Roman Catholic Episcopal Corporation of St. John’s (Re), 2022 NLSC 22

February 23, 2022

When will the court appoint representative counsel in a mass tort insolvency case?

The Applicants had claims for damages against the Roman Catholic Episcopal Corporation of St. John’s (the “Corporation”) for abuse by Christian Brothers while they lived at Mount Cashel Orphanage in St. John’s in the late 1940s and 1950s. More than one hundred others were also looking for redress against the Corporation. The Corporation retained a trustee to develop a process for it to meet its obligations to its creditors, who were mostly the claimants. The claimants agreed to forbear executing their judgments to allow the Corporation and the Trustee to develop a framework to recover funds from the assets of the Corporation to pay their damages.

One of the Applicants applied for three orders, including one appointing two law firms as representative counsel for all claimants. Superior Courts in Canada have jurisdiction under section 11 of the Companies’ Creditors Arrangement Act to appoint representative counsel, and the same discretion is available to those courts under section 183(1) of the Bankruptcy and Insolvency Act. The factors that have been considered by courts in granting these orders include:

  1. the vulnerability and resources of the group sought to be represented;

  2. any benefit to the companies under CCAA protection;

  3. any social benefit to be derived from representation of the group;

  4. the facilitation of the administration of the proceedings and efficiency;

  5. the avoidance of a multiplicity of legal retainers;

  6. the balance of convenience and whether it is fair and just, including to the creditors of the estate;

  7. whether representative counsel has already been appointed for those who have similar interests to the group seeking representation and who is also prepared to act for the group seeking the order; and

  8. the position of other stakeholders and the Monitor.

The representative Applicant was 81 years old. He had been actively involved in this litigation for the past 22 years. He knew many of the claimants personally and had maintained contact with them over the years. He testified that many of the members of the claimant group were elderly, and some had died. The claimants had a deep distrust of the Corporation, given its past denial of any liability for the abuse that they suffered. For them all to participate as individuals in this proceeding would be very difficult and would, in some cases, challenge their failing strength.

The Corporation had undertaken the complex and intense work of compiling detailed lists of its assets and valuing them. The process would take time, during which the two groups would have to maintain an ongoing dialogue. The Corporation could not communicate directly with the claimants, because many likely would not care to do so while others would lack the skill and sophistication to be engaged in those discussions. As well, the disparate number of claimants would be a complex interface for the Corporation that would surely hamper the timeliness and efficacy of the undertaking. Representative Counsel would simplify the contact between the Corporation and the claimants, enabling the work to get done and delivered effectively and efficiently.

The Court also noted that the claimants had waited patiently for this process to resolve to be compensated for the abuse they suffered as children. Taking that burden from them by finishing this work was reason enough to complete it as efficiently and effectively as possible. Competent counsel representing them all was critically important to delivering those results. The Court was satisfied that the counsel in question had the requisite knowledge of this file and the experience with this genre of litigation, as well as a genuine interest in the matter, to move it forward quickly and effectively.

Finally, there was a risk that the proceedings would languish and get mired in procedural minutiae if the Corporation were left to deal with a hundred or more claimants, some without counsel. Representative Counsel for all claimants would provide a single point of contact between them and the Corporation, which would lessen the consultation time between the Corporation and the claimants, reduce the logistical challenges broader contact would require, and expedite communication with the claimants to obtain their consent and approvals as required.

Accordingly, the Court concluded that the proposed order fulfilled the two “primary rationales” of representative proceedings: to provide effective communication with stakeholders and ensure that their interests are brought to the attention of the Court and other CCAA participants, and to bring increased efficiency and cost effectiveness to the proceedings as a whole. The Court granted the Order sought.

Judge: Justice Garrett A. Handrigan

Counsel: Clifton P. Prophet and Thomas Gertner of Gowling WLG (Canada) LLP and Geoffrey E. Budden, Paul A. Kennedy and Jennifer Helleur of Budden & Associates as representative counsel for claimants; Geoffrey L. Spencer of McInnes Cooper for the Roman Catholic Episcopal Corporation of St. John’s; Maurice Chiasson, Q.C., Joseph J. Thorne of Stewart McKelvey for Ernst & Young Inc. as trustee; Joe Fiorante, Q.C. of Camp Fiorante Matthews Mogerman LLP, Grant B. Moffatt of Thornton Grout Finnigan LLP, Robert W. Buckingham of Bob Buckingham Law, Henry G. Mugford of Stack and Associates, Andrew J. Martin of Morris Martin Moore and Andrew J. Conway of Rogers Rogers Moyse Personal Injury Law for other anonymous claimants and creditors

By Matilda Lici