there was some basis in fact for concluding that the amount of compensation paid under the OSC procedure was between one-seventh and one-third of the actual losses sustained by the class members. At the certification hearing, the motion judge found that the OSC settlement had provided a measure of compensation and performed a deterrence function and therefore was the preferable procedure. Court of Appeal Chief Justice Warren Winkler disagreed and found that the OSC process was not preferable to the class proceed- ing for two reasons: first, the aim of the OSC settlement was principally protective and preventative rather than compensatory and second, those proceedings lacked the OSC are designed to work in conjunction with civil litigation to ensure public companies and mutual fund managers act in the investing public's interest. In his view, private and public enforcement mechanisms are not mutu- ally exclusive. "Unlike enforcement proceedings under s. 127 of the Securities Act, the purpose of the proposed class proceeding is to obtain relief for investors — monetary or otherwise — who claim to have suffered losses from the defendants' impugned conduct ." Put differently, public enforcement via regulatory agencies focuses on deterrence of wrongful behaviour while private enforcement via class actions has a principally compensatory function. Winkler also pointed to the transparency of class actions as a distinct advantage over the lack of investor participa- tion in regulatory proceedings. Here, Winkler equated the appointment of a representative plaintiff with participation by investors and class members. So what do these important statements mean for Iacobucci's questions about the meaning of access to justice and the possibility that class actions are trying to do too much? Fischer offers a clear vision of access to justice as hav- ing both substantive and procedural components with the latter being the main concern at the certification stage. Indeed, the Court of Appeal rejected as inappropriate any consideration of the adequacy of the OSC settlement award in its analysis of preferable procedure. Rather, a preferable procedure will be one that gives notice to affected investors, permits them to participate in hearings that operate on the open-court principle, and provides information about the proposed settlement. Further, class actions exercise a compensatory function that is complementary to that of regulatory agencies. As such, by carving out a role for civil litigation even where regulatory enforcement has already taken place, Fischer proclaims that it is the class action, not the OSC, that is best www.lawtimesnews.com suited to providing substantive justice to investors. In doing so, private civil actions buttress the regulator's deterrence function. Class actions, according to the court, are not trying to do too much. The Court of Appeal's decision is bound to attract criticism and warrants further discussion. It comes at a particularly important time for the development of col- lective redress mechanisms internationally, particularly in Europe. There, the normative question legislators are grap- pling with revolves around the issue of privatizing, wholly or in part, the enforcement of antitrust, environmental, consumer, and other laws with class action lawyers acting as private attorneys general. Winkler's reasons highlight the fact that, at least in Ontario, private enforcement mechanisms are equally important to those of public entities in regulating the behaviour of capital market participants. Yet if through class actions the government has a cost-effective way to promote enforcement of securities legislation, is there a risk that the Fischer approach, with its rejection of any consideration of the substantive outcome of the regulatory proceeding, will lead to duplicative effort, if not excessive compensation? Moreover, critics may point to the less-than-robust participation by class members as casting into doubt Winkler's emphasis on the procedural justice elements of class proceedings. Whether measured by the number of people who opt out, objector participation or take-up rates, there is at least some empirical basis for the more cynical view of the motion judge who found that the "subjective and emotive plea that the investors have not had their day in court" was not persuasive. If the negli- gible role played by class members in most class actions satisfies the procedural justice imperative, is the Court of Appeal's vision of that notion inadequate? Notwithstanding the questions raised by Fischer, the decision contributes to an ongoing, principled discussion about the aims of class actions. It is a discussion that is long overdue. LT Jasminka Kalajdzic is an assistant professor at the University of Windsor Faculty of Law. Are class actions trying to do too much?

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