CPP rule prevents fees being paid

Judge says ruling shouldn’t affect future class-action lawsuits

While same-sex couples fought for and won full access to Canada Pension Plan (CPP) survivor benefits in the class-action lawsuit Hislop v. Canada (Attorney General of Canada) in 2003, their lawyers are now fighting for their pay.

Four years ago, Justice Ellen Macdonald of the Ontario Superior Court of Justice approved a retainer agreement that the class-action lawyers be paid 50 per cent of certain pension arrears to cover about $15 million in legal fees.

But recently, lawyers for the federal government challenged this deal. And ultimately, on Feb. 29, 2008, Justice Ellen Macdonald agreed that the CPP invalidates the agreement, through section 65, a clause meant to protect pensioners by preventing pension funds from being transferred or claimed by others.

In developing the fee agreement, the class-action lawyers relied on a section of Ontario’s Class Proceedings Act (CPA) that says “amounts owing under an enforceable agreement are a first charge on any settlement funds or monetary award.”
And in response to the attorney general challenge, they said there was a distinction between amounts “normally payable” under the CPP, which comprise future benefits and 11 months of statutory arrears, and other sums netted by the class members because of the original violation of the Charter of Rights.

They argued section 65 is only intended to shelter these “normally payable” benefits and the prejudgment arrears of their claim should not be sheltered. And even if this section is found in conflict with the CPA, they said the act “should trump in a paramountcy analysis.”

The class-action lawyers also said they incurred significant risk taking on this case and “the court should be wary of either undermining the access to justice principles in the CPA or discouraging qualified counsel from acting in similar cases.”

However, the federal lawyers said Hislop’s judgments “amount to a bare declaration of unconstitutionality” and the award was a declaration of entitlement and not a monetary award. Section 65, they said, “is clear and unambiguous and expressly prohibits the requested charge” and “was enacted to address precisely the sort of relief sought in this motion that is to prevent assignments and defeat attachments to pensions granted by the CPP.”

The two key questions, said Macdonald, was whether the award was a “monetary judgment” and whether the CPP precluded the fees request. If the answer was “yes” to both, which statute should prevail? In the end, she interpreted the award as a declaration of entitlement to retroactive and future benefits, “which happens to take a form akin to monetary damages, rather than an award for monetary damages themselves.”

The class members are now entitled to CPP benefits, she said, and section 65 “uses the broadest possible language to indicate that such benefits may not be encumbered in any way, voluntarily or otherwise... In this situation of legislative conflict… the CPA cannot prevail over section 65 of the CPP.”

She denied the motion of the class-action lawyers, adding, “I am not persuaded that this result will deter future class actions or frustrate the access to justice principles embodied in the CPA.”

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