Law Times

Law Times • JuLy 10, 2017 Page 5 www.lawtimesnews.com Final amount to be determined Court of Appeal lowers damages in dealer class action BY MALLORY HENDRY AND ALEX ROBINSON Law Times A recent Ontario Court of Appeal decision will lower the original $45 million in dam- ages Cassels Brock & Blackwell LLP was ordered to pay in a 2015 General Motors of Canada Ltd. dealer class action, but the final amount has yet to be deter- mined. The appeal court's decision in Trillium Motor World Ltd. v. Cassels Brock & Blackwell LLP was released July 4. Cassels Brock had appealed the original decision, with the appellate judge stating in her decision that the firm "raises legal issues relating to liability, the availability of an aggregate damages award, and the trial judge's damages assessment." In 2015, an Ontario Superior Court judge awarded damages against Cassels Brock for breach of fiduciary duty, breach of con- tract and professional negli- gence. Justice Thomas McEwen found Cassels Brock owed con- tractual and fiduciary duties to some or all of GM Canada deal- ers in the class. Cassels Brock submitted on appeal that the trial judge erred in his findings concerning the scope of the dealer retainer; by finding that Cassels Brock breached its duties to the class members; in his treatment of the Saturn dealers' claims; by inferring causation; by award- ing aggregate damages; and in his quantification of damages. Allan Dick, one of the law- yers representing Trillium in the proceedings, says the case reaffirms the obligations of lawyers to their clients and the scope of retainer. "The important takeaway is the responsibility lawyers have to their clients and understand- ing the harm that can be caused if they breach those obligations," says Dick, who is a partner in Sotos LLP's litigation depart- ment. "So it's a harsh finding against Cassels Brock given the position that they were taking that they did not have respons- ibility, and it's unfortunate from our perspective that they didn't recognize that responsibility and carry it out." In a statement, Cassels Brock said that although the Court of Appeal did not accept a number of the arguments made by the firm on appeal, "[W]e believe that we have acted appropriately and professionally in our hand- ling of this matter, respecting our duties to our clients and act- ing in a manner consistent with our retainers and our clients' instructions. With this stage of appeal now concluded, we look forward to building on our reputation as a dedicated, trust- ed advisor to our many clients." The facts of the case stem from May 2009, when Cassels Brock was retained by the class members — including Trillium, which became the representa- tive plaintiff — to protect their interests in restructuring of the dealer network and represent them in related proceedings. About 200 GM Canada deal- ers were eliminated during the federal auto bailout, and the class action was seeking $750 million in damages on behalf of those dealers. Cassels Brock had been re- tained to represent Canadian dealers in a GM Canada re- structuring bankruptcy. In his 2015 decision, Mc- Ewen wrote: "Cassels takes the position that there was only ever the potential for a conf lict to arise on account of the two re- tainers. In other words, Cassels accepts that there was indeed a risk that immediate legal inter- ests of Industry Canada and the GMCL dealers would be direct- ly adverse." Along with Cassels Brock's appeal of the trial decision, Trillium filed a cross-appeal, arguing the class should have received more damages. It con- tended the value of the dealers' lost chance was $77.3 million, not $45 million as found by the trial judge. Trillium also argued that the trial judge's supplementary rul- ing should not be considered. In January 2016, after the release of the trial decision, the parties met before the trial judge to settle the terms of the judgment, and it emerged that the trial judge may have mis- understood the composition of the class, the appeal decision reads. Justice Eleanore A. Cronk ultimately dismissed Trillium's cross-appeal. Cronk upheld Cassels Brock's submission that the trial judge erred in his quantification of the damages. She agreed the amount con- tained calculation errors. Cronk wrote that "the trial judge cal- culated the lost chance as the difference between the amount approved and the amount paid: $218 million - $126 million = $92 million." General Motors Corp. had approved up to $218 million for its subsidiary, GM Canada, to pay out the estimated 290 ter- minated dealers, and $126 mil- lion was the amount actually paid out to the 202 dealers who accepted the wind-down agree- ment offers. Cassels argued, and Cronk agreed, that the second number should have been $143.5 million — the amount GM Canada of- fered to the terminated dealers under the WDAs, based on the actual final count of 240 ter- minated dealers. LT NEWS Allan Dick says a recent Court of Appeal decision reaffirms the obligations of lawyers to their clients and the scope of retainer. TorontoCommercial_LT_July10_17.indd 1 2017-06-30 10:01 AM

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