Shortly after 9:40 this morning, copies of the Plan Implementation Certificates were circulated among the service list of those following the CCAA oversight of the settlement between the major tobacco companies operating in Canada and the provincial governments and class actions suing them.
The near-identical documents confirm that: "The Plan Implementation Date has occurred and the CCAA Plan and the provisions of the Sanction Order which come into effect at the Effective Time are effective."
At some point during yesterday's hearing, Chief Justice Geoffrey Morawetz observed that more than 6000 pages of documentation had been submitted to support the 13 or more formal agreements he was being asked to make just two days before the tobacco settlement takes effect.
In contrast to the volume of material, the time given to the presentation, discussion and approval of all these requests did not exceed 40 minutes. The lawyers presenting the requests were mostly concise to the point of laconic. And through their silence when given a chance to comment, all of the formerly warring parties seemed to be in agreement with the last-minute touch-ups to the agreements they approved last December.
Given the pace of developments over the past quarter century, yesterday's developments resembled the digestive tract of the proverbial goose. The decisions involved are linked at the end of this post.
On second thought...
Before court was adjourned, Chief Justice Morawetz let it be known that a subsequent private discussion (case conference) would take place shortly afterwards. The topic under discussion was his ruling earlier that week that there would be a hold-back on the fees paid to lawyers representing the Quebec class action until all claims had been settled.
Yesterday afternoon, he backtracked somewhat on that requirement and issued an amended version of his ruling on fees. Instead of a vaguely defined requirement for a reserve fund, the new text (paras 77 to 79) establishes that "a reserve be held back from the QCAP Counsel fee and retained in the respective QCAP Trust Accounts in the total amount of $50,000,000, the purpose of which is to alleviate, to the extent possible, any reduction in compensation to claimants because of the actual take up rate ..."
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Settlement-related decisions and orders released after August 26 - including one by the US Bankruptcy Court on Tuesday - are linked below.
Plan Amendment Orders:
U.S. Chapter 5
Insurance Settlements
Collateral Agent Order
Plan Administration Reserve Trust Order
Claims Administrator Order
Other issues
Class Counsel Fee Orders
Two months ago, Chief Justice Geoffrey Morawetz had indicated that he would issue his ruling on class counsel fees "long before the implementation date." As it turns out, his ruling issued today arrives only 4 days in advance of that long-anticipated moment.
The lawyers whose fees were the subject of this ruling will consider that it was worth the wait. Chief Justice Morawetz endorsed their request for the full contracted amount.
Two of these fee decisions will draw scant notice - the judge himself dismisses them as "de minimus". The legal team representing the B.C. "Knight" light cigarette action will receive $5 million, which is one-third of the settlement amount for the class. They will also be reimbursed for $1 million in disbursements and an additional award of $10,000 will be provided to the representative class member. The remainder of the $15 million will be allocated to the Cy Pres foundation. Lawyers representing tobacco producers are able to claim 25% of the $15 million recovered for farmers in the settlement (some of which they have already been provided). The remainder will be disbursed among the affected farmers.
The third fee endorsement is the record-breaking decision to uphold the 22% fee contracted by the lawyers who have represented two classes of injured Quebec smokers since 1998. This legal team will receive $901 million in compensation for their decades of work (totalling more than 200,000 hours of work since 1998 and covering future work). Because they have previously been provided with $5 million which was used to reimburse the Fond d'Aide, the legal fees will total almost $906.2 million.
This is the largest fee award in Canada by a considerable margin - described in this ruling as "unheard of in Canadian legal history."
The judge cautions that he does not intend his approval of this fee to become precedent for future legal fees. He nonetheless provides his reasoning at length in a text peppered with quotes, footnotes from other rulings, references to advice from a Quebec jurist, and the interventions of other parties. Fundamentally, he agreed with the position of Quebec lawfirms who said in February and in March that in the absence of a principled reason to alter the fee, their contract should be honoured.
Justice Morawetz summarizes his decision to - "reluctantly" - approve the amount requested.
(63) I accept the following:
(a) QCAP Counsel assumed great risk in accepting the retainer from the class
(b) The 22% fee arrangement is at the low end of the scale and is fair and reasonable.
(c) The ACQPs succeeded at trial and the Quebec Court of Appeal
(d) Although the CCAA Plans reflected a mediated settlement, the CCAA Plans were only put forth to a creditor vote after five and a half years of mediation. This reflects hard fought negotiations.
(d) An exceptional outcome was obtained for the Class. The monetary award for each member of the class if fixed. Even if the fee request of QCAP Counsel is reduced, the reduction will not flow to the benefit of the Class.
(f) The PCCs, as well as the provinces and territories obtained residual benefits as a result of the work of QCAP Counsel.
(g) With the exception of Quebec, the provinces and territories took no position on the appropriateness of fees. This is significant as any reduction in the fees being awarded to the QCAPs would flow to the provinces and territories.
Safeguarding class members' compensation
Justice Morawetz' approval of the $900+ million fee is contingent on the $4 billion awarded to the Quebec class of smokers being enough to provide all eligible members with the compensation provided for them in the settlement and also cover the legal fees.
If it transpires that the class members are being short changed, then the fees to lawyers will be reduced. The endorsement provides for a reserve fund "to ensure that each approved claimant receives the full amount of their claim under the CCAA plans" and directs the monitors to work out the details of how this will happen.
A firm hint from the bench
Chief Justice Morawetz closes his decision by calling on the Quebec legal teams to be generous with their earnings. "This created the opportunity for QCAP Counsel to obtain compensation beyond their wildest expectations. In receiving this reward, they should recognize that they have a moral obligation to society ..." He calls on them to honour this obligation through charitable giving - "In this way they can be publicly recognized for their incredible work in this matter."
On Wednesday August 27th Justice Morawetz will hear requests from a number of parties involved in the ink-almost-dry settlement among Canadian provincial governments, injured smokers and farmers and tobacco companies.
This hearing will come two days before the expected implementation date, and one day after the US Bankruptcy Court is expected to support Imperial Tobacco's settlement position in the United States.
This post identifies the issues that will be raised on the 27th with links to the paperwork involved. It will be updated as additional material comes on line.
1) "Amended and Restated Plans"
The monitors are seeking another set of amendments to the plans of each company, and have submitted "Fourth Amended and Restated" versions for approval. In broadly similar motions for each company, they provide consistent rationale that the amendments are "necessary", "consistent" with the original plan that was voted on in December, "not materially adverse" to the financial interests of the creditors and adversely affecting any other party and are not opposed by other parties.
The large volume of changes is immediately apparent from the blackline version which is included in the motion record for each company (Imperial Tobacco, Rothmans, Benson & Hedges (Part 1 and Part 2) and JTI-Macdonald).
The rationale for the changes is explained earlier in the document in a sets of tables that summarize the proposed amendments. Some of the changes embed issues raised earlier this summer and/or proposed for discussion this week.
The Monitors (who also act as Plan Administrators) have submitted a Factum outlining their support for these changes.
2) Collateral Agent Order
Plan Administrators are seeking a court order to appoint Computershare Trust Company as the collateral agent for the parties. Equivalent motions were filed for Imperial Tobacco, Rothmans, Benson & Hedges and JTI-Macdonald
3) Claims Administrator Orders
Epic Class Actions Services is seeking an Order with respect to each company to approve their plan for notifying potential claimants and for their administrative costs and for related issues. They estimate it will cost them $92 million for their role in administering the claims.
* Motion with draft order, Global Notice Plan and related documents including claim forms, etc.
3) Settlement of insurance claims
The companies appear to have finalized their arrangements with those insurance companies which provided them coverage at the time of the behaviour which has resulted in the settlement. Imperial Tobacco will receive about $3 million from 5 insurance companies (Aviva, NHRAE, Lloyds, Westport and Zurich). The motion to approve the allocation of this to the settlement funds also identifies other insurance companies from whom there appears to be no pay-out.
In a brief (15 minute) hearing this morning, Chief Justice Geoffrey Morawetz granted two sets of requests for court orders.
The first, made by the lawyers representing the Quebec class action on behalf of themselves and the three other claimant classes (Pan Canadian Claimants, Knight action and Tobacco Producers) will authorize these lawyers to sign releases and other documents required by the settlement plans.
The second, made by the Monitors-cum-Plan Administrators, will authorize the assignment of managing the settlement funds by BMO.
The two orders which will be endorsed later today were described as "critical elements" of the settlement plan which is expected to take effect on August 29th. There were signals that there will be other issues that need court approval before that date.
The orders which were approved today can be found in the material submitted to the court:
In addition to the clarification about the authority of class action counsel, during this Friday's hearing Chief Justice Morawetz will also be asked to approve the banking arrangements between the Plan Administrators and the Bank of Montreal (BMO).
Details of the parallel requests from each company were posted today on the websites of the monitors (who are also the Plan Administrators). These Motions can be accessed here:
A new notice of motion by the lawyers representing members of the Quebec class action was filed on Friday and made available today. At a hearing now scheduled for Friday, August 15th at 9:00 a.m., they will ask for clearer signing authority for lawyers representing all of the non-government claimants.
This pre-hearing paperwork includes an explanation that the Sanction Order inadvertently failed to specifically authorize these lawyers to release the claims in return for which settlement funds will be issued and to conduct other required paperwork. "Out of an abundance of caution, Quebec Class Counsel are seeking this Court’s authorization to execute and deliver any and all required plan implementation documentation as they consider advisable and propose that this Court’s authorization be extended to the other Claimant Class Counsel as well."
The order from Justice Morawetz they are seeking is to the effect that
"(i) Quebec Class Counsel is hereby authorized to execute and deliver on behalf of the Quebec Class Action Plaintiffs, (ii) PCC Representative Counsel is hereby authorized to execute and deliver on behalf of the PanCanadian Claimants, (iii) Knight Class Counsel is hereby authorized to execute and deliver on behalf of the Knight Class Action Plaintiffs, and (iv) Counsel for the Tobacco Producers is hereby authorized to execute and deliver on behalf of the Tobacco Producers and Ontario Flue-Cured Tobacco Growers’ Marketing Board, any and all documents as they consider advisable to give effect to the implementation of the CCAA Plans including, as applicable and without limitation, the following documents: a. Claimant Contractual Releases; b. Plan Implementation Certificates; c. Collateral Agency Agreements; and d. Flow of Funds Agreement."
Yesterday the Monitors for JTI-Macdonald uploaded the Chapter 15 Order of Justice Mastando of the United States Bankruptcy Court Southern District of New York, giving effect in the United States to the CCAA settlement with respect to that company.
As reported earlier this week, the same judge is currently scheduled to hear an equivalent request from Imperial Tobacco Canada on August 26th.
Documents related to the JTI-Macdonald decision are available on the Deloitte Insolvency website, at the following links:
Following a similar request by JTI earlier this summer, last week Imperial Tobacco submitted its request to a New York Court for "Recognition and Enforcement of the Orders of the Canadian Court".
The hearing is scheduled for "August 26, 2025 at 11:00 a.m., prevailing Eastern Time" before Honorable John P. Mastando III of the United States Bankruptcy Court for the Southern District of New York.
This is only 3 days before the day on which the implementation was earlier suggested to take place - and which is still suggested on the website for claims related to the Quebec class of victims.
On July 29th, following a hearing in the morning, the Quebec Court of Appeal authorized the release of the almost $1 billion that it had ordered two tobacco companies to put aside almost a decade ago.
In October 2015, that court had ordered a series of security payments from Imperial Tobacco (totalling $757,995,000) and Rothmans, Benson & Hedges (totalling $225,995,000).
During the intervening period, the money has been managed by the Quebec Minister of Finance, which has now been ordered to release the money to the monitors of those two companies. It would appear that no interest was involved.
The joint request by the two largest companies involved was supported by the Quebec class action, on whose behalf the security payments had initially been imposed.
On Monday July 21, Justice Catherine Piché of the Quebec Superior Court issued two rulings aimed at implementing the tobacco settlements.
The first - "official confirmations" - includes a dozen specific orders establishing the authority and responsibility of the Quebec health insurance system in assisting the payment of compensation to injured Quebec Smokers. The Régie de l'assurance maladie du Québec (RAMQ) is directed to providing information which facilitates the eligibility of claims and which safeguarding the confidentiality of this information.
The second - Come-in-Aid - provides assurance that the Quebec courts will "recognize, assist and give effect to" the CCAA application as though they had been issued in Quebec.
The application for this order which was made by the Quebec class action can be read here.
At 10 a.m. on August 7th, lawyers for JTI-Macdonald will seek approval from a New York Court for recognition of and support for the CCAA settlement plan. This information was provided in an Order from the United States Bankruptcy Court (Southern District of New York) which appeared on the website of the company's monitors earlier this week.
Also uploaded were the company's application for the Order, its Petition for Recognition, as well as an accompanying declaration and 'Memorandum of Law'.
The first dozen pages of the Petition provide a readable re-cap of the issues and also the company's motivation in seeking the order.
JTIM asserts that a positive decision to its request from the U.S. court is required before the Canadian settlement takes effect. "The entry of an order by this Court, pursuant to Chapter 15 of the Bankruptcy Code, recognizing the Canadian Proceeding and the CCAA Plan and granting related relief in order to give full force and effect to the Sanction Order and the CCAA Plan, and particularly the Releases in the U.S., which enjoyed full creditors’ approval in the Canadian Proceeding, is an unwaivable condition precedent to implementation of the CCAA Plan. Without a Chapter 15 order recognizing the Canadian Proceeding and giving full force and effect to the CCAA Plan and the Sanction Order in the United States, the CCAA Plan will not be implemented and the global settlement will fail."
If an explanation was offered as to why the 'unwaivable condition' is only being addressed so many months later, I have missed it.
The Petition provides additional insight on the value of U.S. court support: this will ensure that the release from liability is extended to the United States, giving protection both to JTIM and also to its previous owners (now a subsidiary of British American Tobacco).
"The purpose of this Chapter 15 case is to obtain recognition of the Canadian Proceeding and the CCAA Plan, and the entry of an order of this Court granting full force and effect to the Sanction Order and the CCAA Plan, so that the Debtor may enforce in the United States the CCAA Plan and the Releases for the Released Parties. The Released Parties include, among others, R.J. Reynolds Tobacco Company, R.J. Reynolds Tobacco International Inc. and RJR Nabisco, Inc. (now known as R.J. Reynolds Tobacco Holdings, Inc.) (collectively, the “RJR Group”). The RJR Group owned the Debtor from 1974 until the execution of the Purchase Agreement (as defined below) in May of 1999."
The U.S. judge who is managing the JTIM request -- John P. Mastando III - is the same person who issued a recognition order to Imperial Tobacco last summer, and which has been available on the website of FTI, the monitors for that company since last November. No equivalent material appears to be available on the website of EY, the Monitors for Rothmans Benson and Hedges.
schedules the hearing
Late last week two short court orders were posted on the website of the monitors assigned to manage the CCAA proceedings for Imperial Tobacco, Rothmans, Benson and Hedges and JTI-Macdonald.
One of these extends the authority of the Hon. Warren Winkler, who has acted as mediator in this process for 6 years. His power in these proceedings is significant. In addition to those powers and services previously enumerated, this order directs him to "take all steps and actions, and to do all things, necessary or appropriate, in his sole discretion, with respect to the CCAA Plans (collectively, the "Ongoing Services") until further order of this court."
The confidentiality protocol, also extended by this order, excludes disclosure of either the billings associated with these services or the administrative actions taken by this former chief justice in his role as mediator in these files.
The second of these orders specifies that the fees paid to the monitors and their lawyers are subject to review by Mr. Winkler, and that these fees are also not to be made public.
During a brief (15 minute!) hearing this morning before Chief Justice Geoffrey Morawetz, counsel for the Quebec tobacco class actions reported that August 29th was the target date to implement the settlement agreement that would end all pending litigation against Canada's tobacco companies.
This may be the first public statement to this effect. The information was relayed during a discussion of administrative issues which need to be resolved before the companies begin to pay compensation.
The purpose of today's hearing was to obtain court orders on the following pre-implementation issues:
There were no objections to these requests and representatives of the parties involved were on hand to voice their support. The judge said these orders would be issued this morning with brief reasons (endorsements) to follow. When available, these will appear on the websites of the Monitors for the companies involved:
At the end of this session, Chief Justice Morawetz acknowledged that he had yet to rule on how much the lawyers representing Quebec smokers would be paid, but said his decision would be made public "long before the implementation date."
More than 3 months have elapsed since Chief Justice Morawetz approved the settlements brokered among Canadian provincial governments and the 3 large tobacco companies that have been the target of class action and cost-recovery suits for two decades.
That approval was only an important finishing step in this saga, but came without an indication of when the agreement will be implemented and when the companies' victims will receive some compensation. Little information has been shared about that implementation date - although one mid-May news report suggested it would be in about "90 to 120 days"
A joint motion filed this week by Rothmans, Benson & Hedges and Imperial Tobacco Canada and separate motions ITL hint at the activities that are taking place behind the scenes. These will be the subject of a hearing which starts at 9:30 a.m. on Wednesday June 18, which can be watched on YouTube at: https://youtube.com/live/VP2lCOG8zf8?feature=share
Gaining access to the security deposit
Chief Justice Morawetz is being asked to briefly suspend the stay of proceedings in order to allow the companies to approach Quebec courts. This is apparently required for the companies to access the almost $1 billion in security that the Quebec Court imposed on them 10 years ago and that will form part of their payments to injured smokers, the provinces and others. (JTI was not required to make a deposit).
He is also being asked to grant orders which approve three settlements entered into by Imperial Tobacco:
1. Resolving a dispute with Revenue Canada
In June 2019, shortly after the insolvency protection was in place, Revenue Canada disputed certain claims for tax deductions made by Imperial Tobacco for the 2011 and 2014 tax years, and made similar subsequent demands the following year for the 2015-2018 tax years.
The affidavit filed this week reports that the Canada Revenue Agency was seeking $42.3 million for 2011 (which would increase provincial tax by $6.5 million), with interests adjustments for delayed payment. The amount sought for 2014 was $64.3 million (plus $10.3 provincial). Additional tax demands totaled $7.5 million for 2015, $46.8 thousand for 2016, reduced overall tax for 2017 by $12.7 million, with a further reduction of $16.3 million for 2018. At the end of 2020 the assessment notice issued by Revenue Canada said the company owed $56,748,563.35 (shown below).
The details of the negotiations with CRA about the disputed amounts are not included in the material filed. It appears that the Agency was willing to resolve this large bill for considerably less than the amounts cited in the material filed: "an aggregate payment by ITCAN of $1.5 million and the exchange of full and final mutual releases."
2. Finalizing obligations to 59 Genstar retirees.
Imperial Tobacco's legacy obligation to retirees of a real-estate company it sold many years ago was the subject of a non-controversial decision early in the CCAA process. It would appear there were lingering issues with 59 affected individuals which were resolved by the company at the beginning of 2025 in return for a payment of $850,000. The company wants these to be resolved through a special order of the court, and not through the "miscellaneous claims" process provided for in the settlement.
3. A contribution from insurance companies.
Both ITL and RBH had at some point in previous years had liability-related policies with various insurance companies. In the material filed in advance of the June 18th hearing, ITL reports that it has reached a settlement with certain of its insurers for payments "totaling $2,750,000, to be held in trust by the Monitor" which will be transferred as part of payments made on the day the settlement takes effect.
A copy of the settlement, which includes some information on the policies held by the companies, was included in the material filed.
This morning the monitor for JTI-Macdonald uploaded recent decisions by Chief Justice Morawetz, to agree to the company's request for an amendment to its initial orders, as discussed in a previous post.
The "Second Amended and Restated Order" giving the company CCAA protection is available, as is the "endorsement" in which Chief Justice Morawetz' reasons, pasted below, are given.
[1] The motion proceeded on April 29, 2025, on an unopposed basis. The evidence to support the requested relief is set out in the 26th and 27th Reports of the Monitor and in the Affidavit of William E. Aziz, sworn April 23, 2025.
[2] The relief as set out in the Notice of Motion requests rectification of two points in paragraph 20 of the Initial Order. However, at the hearing, it became apparent that the Applicant was actually seeking to amend two inadvertent errors in paragraph 20 and relied upon Rule 59.06(1) of the Rules of Civil Procedure for such relief.
[3] At the hearing, I indicated that the motion was conditionally approved upon being satisfied that there was direct contact with the Attorney General of Canada, representing Health Canada regarding the motion and that the Monitor was satisfied that no party in interest would be prejudiced if the relief was granted.
[4] The Monitor’s 27th Report confirms that direct contact has been made with both the Attorney General of Canada, representing Health Canada and no objection to the requested relief has been made. The Monitor has reaffirmed its view that no party in interest will be prejudiced by the requested relief.
[5] Having reviewed the record, I am satisfied that paragraph 20 of the Initial Order contains two inadvertent errors as referenced in the Notice of Motion and it is appropriate that these errors be corrected as requested by the Applicant.
[6] The Motion is granted and an Order giving effect of the foregoing has been signed.
All but two of the Canadian jurisdictions which reached a settlement with tobacco companies to resolve their claims for health-care cost recovery chose to enter into contingency-fee arrangements with the lawyers who represented them in court. These arrangements were discussed in a previous post.
Contingency fee arrangements mean that the lawyers agreed to be paid only upon a successful outcome, often as a percentage of any final payment.
Newfoundland is one of the few Canadian provinces which had previously put on record its contractual obligation to the team it hired. In 2011 it said that the U.S. firm and its Canadian partners would share 30% of the proceeds of a lawsuit.
Earlier this month, the Minister of Finance for Newfoundland and Labrador reported that the final fee that will be paid to the lawyers will be $130 million. This represents 25% of the $520 million slated for that province.
On May 13, the Minister was questioned by a member of the opposition, who wanted precision on how much the province would receive: "L. PADDOCK: This year's budget included $520 million in revenue from the tobacco settlement. So I ask the minister: How much of that will actually be received, in hand, this fiscal year?"
More details have emerged following the quiet (unobserved?) hearing held before Justice Morawetz on April 29th. The hearing took place at the request of JTI Macdonald, which wants to tweak the ground rules of their insolvency protection which were set in 2019.
The requested change would prevent an expiry of their own limitation period to sue other parties. The proposed change is shown in blackline below:
Yesterday, JTI's monitors tabled their 27th report (dated May 15, 2025), which provides details on why they want this wording change: they want to challenge federal regulations. "The Applicant sought the relief requested in the Amendment Motion in consideration of its current and future rights in respect of federal regulations applicable to the Applicant."
From this report, it would appear that Chief Justice Morawetz had sought reassurance that the federal government was aware of the potential change. According to the report (and the Appendix B to it), the federal government was duly notified and decided to voice no opposition.
After a month of no communication, a few new items were posted this week to the websites of the Monitors involved in Canada's tobacco insolvency proceedings.
As of this moment, none of this new material contains information about the pending decisions on the date on which the settlement will be implemented (and victims can be paid) or about the fees that will be paid to the lawyers representing many of those individuals.
The new material includes the naming of the Quebec judge who will participate in the administration of the Quebec Class Action. Justice Catherine Piché - who has significant experience in class action theory - was assigned this responsibility mid-month.
It also includes a motion that will likely be the subject of a hearing next week (April 29 at 11:00 a.m). JTI-Macdonald wants a change to the wording of the Initial Order issued by the court 6 years ago.
As I read it, the effect of the wording would be to allow this company to pick up where they left off on any lawsuits they wish to file without worrying about limitation periods. "JTIM seeks to rectify paragraph 20 of the Initial Order to include the word “by,” to align with the McEwen Endorsement and the initial orders of Imperial and RBH, to ensure that any prescription, time or limitation period related to any Proceeding by the Applicant is tolled."
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| The black-lined amendment proposed by JTIM |
The wording change sought by JTI Macdonald would give the company the same rights as are already provided to the other two companies involved in this insolvency proceeding. It would make the language in their Initial Order the same as that already in place in the (amended) initial orders for Imperial Tobacco and Rothmans Benson and Hedges.
No sign of an appeal
It is now 22 days since Justice Morawetz approved the measures that will end the decades-long lawsuits against Canada's tobacco companies. That means that 1 day has passed since the deadline for any parties to file their objections.
Objections to any court decisions based on the Companies Creditors' Arrangement Act must be filed within 21 days (section 14 of the CCAA). Ontario's Court of Appeal has its own methods for managing such appeals that don't necessarily involve public hearings and which make it more difficult for outsiders to know what is going on:
"An appeal under the Companies’ Creditors and Arrangement Act is processed differently from other appeals. Under this act leave to appeal can be obtained by a single judge or a panel. A notice of motion for leave to appeal under this act must be served within 21 days from the date of the order being appealed.
The finalizing hearings to resolve the lawsuits against tobacco companies ended shortly after noon today with a discussion of how much the lawyers representing the Quebec class actions should be paid.*
In theory, the fees of all three class actions were under discussion. In reality, the only question before the court was whether approval should be given to the $900+ million fee requested by the lawyers for the Quebec class action.
Their request had been filed more than a month ago, and the arguments in favour of it presented to Chief Justice Morawetz soon after. The review of their request was interrupted for a few weeks by Chief Justice Morawetz' decision to ask a former Quebec judge to act as an amicus curiae. The Hon. André Prevost was mandated to provide "a purely legal and academic description of the applicable test under Quebec law" as well as some advice on how to apply this to the current circumstances.
André Prévost filed his report in late February. This morning he presented his findings, beginning with the caution that the decision in this case -- whatever it was - would set a landmark for class action fees in other mega fund cases.
He presented the rules that govern lawyers' fees in Quebec (Code of Professional Conduct, s. 102), court rulings on assessing class action fees (e.g. A.B. c. Clercs de Saint-Viateur du Canada, para 64-65), and recent reflections of academics on the subject of fee levels. His review of other cases across Canada, presented as schedules to his report, showed that the fee request under review was consistent with past practice. He cautioned that fees which encouraged large lawsuits are needed in a class action business environment where lawyers feel they are "better to take on smaller cases where the judge is unlikely to be shocked" by the fee.
In short, if Justice Morawetz had been hoping for some comfort or support in turning down the fee request, he would have had to look hard in the report of the amicus curiae.
Yet it seemed that a reason to cut was what Justice Morawetz was looking for. Not because he thought the work had not met the criteria for reward -- he described the endeavour as "spectacular" - but because $900 million might be "absurdly high".
"One of the things that I have to consider is 'what is the objective of class proceeding legislation compensation for lawyers – is it to create a fund for generations to come?'"
A backdrop to the decision imposed on the court is that the ruling will set a precedent for future mega-tort cases -- even though the likelihood of a parallel case is considered remote. Mr. Prévost acknowledged the challenge in his closing comments to the judge: "I am happy to be in my shoes and not in yours. In this case if you compare to all other cases, this is extreme. Counsel has 100% on all factors [to justify honouring their contracted fee]. This was a huge case – we will probably not have many such cases in Canada."
Quebec counsel: a fair and principled fee request
*Disclosure: The staff of Physicians for a Smoke-Free Canada were among those who worked on a contingency basis for the counsel to the Quebec class action.
Late this afternoon - presumably after the markets had closed - Chief Justice Geoffrey Morawetz released his decision in favour of the Plan of Arrangement that will resolve a quarter century of lawsuits against tobacco companies.
His ruling can be read here. In about 50 pages, he translates the 1,200+ text of the proposed plan into readable English before giving a thumbs up to the compromise that was unanimously agreed to in December by those suing tobacco companies and which was the subject of hearings earlier this winter.
Fair and Reasonable and Not Contrary to the Public Interest
The final objections of two companies having been removed earlier in the week, there were few roadblocks to his endorsing the agreement exactly as it was drafted by the team lead by former Chief Justice Warren Winkler.
After Monday, the only nay-sayers in the process were the Heart and Stroke Foundation and the Canadian Cancer Society, which had urged him to consider that some health-oriented measures were required for the plan to be fair and reasonable.
Justice Morawetz acknowledged these requests in his ruling, but firmly turned them down. It was not his job, he said, to interfere in this way.
(165). The decision for the court to make is a binary one. It is to either sanction the CCAA Plans or to reject the CCAA Plans. It is not the role or the function of the court to redraft or amend the CCAA Plans. The views expressed by HSF and CCS are important to consider. However, in my view, these views have been taken into account by the drafters of the CCAA Plans.
In assessing the fairness, reasonableness and public interest of the plan, Chief Justice Morawetz stressed that individuals and provinces will receive compensation, a research institute will be established -- and that tobacco companies will be able "to continue as going concerns, which will benefit their employees, suppliers and other stakeholders."
Not decided
A number of details still remain to be decided -- including important ones like the day on which this agreement will take force and when money will change hands. The "Plan Implementation Date" has yet to be decided - but the litigation stay will be in force until then.
A separate ruling is to be expected for the questions of counsel fees, discussion of which will be the subject of a hearing tomorrow (March 7th).
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Misleading or misreading?
To buttress his rejection of the concern expressed by HSF for injured smokers whose potential claims were being released, Justice Morawetz used the (not public) transcript to cite the views expressed by Ontario's lawyer on January 31st.
The following notice was posted on the JTI Monitor website on February 14th:
"Pursuant to the Order of the Superior Court of Justice dated January 29, 2025, the Court appointed the Honourable André Prévost as Amicus Curiae to assist the Court with the motions to approve the fees of the Quebec Class Action Counsel, British Columbia Class Action Counsel and Counsel for the Tobacco Producers. Please be advised that with respect to the class counsel fee approval motions, amicus expects to file his factum around February 26, 2025 and the hearing of the motions will resume on March 7, 2025 at 10 am. The YouTube link for the livestream of the March 7, 2025 hearing will be posted once available."
After a 10 day break, the creditors, companies and other stakeholders involved in the CCAA-managed resolution of the lawsuits against Canadian tobacco companies met again today before Chief Justice Morawetz.
There was only one item on the agenda - the fees that would be permitted for the legal terms representing the three class action lawsuits.* Nonetheless, discussion of the item was not finished because the advice of a former Quebec judge (André Prévost) had only recently been commissioned and was not yet available.
All three class actions which are included in the settlement were managed on a contingency-fee basis. The lawyers entered into contracts under which they would receive no money unless and until their case was successful at trial or through settlement. All three cases involved a contract stipulating the percentage of any award or settlement that would be paid as a fee.
The lawsuits filed by 11 provinces and territories also used contingency-fee arrangements with lawyers (only Ontario and Quebec did not), but their fees did not require approval by judge supervising the CCAA process. These fee contracts have not been made public. Lawyers assigned by the court for the Pan-Canadian settlement were paid on a fee-for-service basis.
In advance of today's hearing, the law firms involved in these class actions formally filed requests for payment and provided background information on their cases to support the amount they were seeking: