[1]               On January 8, 2010, I granted an initial order pursuant to the provisions of the Companies’ Creditors Arrangement Act (“CCAA”) in favour of Canwest Publishing Inc. (“CPI”) and related entities (the “LP Entities”). As a result of this order and subsequent orders, actions against the LP Entities were stayed.  This included a class proceeding against CPI brought by Heather Robertson in her personal capacity and as a representative plaintiff (the “Representative Plaintiff”).  Subsequently, CPI brought a motion for an order approving a proposed notice of settlement of the action which was granted. CPI and the Representative Plaintiff then jointly brought a motion for approval of the settlement of both the class proceeding as against CPI and the CCAA claim.  The Monitor supported the request and no one was opposed.  I granted the judgment requested and approved the settlement with endorsement to follow.  Given the significance of the interplay of class proceedings with CCAA proceedings, I have written more detailed reasons for decision rather than simply an endorsement. 

[2]               The Representative Plaintiff commenced this class proceeding by statement of claim dated July 25, 2003 and the action was case managed by Justice Cullity.  He certified the action as a class proceeding on October 21, 2008 which order was subsequently amended on September 15, 2009. 

[3]               The Representative Plaintiff claimed compensatory damages of $500 million plus punitive and exemplary damages of $250 million against the named defendants, ProQuest Information and Learning LLC, Cedrom-SNI Inc., Toronto Star Newspapers Ltd., Rogers Publishing Limited and CPI for the alleged infringement of copyright and moral rights in certain works owned by class members.  She alleged that class members had granted the defendants the limited right to reproduce the class members’ works in the print editions of certain newspapers and magazines but that the defendant publishers had proceeded to reproduce, distribute and communicate the works to the public in electronic media operated by them or by third parties. 

[4]               As set out in the certification order, the class consists of:

[5]               As part of the CCAA proceedings, I granted a claims procedure order detailing the procedure to be adopted for claims to be made against the LP Entities in the CCAA proceedings.  On April 12, 2010, the Representative Plaintiff filed a claim for $500 million in respect of the claims advanced against CPI in the action pursuant to the provisions of the claims procedure order.  The Monitor was of the view that the claim in the CCAA proceedings should be valued at $0 on a preliminary basis.

[6]               The Representative Plaintiff’s claim was scheduled to be heard by a claims officer appointed pursuant to the terms of the claims procedure order.  The claims officer would determine liability and would value the claim for voting purposes in the CCAA proceedings. 

[7]               Prior to the hearing before the claims officer, the Representative Plaintiff and CPI negotiated for  approximately two weeks and ultimately agreed to settle the CCAA claim pursuant to the terms of a settlement agreement.

[8]               When dealing with the consensual resolution of a CCAA claim filed in a claims process that arises out of ongoing litigation, typically no court approval is required.  In contrast, class proceeding settlements must be approved by the court.  The notice and process for dissemination of the settlement agreement must also be approved by the court.

[9]               Pursuant to section 34 of the Class Proceedings Act, the same judge shall hear all motions before the trial of the common issues although another judge may be assigned by the Regional Senior Judge (the “RSJ”) in certain circumstances.  The action had been stayed as a result of the CCAA proceedings.  While I was the supervising CCAA judge, I was also assigned by the RSJ to hear the class proceeding notice and settlement motions.

[10]           Class counsel said in his affidavit that given the time constraints in the CCAA proceedings, he was of the view that the parties had made reasonable attempts to provide adequate notice of the settlement to the class.  It would have been preferable to have provided more notice, however, given the exigencies of insolvency proceedings and the proposed meeting to vote on the CCAA Plan, I was prepared to accept the notice period requested by class counsel and CPI.

[11]           In this case, given the hybrid nature of the proceedings, the motion for an order approving notice of the settlement in both the class action proceeding and the CCAA proceeding was brought before me as the supervising CCAA judge.  The notice procedure order required:

[12]           The notice order allowed class members to file a notice of appearance on or before a date set forth in the order and if a notice of appearance was delivered, the party could appear in person at the settlement approval motion and any other proceeding in respect of the class proceeding settlement.  Any notices of appearance were to be provided to the service list prior to the approval hearing.  In fact, no notices of appearance were served.

[13]           In brief, the terms of the settlement were that:

[14]           The claims in the action in respect of CPI would be fully settled but the claims which also involved ProQuest would be preserved.  The licence was a non-exclusive licence to reproduce one or more copies of the freelance subject works in electronic media and to authorize others to do the same.  The licence excluded the right to licence freelance subject works to ProQuest until such time as the action was resolved against ProQuest, thereby protecting the class members’ ability to pursue ProQuest in the action.  The settlement did not terminate the lawsuit against the other remaining defendants.  Under the CCAA Plan, all unsecured creditors, including the class, would be entitled to share on a pro rata basis in a distribution of shares in a new company.  The Representative Plaintiff would share pro rata to the extent of the settlement amount with other affected creditors of the LP Entities in the distributions to be made by the LP Entities, if any.

[15]           After the notice motion, CPI and the Representative Plaintiff brought a motion to approve the settlement.  Evidence was filed showing, among other things, compliance with the claims procedure order.  Arguments were made on the process and on the fairness and reasonableness of the settlement.

[16]           In her affidavit, Ms. Robertson described why the settlement was fair, reasonable and in the best interests of the class members:

[17]           In the affidavit filed by class counsel, Anthony Guindon of the law firm Koskie Minsky LLP noted that he was not in a position to ascertain the approximate dollar value of the potential benefit flowing to the class from the potential share in a pro rata distribution of shares in the new corporation.  This reflected the unfortunate reality of the CCAA process.  While a share price of $11.45 was used, he noted that no assurance could be given as to the actual market price that would prevail.  In addition, recovery was contingent on the total quantum of proven claims in the claims process.  He also described the litigation risks associated with attempting to obtain a lifting of the CCAA stay of proceedings.  The likelihood of success was stated to be minimal.   He also observed the problems associated with collection of any judgment in favour of the Representative Plaintiff.  He went on to state:

[18]           The Monitor was also involved in the negotiation of the settlement and was also of the view that the settlement agreement was a fair and reasonable resolution for CPI and the LP Entities’ stakeholders.  The Monitor indicated in its report that the settlement agreement eliminated a large degree of uncertainty from the CCAA proceeding and facilitated the approval of the Plan by the requisite majorities of stakeholders.  This of course was vital to the successful restructuring of the LP Entities.  The Monitor recommended approval of the settlement agreement.

[19]           The settlement of the class proceeding action was made prior to the creditors’ meeting to vote on the Plan for the LP Entities. The issues of the fees and disbursements of class counsel and the ultimate distribution to class members were left to be dealt with by the class proceedings judge if and when there was a resolution of the action with the remaining defendants.

[20]           Both motions in respect of the settlement were heard by me but were styled in both the CCAA proceedings and the class proceeding. 

[21]           As noted by Jay A. Swartz and Natasha J. MacParland in their article “Canwest Publishing – A Tale of Two Plans”[1]:

[22]           Certainly the court has jurisdiction to approve a CCAA settlement agreement.  As stated by Farley J. in Re Lehndorff General Partner Ltd.,[2] the CCAA is intended to provide a structured environment for the negotiation of compromises between a debtor company and its creditors for the benefit of both.  Very broad powers are provided to the CCAA judge and these powers are exercised to achieve the objectives of the statute.  It is well settled that courts may approve settlements by debtor companies during the CCAA stay period:  Re Calpine Canada Energy Ltd.[3]; Re Air Canada[4]; and Re Playdium Entertainment Corp.[5] To obtain approval of a settlement under the CCAA, the moving party must establish that: the transaction is fair and reasonable; the transaction will be beneficial to the debtor and its stakeholders generally; and the settlement is consistent with the purpose and spirit of the CCAA. See in this regard Re Air Canada[6] and Re Calpine.[7]

[23]           The power to approve the settlement of a class proceeding is found in section 29 of the Class Proceedings Act, 1992[8].  That section states:

[24]           The test for approval of the settlement of a class proceeding was described in Dabbs v. Sun Life Assurance Co. of Canada[9].  The court must find that in all of the circumstances the settlement is fair, reasonable and in the best interests of those affected by it.  In making this determination, the court should consider, amongst other things:

[25]           A perfect settlement is not required.  As stated by Sharpe J. (as he then was) in Dabbs v. Sun Life Assurance Co. of Canada[10]:

[26]           Where there is more than one defendant in a class proceeding, the action may be settled against one of the defendants provided that the settlement is fair, reasonable and in the best interests of the class members:  Ontario New Home Warranty Program et al. v. Chevron Chemical et al.[11] 

[27]           I concluded that the settlement agreement met the tests for approval under the CCAA and the Class Proceedings Act. 

[28]           As a general proposition, settlement of litigation is to be promoted.  Settlement saves time and expense for the parties and the court and enables individuals to extract themselves from a justice system that, while of a high caliber, is often alien and personally demanding.  Even though settlements are to be encouraged, fairness and reasonableness are not to be sacrificed in the process.

[29]           The presence or absence of opposition to a settlement may sometimes serve as a proxy for reasonableness.  This is not invariably so, particularly in a class proceeding settlement.  In a class proceeding, the court approval process is designed to provide some protection to absent class members.

[30]           In this case, the proposed settlement is supported by the LP Entities, the Representative Plaintiff, and the Monitor.  No one, including the non-settling defendants all of whom received notice, opposed the settlement. No class member appeared to oppose the settlement either.

[31]           The Representative Plaintiff is a very experienced and sophisticated litigant and has been so recognized by the court.  She is a freelance writer having published more than 15 books and having been a regular contributor to Canadian magazines for over 40 years. She has already successfully resolved a similar class proceeding against Thomson Canada Limited, Thomson Affiliates, Information Access Company and Bell Global Media Publishing Inc. which was settled for $11 million after 13 years of litigation.  That proceeding involved allegations quite similar to those advanced in the action before me.  In approving the settlement in that case, Justice Cullity described the involvement of the Representative Plaintiff in the class proceeding:

[32]           The settlement agreement was recommended by experienced counsel and entered into after serious and considered negotiations between sophisticated parties.  The quantum of the class members’ claim for voting and distribution purposes, though not identical, was comparable to the settlement in Robertson v. Thomson Canada.  In approving that settlement, Justice Cullity stated:

[33]           In my view, Ms. Robertson’s and Mr. Guindon’s description of the litigation risks in this class proceeding were realistic and reasonable. As noted by class counsel in oral argument, issues relating to the existence of any implied license arising from conduct, assessment of damages, and recovery risks all had to be considered.  Fundamentally, CPI was in an insolvency proceeding with all its attendant risks and uncertainties.  The settlement provided a possible avenue for recovery for class members but at the same time preserved the claims of the class against the other defendants as well as the claims against ProQuest for alleged violations attributable to CPI content.  The settlement brought finality to the claims in the action against CPI and removed any uncertainty and the possibility of an adverse determination.  Furthermore, it was integral to the success of the consolidated plan of compromise that was being proposed in the CCAA proceedings and which afforded some possibility of recovery for the class.  Given the nature of the CCAA Plan, it was not possible to assess the final value of any distribution to the class. As stated in the joint factum filed by counsel for CPI and the Representative Plaintiff, when measured against the litigation risks, the settlement agreement represented a reasonable, pragmatic and realistic compromise of the class claims. 

[34]           The Representative Plaintiff, Class Counsel and the Monitor were all of the view that the settlement resulted in a fair and reasonable outcome.  I agreed with that assessment.  The settlement was in the best interests of the class and was also beneficial to the LP Entities and their stakeholders.  I therefore granted my approval.