Canadian Lawyer

10 N O V E M B E R / D E C E M B E R 2 0 1 8 w w w . c a n a d i a n l a w y e r m a g . c o m R E G I O N A L W R A P O N T A R I O COURT AWARDS OVER $28M DAMAGES AGAINST FIRM T he Ontario Superior Court of Justice said Trillium Motor World Ltd. is entitled to $28,745,304 in damages against Cas- sels Brock & Blackwell LLP and said Cassels Brock is responsible for the adminis- tration of the settlement in a class action suit. The judge's damages award was less than the $33.5 million submitted by the opposing counsel, David Sterns and Andy Seretis of Sotos LLP and Bryan Finlay, Marie-Andrée Vermette and Michael Statham of WeirFoulds LLP. The 2018 case dealt with two issues: the costs of the administration of the settle- ment and the quantification of damages, Justice Thomas McEwen wrote in the decision. Vermette says the case is a reminder to the profession to keep an eye out for conflicts of interest. "Justice McEwen found Cassels to be liable on three different grounds, but the Court of Appeal really just focused on the conflict of interest issue," Vermette says. "So, I think the legal profession should take this as a cautionary tale and just be careful with conflicts." Aside from the damages award, McEwen decided that it was fair for Cassels Brock to be ordered to pay administration costs, estimated to be capped at $100,000. Cassels Brock said it was unable to comment on the case. "In my view, it was cer- tainly within the reasonable expectation of Cassels that the Administration Costs would be borne by them if they were unsuccessful in the litigation," McEwen wrote. The Oct. 10 decision, Trilli- um Motor World Ltd. v. Cassels Brock & Blackwell LLP, is the latest development in a long- running dispute surrounding Trillium Motor World Ltd. and General Motors of Canada Ltd. The fight involves the negotia- tion of "the largest government subsidy given to a corporation in Canadian history," according to Sotos LLP. The dispute dates to the "heights of the financial crisis," when "dangerously close to the edge of insolvency," General Motors Canada nixed around 200 dealers, McEwen wrote in a 2015 decision, Trillium Motor World Ltd. v. General Motors of Canada Ltd. Cassels Brock was retained to represent Canadian dealers in a GM restructuring bankruptcy, where General Motors Canada was a wholly owned subsidiary of General Motors Corporation. In 2015, McEwen said that Cassels Brock breached contractual and fiduciary duties and was negligent by accepting the GM dealers' retainer despite having already agreed to act for the federal government through Industry Canada. "Cassels knew about this conflict from the outset; yet, rather than declining to act for the GMCL dealers and refer- ring the dealers to an uncon- flicted law firm, or even telling the dealers about the retainer with the Federal Government, Cassels continued to act for both the Federal Government and the dealer," McEwen wrote. "As a result of these breach- es, the Class Members, who were offered compensation which represented a fraction of the value of their dealerships, lost the opportunity to negoti- ate with GMCL for increased wind-down payments." Trillium Motor World, which was a Scarborough, Ont. Pontiac, GMC and Buick deal- er, was a representative plaintiff on behalf of class members that signed wind-down agree- ments, McEwen wrote in his 2015 decision. In 2015, after a 41-day trial, McEwen awarded class members aggregate damages of $45 million, which Cassels Brock's general counsel said the firm would appeal. In 2016, McEwen further clari- fied his decision, including specifying the damages be awarded to the members of the class that retained Cassels Brock in 2009. Last year, the Court of Appeal decided the damages should be less than $45 mil- lion, allowing an appeal on the trial judge's quantification of damages, Justice Eleanore Cronk wrote in the 2017 deci- sion, with justices Katherine van Rensburg and Gladys Pardu concurring. After reducing the start- ing point of the damages, the Court of Appeal returned the damages issue to the trial judge. The Court of Appeal decision said that the trial judge should account for a group deemed "Participation Form Dealers." "[Justice McEwen] answered the question on an arithmetical basis," Statham says. "Both the plaintiff and Cassels had a range of other submissions on ways of tack- ling that question that were not just straight-line arithmetic. . . . taking into account who some of the 141 dealers were and whether they had bargain- ing power and so forth. So, both sides, in coming up with alternative calculations, were positing something other than straight-line arithmetic." Margaret Waddell of Wad- dell Phillips Barristers PC in Toronto, says the issue of aggregate damages is unique in the class-action world, as the court has more flexibility than in traditional litigation. Waddell, who was not involved in the case, says that since many cases are settled rather than going to trial, this case is somewhat unusu- al by spelling out the admin- istration costs: the expenses of getting the money out to the class members. She says McEwen's decision is consistent with what usually happens when a case goes to trial in that it indicates that the party that must pay administration costs is the party that engaged in the wrongful conduct. — Anita Balakrishnan "I think the legal profession should take this as a cautionary tale and just be careful with conflicts." Marie-Andrée Vermette, WeirFoulds LLP

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