Objections by potential class members did not affect fairness and reasonableness of settlement

CLASS ACTIONS

Objections by potential class members did not affect fairness and reasonableness of settlement

Investors were advised by financial advisors to borrow money to invest. Investors commenced action against financial advisors and lender for damages for unspecified causes of action. Investors successfully brought motion certifying action as class proceeding. Parties reached settlement consisting of $8.2 million for claims, $1.5 million inclusive of HST for counsel fees, $100,000 for disbursements, and $200,000 for administration expenses. Any potential class member had opportunity to challenge ultimate amount that administrator determined was to be awarded to any potential class member. Investors brought motion for order approving settlement and additional $1.39 million for counsel fees plus disbursements and HST. Motion adjourned on terms. Settlement amounts and counsel fees were acceptable, but challenge process needed to be made more transparent. Net amount available for distribution to class was about $6.81 million plus accruing interest. About 756 eligible class members would receive net return of about 21 per cent of their losses, though certain investors would receive somewhat more. Objections by 43 potential class members did not affect fairness and reasonableness of settlement for class as whole. Litigation risks had been high. Settlement had been reached by experienced class counsel through experienced mediators.
French v. Investia Financial Services Inc. (Aug. 16, 2013, Ont. S.C.J., M.L. Edwards J., File No. Barrie 10-0690, 11-0234) 233 A.C.W.S. (3d) 792.