Schrager, Healy, Baudouin

Appeal from a judgment of the Superior Court dismissing an application to approve a settlement and professional fee agreement reached in the context of a class action instituted against a religious community on behalf of victims of sexual assault. Allowed.

The trial judge analyzed the fairness and reasonableness of the agreement reached by the parties in light of the criteria established by the case law. He considered himself bound by the indivisible nature of the transaction and refused to approve the settlement agreement on the grounds that the professional fees of the members’ counsel, amounting to 25% of the $28 million settlement fund, plus tax, were unreasonable.

The judge committed a reviewable error of law in concluding that his refusal to approve the professional fees claimed inevitably entailed the rejection of the settlement agreement because certain provisions of the agreement provided that the transaction had to be approved as a whole, on pain of nullity. In fact, it appears from a reading of the provisions of the agreement as a whole and of article 593 of the Code of Civil Procedure (CQLR, c. C-25.01) (C.C.P.) that the judge’s power to determine the amount of professional fees is expressly set out.

Moreover, the trial judge placed undue emphasis on the time counsel spent on the file in his assessment of the fairness and reasonableness of the professional fees claimed. The professional fee agreement reached by the representative binds the class action members and benefits from a presumption of validity. The analysis of the reasonableness of professional fees established by a percentage agreement should not start with the time spent on the case, but rather with an assessment of all the criteria set out in the Code of ethics of advocates (CQLR, c. B-1, r. 3.1) and should take into account the risk assumed by counsel. If the amount (and not the percentage) of professional fees is reasonable, the analysis may stop, at the judge’s discretion. However, if the amount of professional fees seems unreasonable, it is then appropriate to consider the hours spent on the case and apply a multiplier to adjust it.

In this case, considering the terms of the agreement and article 593 C.C.P., the judge made a palpable and overriding error in refusing to approve the agreement and determine the amount of professional fees. However, it is not necessary to determine whether the judge exercised his discretion regarding the professional fees abusively or unreasonably. He acknowledged counsel’s expertise, their commitment to the members, the quality of their work, the risk they assumed, and the result they obtained. The judge’s findings in this respect, related to the criteria for assessing the professional fees other than the time counsel spent on the case, support the conclusion that the amount of professional fees now claimed by the members’ counsel, that is, 20% of the settlement fund, is reasonable. The application of the multiplier method in fact confirms the reasonableness of professional fees of $5.6 million, plus tax and disbursements.

Last, the professional fees of the amicus curiae, appointed to counterbalance the submissions of the parties considering that the sole dissenting member could not participate in the debate, must be paid by the members and therefore deducted from the class action settlement fund.

Text of the decision: http://citoyens.soquij.qc.ca