Same as it ever was? Divisional Court sets out Ontario law on honoraria in Doucet et al. v The Royal Winnipeg Ballet et al.

In March of 2022, we blogged about honoraria and observed that while Ontario was trending towards a more permissive approach where such payments are commonly approved, Justice Perell’s decision in Doucet v The Royal Winnipeg Ballet, 2022 ONSC 976 (“Doucet”),was an outlier that took Ontario law in the opposite direction, condemning the practice altogether.  

Doucet was a case about mass sexual abuse at the Royal Winnipeg Ballet. It is the kind of case where an honorarium is reasonable to request—in addition to the significant duties that come with being a representative plaintiff, in sexual abuse cases, representative plaintiffs are retraumatized by reliving their experiences. It is an important job, and someone must do it for the class action to proceed.

On the motion for settlement approval in the lower court, class counsel requested that $70,000 be deducted from the settlement for payments to Ms. Doucet, her common law partner, and three other class member witnesses in recognition of their service to the class. This was a relatively big ask, on the high end of historical honoraria. However, rather than using the court’s discretion to reduce that amount, Justice Perell (who had approved honoraria prior to this decision) declined to make any award at all. In doing so, he departed from the established Ontario jurisprudence, holding that “the practice [of awarding honoraria] is wrong” and “should be stopped as a matter of principle”.

Our last post contrasted Justice Perell’s approach in Doucet with the one taken by Justice Akbarali a few weeks later in Redublo v CarePartners, 2022 ONSC 1398 (“Redublo”), a case regarding a cyber breach. In Redublo, Justice Akbarali granted the payment of a $5,000 honorarium to each representative plaintiff and went the opposite direction from Doucet—holding that honoraria should be awarded wherever “a representative plaintiff, or other involved class member, has provided competent service coupled with positive results to the class”. Justice Akbarali disagreed with the concerns Justice Perell raised in Doucet, and concluded:

not only would I continue the practice of awarding honoraria, but in my view, the approach adopted by the British Columbia Court of Appeal, and which has been creeping into Ontario…better recognizes the role that honoraria can play in advancing the objectives of the CPA (Redublo at para 113)

We said Justice Akbarali’s approach was better because it furthered the objectives of class proceedings by providing an incentive to representative plaintiffs to step forward and take an active role in advancing their case. This was consistent with the then-trend towards courts more regularly awarding honoraria to representative plaintiffs in Ontario.

This post is about the appeal of Doucet, 2023 ONSC 2323 (the “Appeal”), released by the Divisional Court near the end of April 2023.

The Doucet plaintiffs appealed Justice Perell’s settlement approval order to the Divisional Court specifically on the issue of the denied honoraria. In the result, the Court decided to award a modest payment of $7,500 to Ms. Doucet but declined to make any award to her common law partner and the three class member witnesses.

Honoraria are an interesting creature because of their ethical pitfalls. Courts have long struggled with the idea of “bonus” payments to litigants because they may give rise to conflicts of interest, particularly where the amounts are not small compared to what the rest of the class recovers. There is an argument that representative plaintiffs might be tempted to act in self-interest where the potential exists for preferential treatment.

Another reason courts struggle with honoraria is because of the principle that litigants are not rewarded for doing the things that they are required to do as part of the litigation process. We have an adversarial system that requires evidence to be tested by way of, for example, cross-examination. While a party might not enjoy the process of being cross-examined, that’s part and parcel of suing in a lawsuit. As the Court strongly states in the reasons:

One need only turn to the criminal justice system and ask why victims are not given monetary awards for their participation, reliving traumatic events and having those experiences tested and challenged in the course of the administration of justice. They may be compelled to testify. They may be subjected to aggressive cross-examination. Their testimony is critical to the workings of the criminal justice system. They get no monetary trophy (para 77)

This logic is compelling, but it also misses the mark because the civil justice system is aimed at recovering compensation for victims. Put simply, the recovery of money is why plaintiffs, and class member witnesses for that matter, participate in the process to the extent they are required to do so. That is the very justice the system is intended to provide. Also, being a representative plaintiff is a lot of work and in some circumstances—like Doucet—it can be a profoundly difficult role to fulfill.

Up until very recently, Ontario courts appear to have recognized the value in awarding honoraria, granting them with relative frequency. This is borne out in the empirical data: Amicus Curae on the Appeal did a study finding that 80% of requests are approved, and that larger payments to representative plaintiffs are becoming more frequent.

On the Appeal, the Court weighed the ethical issues discussed above, reviewed the relevant caselaw, and (re)stated the law on honoraria in Ontario. It turns out, it’s the same as it ever was:

The principles set out in the prior jurisprudence, which provide that a modest payment to the representative plaintiff could be available in exceptional circumstances, should be followed. Those principles provide that these payments should be rare, not routine, and should be modest. They should foster the goals of class proceedings while addressing significant concerns about an apparent conflict of interest between recipients of these payments and other class members.

In essence, the Divisional Court tells us that lower courts have been getting it wrong by granting honoraria too broadly, but it is also incorrect to never award them. Rather, they should be awarded in very select circumstances. 

Class counsel should pay particular attention to paragraph 92 of the Appeal. There, the Court provides a set of criteria distilled from the cases that Ontario courts will consider in assessing whether to award honoraria:

1. The nature of the case, including whether the representative plaintiff brings forward a claim (such as for sexual abuse) in which they expose themselves to re-traumatization for the benefit of the class.
2. The nature of the remedies available for the cause of action asserted, particularly cases where even complete success would lead to only a tiny monetary remedy for each class member or none at all.
3. The steps taken by the representative plaintiff, who must do more than taking an active role and fulfilling the normal steps required in class proceedings, achieving a settlement.  Exceptional circumstances include enduring significant additional personal or financial hardship in connection with the prosecution of the class proceeding.
4. The rationale for the requested payment, which must not be added compensation for losses or damages that fall within the potential remedies available for the causes of action asserted in the claim itself or for the necessary steps to fulfill the responsibilities of a representative plaintiff.
5. The exposure to a real risk of an adverse costs award.
6. The quantum of the requested payment, which must be modest both in general terms and in relation to the remedies available to the class members in the settlement.

In light of these criteria, the Court found that Ms. Doucet was deserving of a modest award. The subject matter of the case, and the fact that Ms. Doucet had to relive her trauma, favoured approving a modest payment. However, the other representative plaintiff, and the three class member witnesses just did what they had to do. In coming to the amount of $7,500, the Court specifically considered what other class members would get (averaging around $80,000) and found that $7,500 was appropriately “modest” so as not to create a conflict of interest.

The Doucet Appeal is a strong message from the Divisional Court that there are established principles on honoraria in Ontario that must be followed, and which are more restrictive than they have been treated as of late.  According to the panel, honoraria were always intended to be rare, and should only awarded in exceptional circumstances. The Court has directed that Ontario trend back towards these principles.

Although the law is effectively the same, this decision may have a real impact on representative plaintiffs depending on the kind of case that is advanced. For example, in securities cases it will be challenging to argue there is any risk of “re-traumatization for the benefit of the class”.  On the other hand, other types of cases may be unaffected, including those with facts that are similar to the those alleged in Doucet.