CITATION: Smith Estate v. National Money Mart
      Company, 2011 ONCA 233

DATE: 20110328

DOCKET: C51893

COURT OF APPEAL FOR
          ONTARIO

Moldaver, Armstrong, and Juriansz JJ.A.

BETWEEN

Kenneth
          Smith, as Estate Trustee of the Last Will and Testament of Margaret Smith, deceased, and Ronald
Oriet

Plaintiffs (Appellants)

and

Sutts,
          Strosberg LLP, Heenan Blaikie LLP, Paliare Roland

Rothstein Rosenberg LLP and Koskie Minsky LLP

Appellants

and

National Money Mart Company and Dollar Financial
          Group, Inc.

Defendants (Respondents)

Terrence J. OâSullivan and James
          Renihan, for the appellants

Chris Hubbard, for Money Mart (not
          participating in appeal)

Mahmud Jamal and Jason MacLean, for Dollar Financial Group,
          Inc. (not participating in appeal)

Heard: October 25, 2010

On appeal from the order of Justice
          Paul M. Perell of the Superior Court of Justice dated March 3, 2010, with
          reasons reported at (2010), 94 C.P.C. (6
th
) 126.

Juriansz J.A.:

[1]

This is an appeal from the order of Perell J. fixing the
    appellantsâ counsel fees in this class proceeding. The appellants are four law firms that acted as class counsel in this
    class proceeding.

[2]

By order dated
    March 3, 2010, Perell J. varied the certification order by expanding the class
    definition, approved the settlement of the class action, allowed the
    representative plaintiff compensation of $3,000 to be paid out of class counsel
    fees, and fixed class counsel fees in the amount of $14.5 million, being
    $12,806,074.94 for fees, $640,303.75 for GST and $1,053,621.31 for disbursements
    including GST. The disbursements included the fees of
certain
    consultants and other counsel retained by class counsel that the appellants had
    requested be treated as contingency fees.

[3]

The class
    definition was expanded to add a group of payday loan borrowers who entered
    into transactions between the publication of the original certification order
    and December 15, 2009. The date December 15, 2009, is significant. As of that
    date, because of legislative changes, it could no longer be alleged that the
    transactions contravened the
Criminal
    Code
âs

provisions prohibiting
    criminal rates of interest.

[4]

Before Perell J., class counsel sought approval of a counsel
    fee of $27.5 million. On appeal, they seek a fee of $20 million. They also seek,
    as they did before Perell J., to have fees, disbursements and taxes of other
    counsel â who had provided their services on a contingency basis â treated as a
    component of the class counsel base fee rather than as disbursements, to have
    the fees of consultants â who had also provided their services on a contingency
    basis â increased by the multiplier the court awarded to class counsel, and to
    have the compensation paid to the representative plaintiff paid out of the
    class fund rather than out of class counsel fees. Â Â Â Â

[5]

For the reasons that follow, I would allow the appeal
    in part. I would vary the motion judgeâs order so that the fees of the
    representative plaintiff are paid out of the class fund. I would dismiss the
    remainder of the appeal.

[6]

I add the observation that in a case such as this, the motion
    judge should give serious consideration to the appointment of
amicus curiae
or a guardian of the
    settlement fund on the hearing of counselâs application for approval of their
    fees.

Background

[7]

In this class proceeding, the plaintiffs alleged that
    they were charged a criminal rate of interest by the defendants for small loans
    with a due date for repayment connected to their payday. The issue in the
    action was whether the various charges, i.e. a finance charge, a cash checking
    fee and an item fee, should be characterized as interest under the
Criminal
    Code
âs

provisions prohibiting criminal rates of interest.

[8]

The class action was strenuously resisted. There were
    many interlocutory proceedings. According to the motion judgeâs count, there
    were 39 orders, 12 endorsements, and four judgments. There was one leave
    application to the Divisional Court, four appeals to the Court of Appeal, and
    three leave applications to the Supreme Court of Canada. The issues litigated
    included whether the order for service of the claim,
ex juris
, on the defendant Dollar Financial Group, Inc. was valid,
    whether the loan agreements required the plaintiffs to mediate or arbitrate
    their disputes, whether the defendantsâ franchisees should be added as
    defendants, and whether the plaintiffs were entitled to partial summary
    judgment.

[9]

The trial began on April 27, 2009, and proceeded for 17
    days. It was established that during the class period, class members had paid cheque
    cashing fees and interest totalling $224,791,507. Money Mart counterclaimed for
    the class membersâ indebtedness from payday loans that were in default. The
    amount of that indebtedness was ultimately calculated to be $56,388,071 at the
    time of the motion.

[10]

Following a mid-trial mediation, the parties agreed to
    a settlement on the following terms:

i.

The defendants would pay $27.5 million to the
    settlement class;

ii.

the defendants would forgive the class membersâ
    indebtedness to them, in the amount of $56,388,071;

iii.

the defendants would make available fully transferable
    transaction credits in the amount of $30 million to reduce the cost of using
    the defendantsâ services in the future, to be allocated among those class
    members who were not indebted to Money Mart;

iv.

the defendants would pay to the Class Proceedings Fund the
    sum of $3 million, in annual instalments of 10% of the transaction credits as
    they are used, and 10% of the unused transaction credits after the expiration
    date; and

v.

the
defendants would pay the
    costs of administering the settlement, in the amount of $2 million.

[11]

At the motion, class counsel asserted the value of the
    settlement was in the range of $120 million. The time value of the hours
    docketed by class counsel was
$9,750,024.

Issues

[12]

The appellants resist the characterization of the
    appeal as primarily involving a claim for higher fees. Rather, they say that
    the appeal raises important issues about access to justice, since it concerns
    the legal principles that govern the determination of fair fees for class
    counsel. The fees awarded must not only provide adequate compensation to class
    counsel but must also provide a suitable incentive to skilled lawyers to take
    on complex and expensive class proceedings, all without unreasonably
    diminishing the fund available for distribution to the class. The appellants
    say that contingency fees should be available to firms who provide essential
    but non-legal services to the class and that it is important that class counsel
    be able to retain, on a contingency basis, the expert services necessary to
    effectively assert the classâ claim. Finally, they say that as a matter of
    principle, a representative plaintiffâs compensation should be paid out of the
    fund and not out of class counsel fees.

[13]

I summarize the appellantsâ arguments as follows:

i.

The motion judge erred by failing to apply the base
    fee/multiplier approach provided for in s. 33(7);

ii.

the motion judge erred by failing to allow class
    counsel fees in an amount that was fair and reasonable;

iii.

the motion judge erred by refusing to treat the fees
    payable to the consultants, Price Waterhouse Cooper (âPWCâ) and Mr. Anand, in
    accordance with the contingency basis on which class counsel had retained them;

iv.

the motion judge erred by refusing to consider the fees
    of Fraser, Milner,
Casgrain
LLP (âFMCâ) and Prof.
    Krishna as class counsel fees because the court had not appointed them as part
    of the class counsel group; and

v.

the
motion judge erred by
    ordering that the representative plaintiffâs compensation be paid from class
    counsel fees.

[14]

There
    is another matter worth discussing though, strictly speaking, it is not a legal
    issue raised by the appeal. During oral argument, the court raised with counsel
    the difficulties that stem from the fact that class counsel fees are determined
    in a non-adversarial forum. Counsel for the appellants frankly acknowledged the
    difficulties and suggested that it would be useful to the profession for this
    court to discuss the issue. I begin with that discussion.

The non-adversarial forum

[15]

Our system of justice is based on the basic tenet that
    the court will be able to reach the most informed, considered, impartial and
    wise decision after presiding over the confrontation between opposing parties, in
    which each side can identify issues, lead evidence, cite law, discuss policy
    considerations, and seek to undermine the position of the other. Motions for the
    approval of settlements and class counsel fees in class proceeding depart from
    this basic tenet as a matter of routine. They usually proceed unopposed in
    large part because individual class members often have too small a stake to be
    compelled to participate.

[16]

The motion judge was troubled by what he described at
    one point as the â
ex parte
â nature of
    the hearing before him and included a lengthy comment about it in his reasons,
    a comment that is worth reading. The comment emphatically observes that it is âwell
    knownâ that the court is placed in a difficult position in determining whether
    a settlement and class counsel fees should be approved without âthe dynamics of
    the adversary system where opposing views are heardâ.

[17]

Winkler J. in
McCarthy
    v. Canadian Red Cross Society
(2001), 8 C.P.C. (5
th
) 349 (Ont.
    S.C.) also compared unopposed motions in class action to
ex parte
proceedings. After referring to authorities that
    highlighted that âthere is no situation more fraught with potential injustice
    and abuse of the Courtâs powers than application[s] for an ex parte injunctionâ,
    he stated that counsel in unopposed motions in class proceedings are under a
    special duty to make full and frank disclosure, just as in
ex parte
proceedings. He stated,

By comparison, a class proceeding
    by its very nature involves the issuance of orders or judgments that affect
    persons who are not before the Court. These absent class members are dependent
    on the Court to protect their interests. In order to do so, the Court must have
    all of the available information that has some bearing on the issues, whether
    favourable or unfavourable to the moving party. It is the obligation of counsel
    to provide that information in a manner that is consonant with the duty to make
    full and frank disclosure. Moreover, that information must be provided in a
    manner that is not misleading or even potentially misleading. In most class
    proceedings, voluminous records develop as a consequence of the complexity of
    the litigation. The Court is not equipped, nor should it be required, to engage
    in a forensic investigation into the material or to mine the record to inform
    itself. Counsel must direct the Court to all relevant information that would
    impact on the Courtâs determination. This is especially important where the
    motion is for the approval of settlement agreements, class counsel fees or
    consent certifications for the purpose of settlement.

[18]

In one respect, counselâs duty to make full and
    frank disclosure is more significant in unopposed class action motions than in
ex parte
motions. An order obtained
ex parte
is very often brought back
    before the court by an interested party not present at the
ex parte
hearing. This does not happen with orders approving counsel
    fees in class proceedings. This court recently found that a class member lacks
    standing to appeal an order approving class counsel fees:

Lawrence v. Atlas
    Cold Storage Holdings Inc.
(2009), 311 D.L.R. (4
th
) 323
    (Ont. C.A.).

[19]

On appeal, counsel for the appellants summed up the
    courtâs concern well. The process, he said, places the court in the position of
    adversary and adjudicator at the same time; the court must test the case being
    put to it, while impartially adjudicating it. He suggested this was âperhaps a
    flaw in the legislationâ.

[20]

Nothing in the legislation, however, discourages the
    court from exercising its inherent jurisdiction to ensure the proceedings
    before it are fair or resorting to its authority under rule 13.02 to appoint an
amicus
. In fact, counsel for the
    appellants advised that now some judges of the Superior Court appoint
amicus
to present an opposing view in
    such motions. As well, âmonitorsâ have been appointed in several Ontario cases.
    In the United States, it is not uncommon for the courts to appoint a
guardian ad litem
for the settlement
    fund.

[21]

An uncontested motion for fees also places counsel in
    an awkward position. Lawyers are expected to be zealous but personally
    disinterested advocates of their clientsâ positions. On an uncontested motion
    for fees, the lawyer represents the class whose interest is in maintaining the
    maximum settlement amount possible for distribution among class members. The
    lawyer, on the other hand, seeks fees that will diminish the amount of the
    settlement available for distribution. The lawyerâs interests appear to be
    pitted against those of the client. In appropriate cases, class counsel may, on
    their own initiative, seek to reduce the awkwardness of this position by arranging
    for independent counsel to advise the representative plaintiff in relation to
    class counselâs application for fees. Class
counsel have
taken this action in at least one reported Canadian case.

[22]

I discuss each of these strategies briefly.

Amicus

[23]

The court has
    jurisdiction to appoint an
amicus
to
    preserve the fairness of the proceedings before it. In Ontario, though, there
    is no judicial discussion of the appointment of
amicus
in the context of class action proceedings. Commentators,
    however, have pointed out the benefits of allowing
amicus
to assist the
    court in the approval of settlements and class counsel fees, which are often
    dealt with together. The motion judge cited Prof. Garry Watson, who, in
    his paper âSettlement Approval â The Most Difficult and Problematic Area of
    Class Action Practiceâ prepared for the NJI Conference on Class Actions in
    April 2008, argued that âjudges should give serious thought to precipitating an
    adversarial hearing by appointing counsel to advise the court and oppose the
    settlement if appropriateâ.

[24]

Another
    significant paper is âCaught In a Trap â Ethical Considerations for the
    Plaintiffâs Lawyer in Class Proceedingsâ authored by Winkler C.J.O. and Sharon
    D. Matthews, presented at the 5
th
Annual Symposium on Class Actions
    April 11, 2008 and available online at Â«
https://www.ontariocourts.ca/coa/en/ps/speeches/caught.htm
Â».
    The authors note the effect of the absence of an adversary in these situations
    and suggest the use of
amicus
:

Depending
    on the terms of the settlement, the defendant may not have standing on the fee approval
    and in such cases there will be no effective adversary to assist the court on
    either settlement or fee approvals. Class counsel may find themselves in a
    conflict in supporting settlement approvals. ... It may be appropriate to
    appoint
amicus curiae
to assist
    courts in understanding the merits of the settlement generally and as it
    relates to fees in particular.

[25]

The only Canadian case that actually discusses the
    appointment of an
amicus
in the
    context of approving a class settlement or class counsel fees seems to be
Killough
v. Canadian Red Cross Society
(2001), 85
    B.C.L.R. (3d) 233 (S.C.). K.J. Smith J. of the B.C. Supreme Court cautioned
    against too quickly resorting to the appointment of an
amicus
in motions to approve class counsel fees:

In my opinion, there is merit in [the] submission that
amicus curiae
should not be appointed as
    a matter of course in these matters. It may be that, in a particular case, the
    class-action judge will consider that
amicus
would be helpful, but to make such an order in the absence of some special
    circumstances warranting it would be to add an unnecessary layer of complexity
    and expense to the fee-approval process.

[26]

He found the appointment of an
amicus
was premature because it appeared the court would have the
    benefit of an independent perspective. Class counsel had retained separate
    independent counsel to advise the representative plaintiff as to the fairness
    and reasonableness of the proposed fees and class counsel had undertaken to
    file independent counselâs opinion with the court. Moreover, the Public
    Guardian and Trustee had sought standing to take a position and that
    application had not yet been dealt with. When the matter eventually came on for
    hearing, see
Killough
v. Canadian Red Cross Society
(2001), 91
    B.C.L.R. (3d) 309 at para. 40 (S.C.), K.J. Smith J. declined to give the Public
    Guardian formal standing, but did allow the Public Guardian to participate in
    the hearing:

Counsel have
an inherent conflict of interest on applications for approval of
    their own fees and disbursements. While those of us who are trained in the
    workings of the legal system understand that counsel put aside their own
    self-interest in such matters, as they are ethically bound to do, decisions
    that take into account the objective, perhaps adversarial, submissions of other
    interested parties will generally better withstand scrutiny. Accordingly, if
    the Public Guardian and Trustee
wishes
to address the
    Court on behalf of legally incapable persons in the class, it is my view that
    the Court should hear those submissions.

Monitors

[27]

Monitors have been appointed in a number of Ontario
    class actions. The published reasons do not always make clear the role assigned
    to the monitor. For example, in
Baxter v.
    Canada
(2006), 83 O.R. (3d) 481 (S.C.) and
Frohlinger
v. Nortel Networks
(2007), 40 C.P.C. (6
th
) 62 (Ont. S.C.),
    court-appointed monitors are included in the list of those appearing before the
    court, but no mention of them is made in the reasons. Both of these cases
    involved a motion for the approval of class counsel fees as well as other
    issues.

[28]

Monitors can assist the court by analyzing the
    volumes of information that may be filed on approval motions. For example, on a
    fee approval motion, a monitor could be assigned to review in detail the dockets
    of counsel with a view to understanding the fees charged in respect of each
    step in the litigation, identifying duplicated effort and instances in which a
    greater number of hours than reasonably necessary has been expended.

Guardian ad litem

[29]

American
    jurisprudence, as one would expect, is more mature given the much longer
    experience with class proceedings in the United States. American courts
    do appoint
amicus
: see e.g.
Zucker
v. Franklin
, 374 F.3d 221(3d Cir.
    2004);
Weinberger v. Great Northern
    Nekoosa Corp.
, 925 F.2d 518 (1
st
Cir. 1991). However, the
    predominant American approach appears to be the appointment of a
guardian ad litem
for the settlement
    fund.

[30]

The
    landmark case seems to be the 1976 decision
Miller
    v. Mackey International Inc
., 70 F.R.D. 533 (S.D. Fla. 1976). The court
    considered a class counsel fee application to be analogous to litigation
    between a guardian and a ward. The substantive interests of the members of the
    class are at stake because the benefits they receive are reduced by the compensation
    sought by counsel representing the class. Therefore, over the strenuous
    objections of class counsel, the court appointed a
guardian ad litem
for the members of the class saying, âThe
    appointment of a
guardian ad litem
is
    appropriate where there is litigation between a Guardian and Ward â herein, the
    attorneys for the class and the class.â Since the guardian is charged with the
    protection of the fund for the class, his fee was to be charged against the
    fund. The court observed:

[T]his
    procedure both
achieves
protection for the members of
    the class and enables the trial judge to remain in an impartial position. Counsel
    for the class strenuously objected to the appointment of a guardian ad litem
    and asserted that the court should conduct cross examination of the witnesses
    testifying for plaintiffâs counsel. However, that contravenes the courtâs
    traditional role, tending to cast the court into an advocateâs role.

[31]

The
    legislation in the United States is more mature as well. The Class Action
    Fairness Act of 2005, 28 U.S.C. (2005), which brings most large class actions
    within the jurisdiction of the federal courts, specifically authorizes judges
    to have the value of âcoupon settlementsâ assessed by an independent expert
    before approval: see Â§1712(d).

Independent counsel

[32]

Class counsel may consider going beyond their strict
    duty to make full and frank disclosure on an unopposed motion for fees and
    retain separate counsel to provide independent advice to the representative
    plaintiff regarding the fairness and reasonableness of the fees class counsel
    is seeking. Class counsel took this step in
Killough
.

[33]

It seems to me that counsel who bring and proceed
    with a motion without ensuring that an independent perspective is put forward
    have little cause for complaint if the court departs from the passive role it
    traditionally plays by raising new issues, dealing with arguments not advanced
    and actively challenging the uncontradicted evidence. A court, though, should
    not appear confrontational. The line between a sceptical and confrontational
    approach may be difficult to navigate for a court that bears the full
    responsibility for testing the merits of the position put forward by counsel in
    order to fulfill its responsibility to protect members of the class. Courts
    should not be reticent in resorting to one of the strategies discussed above
    when they consider that confrontation of counselâs unopposed position would be
    helpful and reasonably warranted in the circumstances. Such resort is, of
    course, discretionary. Appointment of
amicus
or a guardian is neither necessary nor desirable in every case.

Application to this case

[34]

A glance at the major features of the case placed
    before the motion judge might suggest it was appropriate for the court to
    consider exercising its discretion to appoint a guardian for the fund or an
amicus
or monitor. Nonmonetary items
    figured prominently in the settlement. Class counsel was seeking fees of $27.5
    million. The fees class counsel sought would exhaust all the cash in the
    settlement fund, leaving only the nonmonetary benefits for distribution to the
    class members. While the record was huge, an accounting firm reviewed much of
    the voluminous documentation produced by the defendants. The hourly rates
    charged by counsel were substantial; they were described by the motion judge as
    ânot bargain-basementâ. The total time value of class counselâs docketed hours
    was $9,750,024. Class counsel was comprised of four law firms, raising the
    possibility of duplication of effort in becoming familiar with this very large
    file and dealing with it. Class counsel had not placed before the court any
    independent evidence of the value of the various components of the settlement.

[35]

No doubt, the motion judge faced a difficult task.

[36]

In our adversarial system, in which the case is
    prepared by the parties, the court should not be expected to scrutinize in
    detail a massive set of counselâs dockets for duplicative or excessive hours. Winkler
    J.âs comments in
McCarthy
are worth
    repeating: âThe Court is not equipped, nor should it be required, to engage in
    a forensic investigation into the material or to mine the record to inform
    itselfâ. A court must also guard against appearing confrontational by embarking
    on a cross examination of counsel about the dockets or on matters such as whether
    they perform work at other than the âusualâ rates indicated in the fee
    agreement, and if so, at what rate and for what type of client.

[37]

The motion judge, after underscoring that âthe tasks
    are difficult and made more difficult by the adversarial voidâ, considered that
    he was âup to the taskâ and proceeded. However, the adversarial void did affect
    his reasoning and the way he dealt with the case. The motion judge did not resolve
    the fundamental question whether a court under the CPA could allow a premium
    for service providers engaged by class counsel on a contingency basis. He
    declined to deal with that question on âwhat is essentially an
ex parte
motion where the voices against
    any change are not being heardâ. He added that the matter âshould be attended
    to by the Legislature and not as an exercise of law reform on an uncontested
    fee approval motion.â

[38]

The motion judge should not have felt inhibited from seeking
    the assistance he considered necessary to address the question. He could have
    appointed
amicus
and invited
    intervention from interested groups, such as the Law Society in regard to the
    interpretation of its Rules of Professional Conduct.

[39]

Before leaving this topic I add the observation that
    the adversarial void also affects the case on appeal. The appellant decides
    what issues will be raised on appeal and what material will be included in the
    Appeal Book. There is no respondent to raise additional issues or to focus the
    courtâs attention on different material in the exhibit books. In crafting the
    appeal, the appellant is able to attack some findings of the court below and
    leave others undisturbed. For example, here the applications for approval of
    the settlement and determination of counsel fees were brought before the court
    in one motion; the motion judge dealt with both matters at one hearing, and he
    rendered one set of intertwined reasons. In those intertwined reasons, he
    expressly stated, at paras. 95, 104 and 113,
[1]
that his approval of counsel fees in the amount of $14.5 million was one of the
    factors on which his approval of the settlement was based. Yet, this appeal seeks
    to modify the motion judgeâs order only in respect of fees divorced from his
    approval of the settlement.

[40]

This court, no less than the motion court, had the
    discretion to appoint an
amicus
or
    guardian to articulate opposition to the appeal. In hindsight, the appointment
    of
amicus
or guardian may have been
    of great assistance in this appeal. The analysis upon which this appeal turns
    was not raised in the appellantsâ material and did not come up at the appeal
    hearing. After the hearing, the court found it necessary to seek the
    appellantsâ written submissions on further issues.

[41]

With that preface, I turn to the issues raised by the
    appellants.

Quantum of Fees

[42]

The appellants advance two arguments regarding the
    quantum of fees assessed by the motion judge.

[43]

First, at the appeal they argued that the motion judge was
    bound to use the analytical framework of s. 33(7) of the CPA in assessing what
    would be an appropriate counsel fee and that he erred in law by failing to do
    so. In their supplementary factum filed after hearing, they argue that a motion
    judge determining fees under s. 32(4) must apply the analytical framework of s.
    33(7) in a case in which counsel seek a premium by the application of a
    multiplier.

[44]

Second, in their supplementary factum they argue that any
    mode of analysis should result in the approval of fees that are fair and
    reasonable. Here, they submit, the counsel fee that the motion judge approved was
    not fair or reasonable.

Sections 32 and 33 of the CPA

[45]

In
    advancing their initial argument, the appellants presumed that the motion judge
    was bound to apply the two-step analysis of s. 33(7). Under s. 33(7), the court
    must first determine the number of hours worked and the hourly rate to be
    allowed in order to calculate a âbase feeâ. Second, the court must determine
    the appropriate multiplier to be applied to the base fee in order to arrive at fair
    and reasonable compensation to class counsel for the risk they have assumed in
    representing the class on a contingency basis.

[46]

The
    appellants contend that the two steps of s. 33(7) are distinct and must be
    separately applied. In determining the base fee the court may consider a number
    of factors including the time expended by class counsel, the legal complexity
    of the action, the importance of the matter to the client, class counselâs
    skill, the results achieved and the ability of the client to pay. By contrast,
    they say, the court may consider only two factors â the degree of risk
    undertaken and the degree of success achieved â in determining the multiplier to
    be applied to the base fee.

[47]

The
    appellants argue that the motion judge conflated the first and second steps. Because
    he failed to distinguish between the two steps, they say, he considered factors
    relevant to the base fee in determining the multiplier to be applied to the
    base fee. They submit that he improperly weighed all the factors in one stage and,
    as a result, the class counsel fee he approved was lower than was warranted.

[48]

In setting out the analysis the motion judge should
    have carried out, the appellants begin by submitting that the motion judge
    found that their base fee was reasonable. Although he made no express finding
    on that point, they say it is clear he approved their hourly rates and all the
    hours they recorded in their dockets. Using a base of
$10,327,525.20 for fees and GST, they calculate
    that the

âpremiumâ the motion judge allowed amounts
    to a multiplier of only 1.29. Fees in the amount of $20 million, which they
    request on appeal, would amount to a multiplier of 1.78. They say that 1.78 is
    a modest multiplier in the circumstances.

[49]

I note in passing that the appellantsâ calculations are
    not in accordance with the CPA. Section 33(3) defines the base fee as âthe
    result of multiplying the total number of hours worked by an hourly rateâ. Under
    the statutory definition, the GST does not get multiplied. If the GST included the
    appellantsâ calculations is excluded, the premium granted by the motion judge
    would amount to 1.48, and fees of $20 million would represent a multiplier of
    2.05.

[50]

As
    noted, the appellants presumed that s. 33(7) of the CPA governs the
    determination of counsel fees in this case.
I set out s. 33(7) in the
    context of the section as a whole:

33. (1) Despite
    the Solicitors Act and An Act Respecting Champerty, being chapter 327 of
    Revised Statutes of Ontario, 1897, a solicitor and a representative party may
    enter into a written agreement providing for payment of fees and disbursements
    only in the event of success in a class proceeding.
1992,
    c. 6, s. 33 (1).

Interpretation:
    success in a proceeding

(2) For the purpose of
    subsection (1), success in a class proceeding includes,

(a)
a
judgment on
    common issues in favour of some or all class members; and

(b)
a
settlement that benefits one or more class members.
1992, c. 6, s. 33 (2).

Definitions

(3) For
    the purposes of subsections (4) to (7),

â
base
feeâ
    means the result of multiplying the total number of hours worked by an hourly
    rate; (âhonoraries de baseâ)

â
multiplier
â means a multiple to be applied to a base fee. (â
multiplicateur
â) 1992, c. 6,
    s. 33 (3).

Agreements
    to increase fees by a multiplier

(4) An
    agreement under subsection (1) may permit the solicitor to make a motion
    to the court to have his or her fees increased by a multiplier.
1992, c. 6, s. 33 (4).

Motion
    to increase fee by a multiplier

(5) A
    motion under subsection (4) shall be heard by a judge who has,

(a)
given
judgment on
    common issues in favour of some or all class members; or

(b)
approved
a settlement that benefits any class member.
1992, c. 6, s. 33 (5).

Idem

(6) Where
    the judge referred to in subsection (5) is unavailable for any reason, the
    regional senior judge shall assign another judge of the court for the purpose.
1992, c. 6, s. 33 (6).

Idem

(7) On
    the motion of a solicitor who has entered into an agreement under subsection
    (4), the court,

(a)
shall
determine
    the amount of the solicitorâs base fee;

(b) may apply a multiplier to the base fee that
    results in fair and reasonable compensation to the solicitor for the risk
    incurred in undertaking and continuing the proceeding under an agreement for
    payment only in the event of success; and

(c)
shall
determine the amount of disbursements to which the
    solicitor is entitled, including interest calculated on the disbursements
    incurred, as totalled at the end of each six-month period following the date of
    the agreement.
1992, c. 6, s. 33 (7).

Idem

(8) In
    making a determination under clause (7) (a), the court shall allow only a
    reasonable fee.
1992, c. 6, s. 33 (8).

Idem

(9) In making a determination
    under clause (7) (b), the court may consider the manner in which the
    solicitor conducted the proceeding.
1992, c. 6,
    s. 33 (9).

[51]

It is readily apparent that the motion judge did not
    proceed in the manner contemplated by s 33(7). He made no express finding of counselâs
    âbase feeâ under s. 33(7
)(
a). He made no
    determination of the âmultiplierâ to be applied to the base fee under s. 33(7
)(
b). Instead, the motion judge considered a number of
    factors, including counselâs rates and the hours they docketed. Instead of
    applying a multiplier, he indicated he was allowing counsel a âpremiumâ and
    concluded that a counsel fee in the amount of $14.5 million was fair and
    reasonable.

[52]

While I agree that the motion judge did not apply the
    analysis contemplated by s. 33, I do not agree that he erred. The determination
    of counsel fees, on the facts of this case, is not governed by s. 33(7) of the
    CPA, but by s. 32(4). Section 32 provides:

Fees and disbursements

32. (1)
An
agreement respecting fees and disbursements between a solicitor and a
    representative party shall be in writing and shall,

(a)
state
the terms
    under which fees and disbursements shall be paid;

(b)
give
an estimate
    of the expected fee, whether contingent on success in the class proceeding or
    not; and

(c)
state
the method
    by which payment is to be made, whether by lump sum, salary or otherwise.
1992, c. 6, s. 32 (1).

Court to approve
    agreements

(2) An agreement respecting fees
    and disbursements between a solicitor and a representative party is not
    enforceable unless approved by the court, on the motion of the solicitor.
1992, c. 6, s. 32 (2).

Priority
    of amounts owed under approved agreement

(3) Amounts owing under an
    enforceable agreement are a first charge on any settlement funds or monetary
    award.
1992, c. 6, s. 32 (3).

Determination of fees where
    agreement not approved

(4) If an agreement is not
    approved by the court, the court may,

(a)
determine
the amount owing to the solicitor in respect of fees and disbursements;

(b)
direct
a reference
    under the rules of court to determine the amount owing; or

(c)
direct
that the amount owing be determined in any other
    manner.
1992, c. 6, s. 32 (4).

[53]

Section 32 is mandatory and generally applies to all
    fee agreements. Its own terms leave no doubt that it applies to contingency fee
    agreements as well. Section 32(1) requires that all fee agreements meet certain
    formal requirements. All fee agreements must be in writing and must state the
    terms under which fees and disbursements are to be paid, must provide an
    estimate of the expected fee, and must state the method of payment. Section
    32(2) provides that fee agreements in class proceedings are
prima facie
unenforceable. They are only
    enforceable after being approved by the court. Section 32(3) provides that
    amounts owing under an enforceable agreement, i.e. one that is approved by the
    court, are a first charge on any settlement monies or monetary award. Finally, âif
    an agreement is not approved by the courtâ, s. 32(4) gives the court the
    authority to determine class counsel fees or to direct the manner in which
    class counsel fees are to be determined or calculated.

[54]

The courtâs authority to determine class counsel fees
    under s. 32(4) is distinct from its authority to determine class counsel fees
    under s. 33(7). The courtâs authority to determine fees under s. 32(4) arises âif
    an agreement is not approved by the courtâ. The courtâs authority to determine
    fees under s. 33(7) arises âon the motion of the solicitor who has entered into
    an agreement under [s. 33(4)]â.

[55]

In their supplementary factum, the appellants contend
    that it should make no difference which one of these sections apply, as both
    should lead to the same result â the approval of fees that are fair and
    reasonable. What is clear is that the mode of analysis open to the court under
    the two sections is different. The courtâs authority under s. 32(4) is far more
    expansive than its authority under s. 33(7). Section 33(7) provides only
    for the base fee/multiplier approach, whereas s. 32(4) provides the court with broad
    discretion to set the fee, direct a reference or direct the fee be determined âin
    any other mannerâ.

[56]

The relationship between ss. 32 and 33 has been the
    subject of previous judicial comment. Winkler J., in
Crown Bay Hotel Limited Partnership v. ZÃ¼rich Indemnity Co. of Canada
(1998),
    40 O.R. (3d) 83 (C.J. (Gen. Div.)), observed that â[T]he scheme of the CPA
    seems to envisage that sections 32 and 33 operate independently of one another.
    Hence the duplicate provisions for court approval.â In
Crown Bay Hotel
, Winkler J. concluded that the court had authority
    under s. 32(4) to approve a contingent counsel fee based on a percentage of the
    recovery, rather than on a base fee/multiplier as contemplated by s. 33(7).

[57]

In an earlier case,
Nantais
v.
Telectronics
propriety (Canada) Ltd.
(1996), 28 O.R. (3d) 523 (C.J. (Gen. Div.)), Brockenshire J. commented that the
    arrangement of sections 32 and 33 was âsomewhat confusingâ. He suggested that âit
    would have been clearer if s. 33(1) and (2) had come first, followed by s.
    32 and then followed by s. 33(4) through (9).â That is because sections 33(1)
    and (2) apply generally to make it clear that a contingency fee agreement is
    permitted by the CPA, despite the provisions of the
Solicitors Act
, R.S.O. 1990, c. S.15 and
An Act Respecting Champerty
, R.S.O. 1897, C. 327. Section 32(3)
    also applies generally. Sections 33(3) through (9), in Brockenshire J.âs view,
    apply in cases in which there is âan arrangement under which hourly rates are
    quoted, with a provision for applying to the court after the fact, for an
    increase in such hourly rate, based on the risk incurred in undertaking the
    case under an agreement to be paid only if successful.â

[58]

In
Crown Bay
    Hotel
, Winkler J. quoted and approved of Brockenshire J.âs comments in
Nantais
.

[59]

Cullity J. in
Garland
    v. Enbridge Gas Distribution Inc.
(2006), 56 C.P.C. (6
th
) 357 (Ont.
    S.C.) at para. 16 said:

Section 32 is concerned with fee
    agreements â contingent or otherwise â in general. Section 33 is confined to a
    particular type of contingent fee agreement: one that contemplates, and
    permits, the solicitor to make a motion to the court to have his or her fees
    increased by a multiplier. The jurisdiction under this section appears to be
    premised and conditioned on the existence of such an agreement.

[60]

I agree with these earlier decisions. The courtâs
    jurisdiction to determine class counsel fees under s. 33(7) is premised and
    conditioned on the existence of a fee agreement providing for payment of fees and
    disbursements only in the event of success and which permits class counsel to
    make a motion to the court to have his or her fees increased by a multiplier. To
    spell this out, I observe that the courtâs jurisdiction under s. 33(7) is
    brought into play by a motion of a solicitor âwho has entered into an agreement
    under subsection (4)â. An agreement under s. 33(4) is one that permits counsel
    to make a motion to the court to have his or her fees increased by a
    multiplier.

[61]

Illustrative of a fee agreement to which s. 33(7)
    applies is the fee agreement that was before this court in
Gagne v.
Silcorp
Ltd.
(1998), 41 O.R.
    (3d) 417 (C.A.).
Gagne
is the main
    authority on which the appellants relied in this appeal. In
Gagne
, Goudge J.A. provided the
    following description of the fee agreement:

As required by the Act, the
    appellant solicitors executed a written agreement with the representative
    plaintiff respecting their fees and disbursements. It provided that the payment
    of any legal fees was contingent on the class action being concluded
    successfully as defined by the Act. It also provided that the base fee would be
    the product of the hours worked by the solicitors and their usual hourly rates.
In addition, it set out that the solicitors could seek court approval for a
    multiplier to be applied to that base fee.
Finally, the agreement described
    two examples of how this might work.... [Emphasis added.]

[62]

In the case on appeal, the agreement is quite different.
    Paragraph 9 of the agreement provides:

In
    the event of Success in the Action, and in addition to any costs paid by the
    Defendants to the Solicitor, the Solicitor shall be paid and shall receive the
    aggregate of the following in accordance with paragraph 8:

(a)
an amount
    equal to any disbursements not paid by the Defendant(s) as costs, plus
    applicable taxes plus interest thereon in accordance with s. 33(7)(c) of the
    Act;

plus

(b)
the
greater of:

(
i
) one-third
    of the Recovery; or

(ii)
the
Base
    Fee increased by a multiplier of four;

less

(iii)
the
fee portion of any costs paid to the Solicitor in
    accordance with paragraph 8;

plus

(iv)
applicable
taxes.

[63]

This
    paragraph
, which is the agreement regarding class counsel fees, does not
    provide that counsel may bring a motion to have the court increase the base fee
    by a multiplier. Rather, if paragraph 9 were given effect, counsel fees may not
    even be premised on the base fee/multiplier approach, but on one third of the
    recovery.

[64]

Nowhere else in the agreement is it stipulated that
    class counsel is permitted to bring a motion to have their fees increased by a
    multiplier. Recital D of the agreement merely states that â[t]he Act provides,
    among other things, that a Fee Agreement: â¦ (d)
may
permit a solicitor to be paid by having a Base Fee increased by a multiplier or
    as a percentage of the Recoveryâ. While this is accurate as a general
    statement, it does not bring the fee agreement under s. 33(4) of the CPA. It
    does not, as a matter of contract, âpermit the solicitor to make a motion to
    the court to have his or her fees increased by a multiplierâ.

[65]

The distinction is not merely technical. Class members may
    understand the phrase â[t]he Act ... may permit a solicitor to be paid ... a base
    fee increased by a multiplierâ to mean that such fees are payable if specified
    in the fee agreement. On the other hand, an agreement that precisely complies
    with s. 33(4) of the CPA can leave no doubt in the mind of class members that
    the size of the multiplier and the fees themselves rest completely within the
    discretion of the court. It is a matter of emphasis. A fee agreement that
    simply states that âthe Act provides that a Fee Agreement may permit a
    solicitor to be paid by having a Base Fee increased by a multiplierâ does not
    emphasize that the court must, in every case, approve both the base fee and the
    multiplier before the fee agreement is enforceable.

[66]

The agreement in this case does make clear the court
    must approve it. Paragraph 4 of the fee agreement states, âThis agreement
    requires Court approval. If this agreement is approved by the Court, it shall
    bind the Solicitor, the Client, and all members of the Class who do not opt out
    of the Actionâ. Paragraph 4 speaks to the fee agreement as a whole. No
    provision of the agreement, however, expressly indicates that the court must determine
    what fees will be allowed to counsel.

[67]

It is interesting to note the difference between
    paragraph 8, which deals with costs paid by the defendants, and paragraph 9
    which deals with counsel fees. Paragraph 8 expressly provides that counselâs
    entitlement to costs payable to the client is specifically subject to the
    approval of the court. Paragraph 9 sets out precisely how counsel fees are to be
    calculated, but unlike paragraph 8, does not state that counsel fees are
    subject to the approval of the court.

[68]

I conclude that the fee agreement in this case does not
    satisfy the requirements of s. 33(4). It does not permit counsel to apply to
    the court for a multiplier but instead stipulates how counsel fees are to be
    calculated. The agreement for the fees stipulated would become enforceable only
    if it were approved by the court under s. 32(2). If the agreement was not
    approved then, under s. 32(4), the court could determine the amount owing to
    counsel.

[69]

In this case, the motion judge did not expressly state
    that he was disapproving the fee agreement. Section 32(4), however, does not
    require that a fee agreement be expressly disapproved before it applies.
    Section 32(4) applies whenever there is no approval of the fee agreement. This
    is made clear by the opening words of s. 32(4), which clearly state that
    the courtâs authority to determine the amount owing to class counsel in respect
    of fees and disbursements under that subsection arises âif an agreement is not
    approved by the courtâ. Cullity J. put it well in
Martin v. Barrett
, [2008] O.J. No. 3813 (S.C.), at para. 35: âIf
    the court withholds approval, it then has a discretion to determine the fee
    pursuant to section 32(4
)(
a).â

[70]

There can be no doubt the motion judge withheld
    approval of the fee agreement in this case. Had he approved it, it would be
    enforceable and the fees owing under paragraph 9 would be a first charge on the
    settlement fund by virtue of s. 32(3) of the CPA. By assessing fees in a
    different amount, the motion judge made evident he was not approving the fee
    agreement. Section 32(3) makes apparent that a substantive as well as a formal
    review of the fee agreement is necessary for court approval. The current
    practice of some trial courts to approve the fee agreement simply upon being
    satisfied that it contains the formal requirements of s. 32(1) ignores the
    effect of s. 32(3). The motion judge in this case followed the correct approach
    by withholding approval of the fee agreement.

[71]

Because the fee agreement in this case was not approved
    and because it does not meet the requirements of s. 33(4), I conclude that
    class counsel were not entitled to invoke the application of s. 33(7).
    Rather, counselâs fees in this case fell to be determined under s. 32(4).

[72]

I do not accept the contention advanced in the
    appellantsâ supplementary factum that, even if s. 32(4) applies, the court must
    apply the analytical framework of s. 33(7) when counsel who have taken the case
    on a contingency basis apply for a multiplier. The wording of s. 32(4) is
    clear. The court has broad authority to itself determine the âthe amount owing
    to the solicitor in respect of feesâ, or even to direct that the amount owing
    be determined âin any other mannerâ.
Gagne
,
    the only Court of Appeal authority on which the appellants rely for this
    argument, was
a
s. 33(7) case. The proper view is that
    the court acting under s. 32(4
)(
a) has the authority
    to determine the fees owing to the solicitor after considering and weighing all
    relevant factors. It is within the courtâs discretion to test the
    reasonableness of the quantum of a lump sum fee by looking at the result as a multiplier,
    as Cumming J. suggested in
Vitapharm
Canada Ltd.
    v. F. Hoffmann-La Roche Ltd.
, [2005] O.J. No. 1117 (S.C.). It is, however,
    a matter of discretion.

[73]

I conclude that the motion judge was not bound to apply
    the base fee/multiplier analysis provided for in s. 33(7) of the CPA. He
    committed no error in exercising his authority under s. 32(4) of the CPA to
    determine class counsel fees without determining the amount of the appellantsâ
    base fee and applying a multiplier to it.

[74]

Before leaving this issue I add that it is not apparent
    to me that, before the motion judge, class counsel pressed the application of the
    base fee/multiplier analysis, which they now allege he erred in failing to
    apply. The notices to the class members and the notice of motion filed with the
    motion court are more consonant with the application of s. 32(4) than with s. 33(7)
    of the CPA.

[75]

The notice of certification, drafted and advertised by
    class counsel, advised the class members that the agreement âwhich must be
    approved by the court to be effective, provides for a contingency fee of at
    least one-third of the amount recovered in the class action.â The notice of the
    approval hearing stated that â[c]lass counsel will ask the court to approve
    their fee agreement with the plaintiffs and award $27.5 million in cash in full
    payment of the plaintiffsâ obligations to class counsel.â Neither indicates that
    counsel would apply to the court for the application of a multiplier to their
    base fee.

[76]

Paragraph 1(d) of the notice of motion sought an order âapproving
    the agreements as to fees, disbursements and taxes between [the representative
    plaintiffs] and Harvey T. Strosberg (âAgreementsâ)â. Paragraph 1(e) sought an
    order âfixing the amount of class counselâs fees at $27.5 millionâ. The notice
    of motion refers generally to both ss. 32 and 33, but does not seek to have
    counselâs base fees increased by a multiplier, as contemplated by s. 33(7). Nowhere
    in the notice of motion is there a reference to either the base fee or a
    multiplier. The supporting affidavits filed on the motion do not refer to a
    multiplier.

[77]

Finally, the motion judge made no reference to any
    argument by the appellants that he was bound to apply the base fee/multiplier
    analysis, as would be expected had the argument been advanced. He only referred
    to the position in the appellantsâ notice of motion and notices to the
    plaintiff class that they were seeking a specific dollar amount â namely $27.5
    million.

[78]

I would not give effect to this ground of appeal. Before
    moving on, I caution that these reasons should not be taken to indicate acceptance
    of the appellantsâ submissions on how s. 33(7) should be interpreted and applied.

Reasonableness of class counsel fees

[79]

I turn then to the second leg of the appellantsâ
    argument, that, irrespective of the mode of analysis used, the quantum of fees
    allowed by the motion judge was too low. The appellants submit that the amount
    of $14.5 million is inadequate to achieve the policy objective of providing
    incentives for lawyers to undertake complex and protracted class actions, and that
    the amount is not fair and reasonable compensation given the work they
    performed, the risk they undertook and the success they achieved.

[80]

At para. 24 of his reasons, the motion judge set out
    the general principles that apply to the assessment of class counsel fees:

Factors relevant in assessing the
    reasonableness of the fees of class counsel include: (a) the factual and legal
    complexities of the matters dealt with; (b) the risk undertaken, including the
    risk that the matter might not be certified; (c) the degree of responsibility
    assumed by class counsel; (d) the monetary value of the matters in issue; (e)
    the importance of the matter to the class; (f) the degree of skill and competence
    demonstrated by class counsel; (g) the results achieved; (h) the ability of the
    class to pay; (i) the expectations of the class as to the amount of the fees;
    (j) the opportunity cost to class counsel in the expenditure of time in pursuit
    of the litigation and settlement.

[81]

There can be no quarrel that these factors are relevant
    in assessing the reasonableness of class counsel fees. These factors have been
    applied in a number of cases, including those cited by the motion judge.

[82]

The motion judge found that the class proceeding dealt
    with matters of high factual and legal complexity, had a substantial monetary
    value, was important to the class, and that class counsel performed with
    competence and admirable skill. The motion judge also considered that class counsel
    had assumed a high risk in taking on the class proceeding and he recognized
    that that risk should be rewarded. He also attached weight to the fact that âClass
    Counselâs compensation must be sufficient to provide a real economic incentive
    to lawyers to take on a class proceeding and to do it wellâ.

[83]

The motion judge, however, refused to accept class
    counselâs contention that they deserved fees in the amount of $27.5 million for
    achieving a settlement worth $120 million because, in his view, the settlement
    was not worth $120 million. The motion judge seemed taken aback by class
    counselâs insistence that the settlement had a value of $120 million as he âwould
    have thought it obvious that the settlement in the case at bar, which involves
    cash, coupons, and releases, is not worth $120 millionâ. He repeated that the
    settlement was not worth $120 million âfor the purposes of the contingency fee
    agreementâ. He described the result as âadequate or satisfactoryâ and said it
    was âto spin a silk purse from a sowâs ear to suggest that the result was
    excellent.â He added that an objecting class member âwas right in expressing
    disappointment about the settlementâ.

[84]

The motion judge had a solid foundation for finding
    that the settlement did not have a value of $120 million. To begin with, the
    motion judge did not regard the transaction credits as having a benefit to the
    class members equal to their face value. He was sceptical that there would be
    much take-up and stated his view that the most likely beneficiaries would not
    be class members but future Money Mart customers. The implication that class
counsel do
not earn a premium in fees by obtaining benefits
    for persons outside the class is sound.

[85]

The motion judge also observed that the transaction
    credits could be viewed âas a business promotion scheme under which Money Mart
    discounts its price and makes less profit from a profitable transactionâ but âobtains
    business it would otherwise not have obtainedâ. He also drew attention to the
    fact that the settlement provided that a maximum of five dollars in transaction
    credits could be used per transaction. This meant that class members would have
    to enter into a number of further transactions with Money Mart repeatedly in
    order to exhaust their transaction credits.

[86]

The motion judge was not impressed with class counselâs
    argument that the transaction credits should be considered to have marketable
    value because Money Martâs competitors would likely honour the transaction
    credits.
That competitors
would find acceptance of the
    transaction credits attractive confirmed that credits were a business promotion
    scheme for more payday loans, in the motion judgeâs mind.

[87]

The motion judge, in making the point that the
    transaction credits were not equivalent to cash, surmised that class counsel
    would likely not accept an assignment of $27.5 million worth of transaction
    credits as payment of their fees. Â In my
    view, this was a fair inference based on class counselâs position that the
    entire cash remnant of $27.5 million should be devoted to paying their fees
    rather than them taking a share of the âmarketableâ transaction credits. The
    motion judge concluded that it was âhard to paint [the transaction credits] as
    a success for the mission of this class proceeding.â

[88]

The motion judge also substantially discounted the
    value of the debt forgiveness component of the settlement. He considered that
    payday loans were uneconomical to recover given their small value and the
    expense of collecting them. The evidence indicated that much of the debt
    forgiveness component of the settlement released debts that were already
    written off or reserved in Money Martâs financial records.

[89]

The motion judge did recognize that the $30.5 million
    in cash that the settlement provided was solid value, though he observed it âshould
    be present-valued because it is being paid in instalments over approximately two
    and a half years and there is no interest until the payments are dueâ.

[90]

These matters provided an abundant basis for the motion
    judgeâs finding that the settlement was not worth $120 million. The appellantsâ
    arguments at the appeal hearing and in their written submissions were all
    premised on the settlement being worth $120 million. However, they did not
    establish that the motion judge made any error in arriving at the clear finding
    of fact that it was not. The appellants complain that the motion judge made no
    finding as to what the settlement was worth. The record before the motion
    judge, compiled by the appellants, provided a poor basis for doing so. There
    was no independent expert opinion on the value of the transaction credits or
    the debt reduction.

[91]

Besides finding that the settlement was worth less than
    the appellants contended, another important factor in the motion judgeâs
    approval of the settlement was the $13 million in cash that would become
    available for distribution to the class upon class counsel fees being fixed in
    the amount of $14.5 million instead of the $27.5 million that the appellants sought.

[92]

Placing importance on providing fair and reasonable
    compensation to counsel and providing incentives to lawyers to undertake class
    actions, as the motion judge noted, does not mean that the court should âignore
    the other factors that are relevant to the determination of a reasonable fee.â In
    this light, it was an important aspect of the motion judgeâs analysis that the
    settlement he approved provide some cash for distribution among the class
    members. The motion judge stressed that the settlement he was approving was one
    in which âClass Counselâs fee does not take up all the cash portion of the
    settlementâ.

[93]

The motion judge found that â[h]
aving
regard to all the factors, an all-inclusive award of $14.5 million is a
    reasonable fee in the circumstances of this case.â He concluded that $14.5
    million was âample compensation and a reasonable feeâ and there was âno
    necessity to award more having regard to the success achieved and the risk
    takenâ.

[94]

The appellants submit that the motion judge made errors
    in his analysis of specific issues. I agree he may have overstated one or two
    things, but this does not undermine his central reasoning and the conclusion
    that he reached.

[95]

For example, the appellants submit that the motion
    judgeâs comment that the settlement failed to achieve behaviour modification is
    unreasonable because the section of the
Criminal
    Code
prohibiting criminal rates of interest was amended in May 2007 to
    exempt from its application small short-term loans in provinces that enact
    legislation to regulate the payday loan industry. At the time of the hearing
    before the motion judge, British Columbia, Manitoba, New Brunswick, Nova
    Scotia, Prince Edward Island, Saskatchewan and Ontario had introduced such
    legislation. The provisions of Ontarioâs
Payday
    Loans Act
,
2008
, S.O. 2008, c. 9,
    which regulate the cost of payday loans borrowing, came into force on December
    15, 2009. The appellants make the point that it was impossible for the
    settlement to achieve âbehaviour modificationâ because the new legislation
    legalized the defendantsâ business practices. The motion judge erred, they say,
    by minimizing the success they achieved on the basis that the settlement did
    not accomplish âbehaviour modificationâ.

[96]

The motion judge could have explained more clearly why
    he commented that âthere was not a peep about behaviour modificationâ during
    the settlement approval motion. As I understand his reasons, the point he was
    making is that the settlement, by providing coupons for the defendantsâ
    services, provided support for the payday loan industry and hence diminished
    the degree of success achieved. The settlement did not sever the business
    relationship between the defendants and the class members who receive
    transaction credits under the settlement but rather continued that business
    relationship. I gather this because, after observing there was no behaviour
    modification, the motion judge said,

[B]
ut
for the members of the Transaction Credit group, if they are to obtain a
    benefit under this settlement it is by abandoning the original purposes of this
    class action, which was to enjoin, not encourage, payday loans pricing
    policies. Once again, it is hard to paint this as a success for the mission of
    this class proceeding.

[97]

I have no doubt that the motion judge did not expect
    that a settlement or judgment could have resulted in the modification of the
    defendantsâ business practices. The motion judge was aware of the new
    legislation. He set out the evolution of the legislative changes and noted the
    irony that the defendantâs charge for the representative plaintiffâs loan was
    now apparently legal in Ontario and that, indeed, Money Mart could even charge
    him an additional two dollars. The motion judge could have meant nothing more
    than that there was no âbehaviour modificationâ as far as these members of the
    class were concerned because the scheme of the settlement destined them to
    continue to borrow payday loans from the defendants on essentially the same,
    albeit now unquestionably legal, terms.

[98]

In any event, I do not see the motion judgeâs comment
    about the lack of behaviour modification as the foundation for his conclusion
    that the value of the settlement was much less than the claimed $120 million.

[99]

The appellants also take strenuous and justified
    umbrage to the motion judgeâs description of the settlement as the self-serving
    design of class counsel. The motion judge said,

With
    respect to the factor of the classâ ability to pay, the settlement has been
    structured in a way that the class is able to pay Class Counselâs fee, but that
    is the self-serving design of Class Counsel, and as I have already explained,
    the class would not have been able to pay the contingency fee if Class Counsel
    had been able to enforce the contingency fee agreement based on its own
    self-serving evaluation of the value of the settlement.

[100]

I agree with the appellants that a court ought not to
    attribute self-interest to counsel in the absence of a proper evidentiary
    basis. There was, in this case, no evidentiary basis for the modifier âself-servingâ.
    Regrettably, the risk of such an overstatement is increased in a non-adversarial
    motion brought by class counsel that requires the court to depart from its
    traditional neutrality and take on an active role to protect the interests of
    the class. In fulfilling that active role, the motion judge could allude to the
    fact that the settlement was structured to provide for a cash payment of $27.5
    million and that class counsel was seeking approval of fees in the amount of
    $27.5 million, and highlight that this would leave the class members only with
    transaction credits and debt forgiveness. His use of the modifier âself-servingâ
    in making that observation was unfortunate.

[101]

None of the isolated comments that the appellants
    objected to provide any reason to interfere with the motion judgeâs exercise of
    discretion in setting class counsel fees.

[102]

The motion judgeâs determination was discretionary. The
    appellants have not established any basis for interfering with his
    determination that $14.5 million was a fair and reasonable fee for class
    counsel in this case.

The fees of PWC and Mr. Anand

[103]

Class counsel retained PWC and Mr. Anand to perform
    certain work on the basis that they would only be paid if and when the action
    was successful and then on the same basis as class counsel. For example, PWC
    agreed to the following:

We
    understand that our fees will be payable on a contingency basis. We will
    accumulate our hours. In the event that your action is successful when you
    achieve either a settlement or an award from the court, our fees will be
    payable on a pro rata basis with payment of your own fees and the fees of other
    members of your team. To this end, our usual fees for time incurred would
    attract the same multiplier applied to usual hourly rates as the multiplier
    applied to each of your teamâs members.

Our expenses incurred will also be
    on a contingency basis. They will be paid, pro rata, with the disbursements of
    the members of your team from any proceeds received before distribution of any
    fees to the team members.

In
    the event that your action does not result in a settlement or an award from the
    court, no amount will be payable to us on account of fees for time incurred or
    expenses.

[104]

The motion judge decided that the fees of PWC and Mr.
    Anand would be treated as disbursements of class counsel. The appellants submit
    that the motion judge erred by failing to approve PWC and Mr. Anandâs fees in
    an amount consistent with the contingency basis on which they were retained.
    The time value, taxes and disbursements for the work of PWC amounted to
    $835,629.03; those of Mr. Anand amounted to $16,800. Though the motion judge
    treated these amounts as disbursements incurred by class counsel, class counsel
    say they remain contractually obligated to pay these service providers on the
    basis on which they were retained.

[105]

By way of relief, the appellants seek an order that a
    premium be added to the fees of PWC and Mr. Anand in proportion to the premium
    added to the fees of the appellants. The unstated premise of this request seems
    to be that treating the consultantsâ fees as contingency fees would enlarge the
    aggregate quantum of fees allowed. I do not agree that this would necessarily be
    so.

[106]

Insofar as the premium granted depends on the risk
    undertaken in a contingency case, the issue is the quantum of that risk, not
    the number of risk-takers who have shared it. It is illogical that the total
    amount of the premium allowed for a given total risk should be higher because
    there are more risk-takers. For example, the premium allowed should not
    increase because class counsel in this case was comprised of four law firms.
    Thus, if the premium allowed to class counsel is predicated on the risk of
    counselâs fees and disbursements, granting service providers a contingency
    premium should result in a redistribution of the premium rather than an
    enlargement of the premium. After all, the risk undertaken by class counsel is
    diminished by the amount of risk the service providers undertake when they are
    retained on a contingency basis. If the CPA permits the court to allow
    contingency premiums to service providers, the appellants, to obtain an increase
    in the total premium allowed, would have to demonstrate that the motion judge
    did not base his determination of the premium on the total risk of undertaking
    the case, including the disbursements for the services of PWC and Mr. Anand.

[107]

As I mentioned earlier, the motion judge considered it
    unwise to determine the general question whether the CPA could be interpreted
    to permit contingency fee arrangements with service providers on what was
    âessentially an
ex parte
motion where
    the voices against any change are not being heardâ. He decided to treat the
    accounts of PWC and Mr. Anand as disbursements in this case because he was
    troubled by the appellantsâ contention for four reasons. First, as non-lawyers,
    the service providers could not be appointed class counsel. Second, the CPA
    does not envisage contingency fee agreements with anyone other than properly
    appointed class counsel. He pointed out that s. 32(2) of the CPA
refers
to an agreement respecting fees and disbursements
    âbetween a solicitor and a representative partyâ. Third, it was not clear that
    the arrangement complied with the Law Societyâs Rules of Professional Conduct.
    Rule 2.08(8
)(
a), for example, provides that a lawyer
    shall not âdirectly or indirectly share, split, or divide his or her fees with
    any person who is not a licenseeâ. And fourth, the arrangement with the
    non-lawyers might well be
champertous
. The motion
    judge pointed out that
An Act Respecting
    Champerty
was still in effect.

[108]

I agree that the appellants placed before him a
    fundamental question with far-reaching implications for the future of class
    actions, and that it is usually desirable to hear the perspectives of all the
    interests that might be affected before deciding such questions.

[109]

While that may be generally so, in my view the answer
    to the far-reaching question raised in this case is straightforward. The CPA
    does not contemplate contingency fee arrangements with persons other than class
    counsel and does not give the court the jurisdiction to allow a service
    provider a premium on its fees.

[110]

Section 33(1) allows a contingency agreement âbetween a
    solicitor and a representative partyâ. Section 32(1) requires all agreements
    between a solicitor and a representative party, including contingency
    agreements, to meet certain formal requirements. Section 32(2) interferes with
    freedom of contract by providing that all agreements between a solicitor and a
    representative party are unenforceable unless approved by the court. If
    contingency agreements with service providers are allowed under the CPA as the
    appellants contend, I find it odd that the Act does not set out formal
    requirements for such agreements or make them unenforceable unless approved by
    the court.

[111]

Section 33(7), which the appellants wish to have
    applied in this case, could not be clearer. Read in context, s. 33(3)âs definition
    of âbase feeâ clearly refers to the hours worked by counsel multiplied by
    counselâs hourly rates. The only multiplier that the court has jurisdiction to
    grant under s. 33(7
)(
b) is one that results in a fair
    and reasonable compensation
to the solicitor
for the risk undertaken. Under
    s. 33(7
)(
c) the court has jurisdiction to determine
    the amount of disbursements, but these are disbursements âto which the
    solicitor is entitledâ. The text of s. 33 is not concerned with fair and
    reasonable compensation to others for risk incurred in undertaking work on the
    action on a contingency basis.

[112]

Section 32(4) may not be as rigidly structured, but
    still provides the court with authority to determine the amount owing
to the
    solicitor
in respect of fees and disbursements. As the appellants argue in
    their supplementary submissions, the application of the two sections should
    theoretically lead to roughly the same result â fair and reasonable
    compensation for class counsel. I do not read the broader more general
    authority granted to the court by s. 32(4) as extending to allow a premium to
    service providers in order to achieve fair and reasonable compensation for them
    for the risk undertaken in the provision of their services.

[113]

The grammatical and ordinary sense of ss. 32 and 33,
    read in the context of the entire statute and considered in light of its
    purpose, leads me to conclude that the legislature did not intend to grant the
    court jurisdiction to allow service providers a premium for providing their
    services on a contingency basis. The legislatureâs intent was to authorize the
    court to allow class counsel a premium or multiplier for the risk incurred by
    investing their time and underwriting disbursements, if they take on the case
    on a contingency basis. The representative plaintiff
â
s selection of counsel who is prepared
    and able to carry the case on a contingency basis is relevant to the courtâs
    determination whether the plan for the proceeding sets out a workable method of
    advancing the proceeding on behalf of the class.

[114]

Â As I find the
    text of the current legislation to be clear, I do not find it necessary to deal
    with the other legal and policy arguments advanced by the appellant. Suffice it
    to say I agree with the motion judge that what the appellants seek âwould
    amount to a fundamental change to the design of the Actâ. The policy issues are
    not confined to access to justice considerations, the only one identified by
    the appellants. For example, the broad proposition the appellants assert, that
    contingency agreements with service providers should be allowed, would apply to
    expert witnesses and others whose work products are tendered in evidence. This
    could give rise to concerns about the quality and reliability of the work product.

[115]

I might add
,
I do not
    anticipate that this decision will have the dire impact on access to justice
    that the appellants assert. In the almost 20 years the CPA has been in effect,
    a great number of class actions have proceeded without the court allowing
    premiums to service providers.

The fees of FMC

and
    Prof. Krishna

[116]

Class counsel also retained FMC and Prof. Krishna to
    perform certain specialized discrete tasks. The total time value of the work
    they performed was $32,002.96 and $10,237.50, respectively. Class counselâs
    agreements with them are not in the record, but the motion judge found that
    they too were retained by class counsel on a contingency basis. Class counsel
    requested that the multiplier or premium the motion judge granted to class
    counsel also be applied to the fees of FMC and Prof. Krishna. The motion judge
    refused this request and treated their fees as disbursements incurred by class
    counsel. On appeal, the appellants ask that the order of the motion judge be
    varied to treat Prof. Krishna and FMC as part of class counsel, and that a
    premium be added to their fees in proportion to the premium added to the fees
    of the appellants.

[117]

Different considerations apply to the work of FMC and
    Prof. Krishna because they are lawyers. The same concerns of fee splitting and
champerty
do not arise in relation to lawyers who have
    actually worked on the clientâs file.

[118]

The appellantsâ position is that FMC and Prof. Krishna
    became part of the class counsel team and their fees should be treated as class
    counsel fees. They say that the motion judge refused to recognize them as class
    counsel on the erroneous belief that court approval was necessary for any
    change in the plaintiffâs representation. The motion judge did note that the
    litigation plan that the representative plaintiff had approved by the court
    defined class counsel to be the four law firms
Sutts
,
    Strosberg,
Paliare
Roland,
Koskie
,
Minksy
, and David
Stratas
of
Heenan
,
Blaikie
.

[119]

The appellants rely on this courtâs decision in
Fantl
v. Transamerica Life Canada
(2009), 95
    O.R. (3d) 767 (C.A.) to submit that no court approval was required to enlarge
    the class counsel group to include FMC and Prof. Krishna.
Fantl
merits closer examination. In
Fantl
, the
    law firm acting for the representative plaintiff in a class action split up and
    its former members disputed who should continue as class counsel. The narrow
    issue was whether the representative plaintiff could choose to retain one of
    the successor firms and serve a notice of change of solicitors without court approval.
    Winkler C.J.O. writing for this court said that he did not view it âas
    necessary for the plaintiff to seek and obtain approval of the court for every
    decision involving the selection or change of counsel.â Yet he immediately
    added, âHowever, I am of the view that the case management judge charged with
    responsibility for the supervision of the proceeding should be immediately and
    directly notified of such a change.â

[120]

Fantl
is of little assistance to the appellants in this case.

[121]

First, in this case there is no indication the
    representative plaintiff made a decision to change the makeup of the class
    counsel team indicated in the litigation plan. In
Fantl
what was in issue was the
    clientâs choice of new counsel. Winkler C.J.O. said at para. 44 of
Fantl
that â[t]he
    representative plaintiff in a class action lawsuit is a genuine plaintiff, who
    chooses, retains and instructs counsel and to whom counsel report.â I can see
    no indication in the record that the representative plaintiff made or
    participated in any decision to retain FMC and Prof. Krishna as class counsel
    in this action. While counsel may require assistance and may incur
    disbursements on the clientsâ behalf, clients decide who
are
    their counsel
.

[122]

Second, if there was a change in the composition of
    class counsel, the court was never immediately and directly notified of the
    change as
Fantl
indicates is required.

[123]

Moreover, the record does not indicate that Prof.
    Krishna or FMC were intended to have a solicitor-client relationship with the
    representative plaintiff. It is not clear to me in what sense FMC and Prof.
    Krishna are said to be class counsel except for the purpose of being entitled
    to the same premium allowed to class counsel. I briefly review the relevant
    portions of the record.

[124]

The affidavit of Patricia A. Speight, sworn February 1,
    2010, in support of the motion under the heading âClass Counselâ states that
    â[t]he four law firms acting on behalf of the Class are SS [
Sutts
,
    Strosberg],
Heenans
[
Heenan

Blaikie
], PR [
Paliare
Roland Rosenberg Rothstein] and KM [
Koskie
,
Minksy
].â It adds that other lawyers from other firms
    âassisted class counsel as requiredâ.

[125]

The affidavit goes on to describe the role fulfilled by
    each of
Sutts
, Strosberg,
Heenan

Blaikie
,
Paliare
Roland and
Koskie
,
Minksy
, but does
    not mention Prof. Krishna or FMC in this section. The motion material includes
    costs briefs for
Sutts
, Strosberg,
Heenan

Blaikie
,
Paliare
Roland and
Koskie
,
Minksy
setting out the supporting details for their fees
    and disbursements. The motion material before the motion judge did not contain
    costs briefs for FMC and Prof. Krishna. Without details of their rates and
    hours worked, it was not possible to treat their fees as class counsel fees
    under the CPA.

[126]

In a later section of Ms. Speightâs main affidavit
    under the heading âClass Counsel Obtained Advice
From
Othersâ the affidavit sets out that âclass counsel expanded the counsel group
    to include Professor Vern Krishna who is an expert in international taxationâ.
    In the same paragraph, it indicates that a U.S. insolvency firm was also
    retained and that Prof. Krishna and the U.S. counsel had âreviewed and approved
    the parts of this affidavit stating their information, opinions and beliefs.â
    The affidavit does not mention FMC.

[127]

The details of FMCâs retainer are set out in the
    supplementary affidavit of Ms. Speight sworn February 11, 2010:

Money Mart had entered into a
    settlement agreement with counsel in an Alberta payday class action at the time
    that the Ontario action was structured as a national class. A class member,
    resident in Alberta, retained SS to file an objection to the proposed Alberta
    settlement. Mr. Strosberg attended in Alberta and met with plaintiffsâ counsel
    in the Alberta action. As a result of this meeting, Alberta counsel did not
    proceed to tender the settlement to the Alberta court for approval. Money Mart
    then sued the objector and sought damages against him and plaintiffsâ counsel
    in
Alberta.â¦
[Class counsel] arranged for Fraser
    Milner to act on behalf of the objecting class member â¦ with the responsibility
    of defending the action for the objectorâ¦.

[128]

The material indicates that class counsel used FMC and
    Prof. Krishna as consultants to perform discrete, specialized tasks. FMC was
    retained on a different action to represent an individual other than the
    representative plaintiff in this case. Prof. Krishnaâs work product seems to
    have been treated like that of an expert witness on international taxation
    issues.

[129]

The appellants claim that paragraph 5(d) of the retainer
    agreement allowed them to include FMC and Prof. Krishna in the class counsel
    group. I disagree. Paragraph 5(d) authorizes the Solicitor to:

use
such persons or resources from the firms
Paliare
Roland LLP,
Koskie

Minsky
LLP,
Heenan

Blaikie
LLP and
    any other firm as the Solicitor deems necessary and their services shall be
    deemed to be provided as members of the Solicitorâs law firm.

[130]

I do not read the paragraph as purporting to allow
    class counsel to unilaterally establish a solicitor-client relationship on
    behalf of the representative plaintiff with any person or resource âusedâ by
    class counsel. If the paragraph does intend to do so, it would be unacceptable
    as it is inconsistent with Winkler C.J.O.âs observation in
Fantl
that the representative
    plaintiff is a genuine plaintiff, who chooses, retains and instructs counsel
    and to whom counsel report. Whatever the import of this paragraph, to the
    extent it deals with fees, it is part of the fee agreement that was not
    approved and is not enforceable.

[131]

The appeal, which is brought on behalf of class
    counsel, indicates the appellants are the four law firms
Sutts
,
    Strosberg,
Heenan

Blaikie
,
Paliare
Roland and
Koskie
,
Minksy
. Prof. Krishna and FMC are not included as part of
    class counsel for the purposes of this appeal.

[132]

The motion judge had the general discretion to
    determine the allowable fees and disbursements in this case. As the material
    before him did not show that the representative plaintiff made or was even aware
    of any change in the composition of counsel representing him, or that FMC and
    Prof. Krishna functioned in a solicitor-client relationship with him, I see no
    error in his treatment of the fees of FMC and Prof. Krishna as disbursements rather
    than as part of class counselâs base fee.

Compensation for the representative plaintiff

[133]

The motion judge agreed that the representative
    plaintiffâs âcontribution to the class action exceeded that which is normally
    expected of a representative plaintiffâ and granted him compensation in the
    amount of $3,000 as requested by class counsel. However, without discussion, he
    ordered that the representative plaintiffâs compensation be paid out of class counsel
    fees. The appellant argues that the motion judge erred by not ordering the
    representative plaintiffâs compensation to be paid out of the settlement fund.

[134]

In advancing this argument, class counsel relied upon
    the decision of Sharpe J. in
Windisman
v. Toronto
    College Park Ltd.
(1996), 3 C.P.C. (4
th
) 369 (C.J. (Gen. Div.)).
    Counsel did not draw the courtâs attention to the more recent decisions of Cullity
    J. in
Garland v. Enbridge Gas
    Distribution Inc.
(2006), 56 C.P.C. (6
th
) 357 (Ont. S.C.) and
McCutcheon v. Cash Store Inc.
, [2008]
    O.J. No. 5241 (S.C.), and Cumming J. in
Walker
    v. Union Gas Ltd.
(2009), 74 C.P.C. (6
th
) 366 (Ont. S.C.). It
    seems that the most that can be said is that judges of the Superior Court have
    different approaches with respect to the payment of the representative
    plaintiffâs fees. This court has never dealt with the issue.

[135]

I take the view that as a general matter the representative
    plaintiffâs fee should be paid out of the settlement fund and not out of class
    counsel fees. Class
counsel
fees are predicated on the
    work that class counsel have done for the class. Allocating a part of that fee
    to a layperson, especially a representative plaintiff, raises the spectre of
    fee splitting, a concern the motion judge expressed at an earlier point in his
    reasons.

[136]

In the absence of any reason for providing otherwise, I
    conclude that the $3,000 compensation for the representative plaintiff should
    be paid out of the settlement fund. I would vary the motion judgeâs order
    accordingly.

Conclusion

[137]

I would allow the appeal in part by varying para. 31 of
    the motion judgeâs order to provide that the compensation for the
    representative plaintiff be paid out of the settlement fund. I would dismiss
    the appeal in all other respects.

âR.G. Juriansz J.A.â

âI agree M.J. Moldaver
    J.A.â

âI agree R.P. Armstrong
    J.A.â

RELEASED:
March 28, 2011

[1]
There is an error in the paragraph numbering in the reasons released
    by the motion judge. I refer to the corrected paragraph numbering in the
    Quicklaw version of his reasons.


CITATION:
Starson
(Re), 2011 ONCA 169

DATE: 20110303

DOCKET: C51696

COURT OF APPEAL FOR ONTARIO

Feldman, Lang and LaForme JJ.A.

IN THE MATTER OF: Professor Scott
Starson
a.k.a. Scott
Schutzman

Professor
Starson
, acting in person

Anita Szigeti, as
amicus
          curiae

Holly Loubert, for the Attorney General

Janice E. Blackburn, for the Centre for Addiction and
          Mental Health

Heard: September 23, 2010

On appeal from the decision of the Ontario Review Board, dated
          January 15, 2010.

By the Court:

[1]

The appellant, Professor Scott
Starson
, appeals the disposition of the Ontario Review
    Board (ORB).  In that disposition, rather
    than granting the appellant the conditional or absolute discharge that he
    sought, the ORB ordered his continued detention at the Centre for Addiction and
    Mental Health (CAMH or the hospital), albeit with a transfer from medium to
    minimum security.  The ORBs disposition
    also provided the appellant with the potential to live in the community in
    accommodation approved by the person in charge of the hospital.

[2]

The appellant had been detained in various
    mental health facilities since he was found not criminally responsible in
    November 1998, and had been the subject of numerous ORB reviews and
    dispositions.

[3]

While exceptionally gifted in science,
    particularly physics, Professor
Starson
unfortunately
    suffers from a condition identified as schizoaffective disorder.  His disorder is marked by grandiose delusions
    and auditory hallucinations, which have sometimes resulted in threatening
    behaviour.  Initially, the appellant
    refused treatment. Later, litigation ensued concerning his capacity to make
    treatment decisions.  In the meantime,
    the appellants condition deteriorated markedly.   Finally,
    the appellant was declared incapable of consenting to treatment in 2005.  He was treated with anti-psychotic medication.  His condition improved dramatically.

[4]

Since that improvement, the appellant has been
    permitted to live in the community from time to time.  However, on each occasion, his illness became
    unmanageable and he was required to return to hospital.  The appellants continuing difficulties at
    the time of the hearing appeared to stem from the hospitals challenges in
    finding him the appropriate dosage of the most effective medication with the
    least side effects.

[5]

In this appeal, the appellant initially
    challenged the Boards refusal to grant him either a conditional or an absolute
    discharge.  However, at the opening of
    argument, the appellant abandoned his grounds of appeal regarding a conditional
    discharge and proceeded only in regard to the Boards refusal to grant him an
    absolute discharge.  Primarily, the
    appellant argued that an absolute discharge was the appropriate disposition in
    fact and in law because he believed that he would soon be presenting lectures
    and undertaking employment at a U.S. university.

[6]

Despite the strength of the appellants belief,
    in our view, based on the circumstances at the time of the hearing in December
    2009, the Board reasonably concluded that the appellant presented a
    significant threat.  After balancing
    the twin goals of public safety with fair treatment of the appellant, the Board
    also reasonably concluded that his continued detention was the least onerous
    and least restrictive disposition available.

[7]

The Board provided comprehensive reasons
    explaining its conclusions, which were supported by the evidence.  At the time, even though his medication had
    been increased, the appellant continued to suffer from delusions.  Importantly, the appellants delusions were
    historically the source of his problematic behaviour.  In addition, in light of the challenges in
    finding a therapeutic dosage for the appellants symptoms, as well as the
    failure of the then prescribed medication to have a continuing positive effect,
    the hospital planned a consultation regarding the appellants medication.  There were concerns that potential changes in
    medication could result in the appellants destabilization.  Accordingly, his reaction would require careful
    monitoring.

[8]

In any event, the appellants general condition
    required monitoring.  This was because,
    even though the appellant had evidenced promising stability since April 2009,
    he had suffered a brief period of
decompensation
in
    October 2009 in reaction to an increase in his restrictions.  That
decompensation
included threatening behaviour.  While the
    appellant appeared to stabilize again in the few weeks prior to the December hearing,
    he had not done so to the extent of taking full advantage of the grounds and
    community privileges that were available to him.  Given the overall circumstances, there was
    concern that the appellants condition could again suddenly and unpredictably
    deteriorate.

[9]

Thus, there were ample reasons to support the
    ORBs disposition of continued detention.

[10]

Despite the appellants withdrawal of the
    conditional discharge aspect of his appeal,
amicus
    curiae
sought to advance an argument arising from s. 672.55 of the
Criminal Code
concerning whether a
    person such as the appellant, who has been found incapable of making treatment
    decisions under the
Health Care Consent
    Act,
S.O. 1996, c. 2,
Sched
. A, may nonetheless
    consent to a term in that persons conditional discharge that would require
    compliance with treatment.  As well,
amicus curiae
sought to pursue an
    argument concerning the availability of provisions in the
Mental Health Act
, R.S.O. 1990,
c
. M. 7 as
    relevant to the discharge argument.

[11]

We declined to hear
amicus curiaes
argument on these points for two reasons.  First, as we have said, the appellant has
    abandoned his appeal of the disposition to the extent the ORB refused him a
    conditional discharge.   Second, since
    the Board concluded that there was no air of reality to the appellants
    conditional discharge, it saw no need to evaluate whether the appellants
    consent to treatment under a conditional discharge order has any meaning in
    law.  Similarly, the Board saw no need
    to consider the application of the
Mental
    Health Act
provisions.  In our view,
    the proposed legal arguments are not raised on the facts of this case,
    particularly given the significant body of evidence that supported the
    appellants continued detention at the time of the hearing and the rejection of
    a discharge as a potential disposition.

[12]

That said, during argument, we expressed concern
    about the apparent delay in proceeding with the appellants outstanding
    medication consultation.  In response,
    counsel for the hospital assured the court that the panel conducting the next
    ORB review would be presented with the results of the consultation, including
    recommendations that may permit the appellants illness to be managed while he
    lives in the community.  This would provide
    the next panel with information important for the determination of an
    appropriate disposition.

[13]

In the result, the appeal must be dismissed.

RELEASED:  Mar 3, 2011
                                                                 K.
    Feldman J.A.

KF                                                                                S.E.
    Lang J.A.

H.S.
    LaForme J.A.