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."
