Additional fee made class counsel’s compensation manifestly disproportionate to results achieved

CLASS ACTIONS

Additional fee made class counsel’s compensation manifestly disproportionate to results achieved

Appellant appealed motion judge’s decision to award class counsel additional fee. This was class proceeding that alleged that appellant knowingly sent travellers to group of resorts in Dominican Republic while there was outbreak of norovirus at resorts. Parties reached settlement agreement that created settlement fund of $2.25 million for class of approximately 4,000 members. Appellant agreed to pay initial counsel fee of $600,000. Settlement was approved, including initial counsel fee. After settlement was fully administered $333,307 had been paid to 354 class members who submitted eligible claims, which represented take-up rate of 8.85% of class members or 16.7% of settlement fund. Additional class counsel fee of $395,000 was approved. Appeal dismissed. Motion judge’s analysis minimized significance of actual recovery to class and led him to award fee that was grossly disproportionate to results achieved and risk undertaken. In context of case take-up rate had heightened significance that was not adequately recognized by motion judge in his analysis of value of settlement. When it was uncertain how many class members would make claims under settlement, it was when take-up rate was known that information relevant to assessing results achieved was present and it was then that connection between efforts of counsel and what was achieved for class could be assessed. Take-up rate was appropriate measure of results achieved, as it reflected actual benefit to class. Risk taken on by class counsel had already been recognized and rewarded. Result achieved was that approximately 9% of class received compensation through efforts of class counsel and compensation amounted to one-sixth of total negotiated fund. Addition of the $395,000 fee resulted in total class counsel fee of almost $1 million, which was nearly three times value of settlement to class. Approval of additional fee made class counsel’s compensation manifestly disproportionate to results achieved for class. Fee of $600,000 was fair and reasonable compensation in circumstances and additional fee of $395,000 to class counsel was set aside.
Lavier v. MyTravel Canada Holidays Inc. (Feb. 14, 2013, Ont. C.A., Laskin, MacPherson and Gillese JJ.A., File No. C55662) Decision at 212 A.C.W.S. (3d) 637 was reversed. 223 A.C.W.S. (3d) 778.