Canadian class action litigation beginning to resemble that of the United States

Canada’s class action plaintiff bar is becoming more sophisticated as it adopts U.S.-style litigation practices, delegates of the AIG Canada Product Symposium were told.
Canadian plaintiff lawyers are increasingly seeking contingency fees in class action cases, Alan D’Silva, partner at Stikeman Elliott LLP, suggested.
“We’re seeing the courts approving multiples of four or five times the plaintiff lawyers’ fees,” he noted. “And with that, we’re seeing the development of a very sophisticated plaintiffs class action bar in Canada.”
Although the Class Proceedings Act, in theory, intended to modify the behaviour of organizations that were doing something wrong and offer consumer protection, “what we’re seeing is and not surprisingly with the fees that lawyers can recover in these types of cases some of these cases are in fact lawyer-driven and not consumer protection- or altruism-driven,” D’Silva continued.
The most recent example, he noted, is a case called Garland v. Consumers’ Gas Co. The case started about 10 years ago on the theory that a late payment fee charged by the gas company is an illegal interest payment under the Criminal Code.
“It went up to the Supreme Court of Canada a couple of times,” D’Silva said. “Eventually the class action got certified and it got settled. And Consumers’ Gas [now Enbridge] settled the case for $24 million,” D’Silva said.
The underlying assumption was that the $24 million would serve as indemnity for all of the people who had paid the late fee. “The problem was, when they started to implement the settlement, they couldn’t figure out who had overpaid and who hadn’t because they didn’t have the proper records,” D’Silva observed. “So $12.5 million of the settlement went to the lawyers who were active in the case, and the rest went to a charity fund.
“Most recently, Enbridge has applied to the energy board and received approval to recover the $24 million through their rate set,” he added.
“The story is, in that case without being critical of anyone settlements are getting completely out of whack. Here’s a case where plaintiff lawyers say that this is a consumer protection case, they walk away with $12.5 million and the consumer gets nothing.”