ONTARIO SUPERIOR COURT OF JUSTICE - Koskie …€¦ · · 2016-03-21ontario superior court of...
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BETWEEN: Court File No.: CV-11-431153-00CP ONTARIO SUPERIOR COURT OF JUSTICE THE TRUSTEES OF THE LABOURERS' PENSION FUND OF CENTRAL AND EASTERN CANADA, THE TRUSTEES OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 793 PENSION PLAN FOR OPERATING ENGINEERS IN ONTARIO, SJUNDE AP-FONDEN, DAVID GRANT, ROBERT WONG, DAVIS NEW YORK VENTURE FUND, INC. and DAVIS SELECTED ADVISERS, L.P. Plaintiffs -and- SINO-FOREST CORPORATION, ERNST & YOUNG LLP, BDO LIMITED (formerly known as BDO MCCABE LO LIMITED), ALLEN T.Y. CHAN, W. JUDSON MARTIN, KAI KIT POON, DAVID J. HORSLEY, WILLIAM E. ARDELL, JAMES P. BOWLAND, JAMES M.E. HYDE, EDMUND MAK, SIMON MURRAY, PETER WANG, GARRY J. WEST, POYRY (BEIJING) CONSULTING COMPANY LIMITED, CREDIT SUISSE SECURITIES (CANADA), INC., TD SECURITIES INC., DUNDEE SECURITIES CORPORATION, RBC DOMINION SECURITIES INC., SCOTIA CAPITAL INC., CIBC WORLD MARKETS INC., MERRILL LYNCH CANADA INC., CANACCORD FINANCIAL LTD., MAISON PLACEMENTS CANADA INC., CREDIT SUISSE SECURITIES (USA) LLC and MERRILL LYNCH, PIERCE, FENNER & SMITH IN CORPORA TED (successor by merger to Bane of America Securities LLC) Proceeding under the Class Proceedings Act, 1992 FACTUM OF THE MOVING PLAINTIFF INDEPENDENT DIRECTORS FEE APPROVAL (Returnable March 29, 2016) Defendants
Transcript of ONTARIO SUPERIOR COURT OF JUSTICE - Koskie …€¦ · · 2016-03-21ontario superior court of...
BETWEEN:
Court File No.: CV-11-431153-00CP
ONTARIO SUPERIOR COURT OF JUSTICE
THE TRUSTEES OF THE LABOURERS' PENSION FUND OF CENTRAL AND EASTERN CANADA, THE TRUSTEES OF THE INTERNATIONAL UNION OF
OPERATING ENGINEERS LOCAL 793 PENSION PLAN FOR OPERATING ENGINEERS IN ONTARIO, SJUNDE AP-FONDEN, DAVID GRANT,
ROBERT WONG, DAVIS NEW YORK VENTURE FUND, INC. and DAVIS SELECTED ADVISERS, L.P.
Plaintiffs
-and-
SINO-FOREST CORPORATION, ERNST & YOUNG LLP, BDO LIMITED (formerly known as BDO MCCABE LO LIMITED), ALLEN T.Y. CHAN, W. JUDSON
MARTIN, KAI KIT POON, DAVID J. HORSLEY, WILLIAM E. ARDELL, JAMES P. BOWLAND, JAMES M.E. HYDE, EDMUND MAK, SIMON MURRAY, PETER
WANG, GARRY J. WEST, POYRY (BEIJING) CONSULTING COMPANY LIMITED, CREDIT SUISSE SECURITIES (CANADA), INC., TD SECURITIES INC.,
DUNDEE SECURITIES CORPORATION, RBC DOMINION SECURITIES INC., SCOTIA CAPITAL INC., CIBC WORLD MARKETS INC., MERRILL LYNCH CANADA INC., CANACCORD FINANCIAL LTD., MAISON PLACEMENTS
CANADA INC., CREDIT SUISSE SECURITIES (USA) LLC and MERRILL LYNCH, PIERCE, FENNER & SMITH IN CORPORA TED (successor by merger to Bane of
America Securities LLC)
Proceeding under the Class Proceedings Act, 1992
FACTUM OF THE MOVING PLAINTIFF INDEPENDENT DIRECTORS FEE APPROVAL
(Returnable March 29, 2016)
Defendants
March 21, 2016
TO: ATTACHED SERVICE LIST
SISKINDS LLP 680 Waterloo Street, Box 2520 London, ON N6A 3V8
A. Dimitri Lascaris (LSUC#: 50074A) Tel: (519) 660-7844 Fax: (519) 660-7845 Email: [email protected]
Serge Kalloghlian (LSUC#: 55557F) Tel.: (416) 594-4392 Fax: (416) 594-4393 Email: [email protected]
KOSKIE MINSKY LLP 900-20 Queen Street West, Box 52 Toronto, ON M5H 3R3
Kirk Baert (LSUC#: 309420) Tel: (416) 595-2117 Fax: (416) 204-2889 Email: [email protected]
Jonathan Ptak (LSUC#: 45773F) Tel: (416) 595-2149 Fax: (416) 204-2903 Email: [email protected]
Lawyers for the Ad Hoc Committee of Purchasers of the Applicant's Securities, including the Class Action Plaintiffs
Court File No. CV-12-9667 -00-CL
ONTARIO SUPERIOR C.OURT OF JUSTICE
(COMMERCIAL LIST)
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. c-36, AS AMENDED .
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF SINO-FOREST CORPORATION
TO: .BENNETT .JONES LLP 3400 One First Canadian Place, P.O. Box 130 Toronto, Ontario M5X 1A4
Robe1t W. Stale.y Tel: 416.777A857 Fax:. 416.~~3.1716 Email: [email protected]
Ke:v'ih Zych Tel: 416.777.5738 Email: zy·[email protected]
Derek LBell Tel: 4J6j77.4638 Email: be'[email protected].
Raj S. Salmi Tel: 416.777.4804 Email: [email protected]
Jonathan Bell Tel: 416.777.6511 Email: [email protected]
Sean Zweig Tel: 416.777.6254 Email: zweigs@bennet:ljones.com
SERVICE LIST (as at February 2015)
AND GO'WLING LAFLEUR HENDERSON'LLP TO: 1 First Canadian Place
100 King Street West, Suite 1600 Toronto, Ontario M5X I 05
Derrick Tay Tel: 416.369.7330 Fax: 416.862.7661 Email: [email protected]
Clifton Prophet Tel: 416.862.3509 Email: [email protected]
Jennifer Stam Tel: 416.862.5697 Email: jennifer.stam@gowl ings.com
Ava Kim Tel: 416.862.3560 Email: [email protected]
Lawyers for the Monitor
Lawyers for the Applicant, Sino-Forest Corporation
AND FTI CONSULTING CANADA INC. TO: T-D Waterhouse Tower
AND TO:
79 Wellington Street West Toronto-Dominion Centre, Suite 2010, P.O. Box 104 Toronto, Ontario M5K IG8
Greg Watson Tel: 416.649.8100 Fax: 416.649.8101 Emai 1: greg. [email protected]
Jodi Porcpa Tel: 416.649.8070 Email: [email protected]
Monitor
BAKER MCKENZIE LLP Brookfield Plac·e 2100-181 Bay Street Toronto, Ontarip M~J 2T3
John Pirie Tel: 416.865.2325 Fax: 416.863.6275 Em11il: [email protected]
David Gadsden Tel: 416.865.6983 Email: [email protected]
Lnwyers for Poyry (Beijing) Consulting Company Limited
AND AFFLECK GREENE MCMURTY LLP TO: 365 Bay Street, Snite 200
Toronto, Ontario M5H 2Y I
Peter Greene Tel: 41 6.360.28o:o Fax: 416.360.8767 Email: [email protected]
Kenneth Dekker Tel: 416.360.6902 Fox: 416.360.5960 Email: [email protected]
David Villaincourt Tel: -416.360.8100 Fax: 416.360.5960 Email: dvillaincourt@agmla\vyers.coin
Lawyers for BDO
AND TORYS LLP TO: 79 Wellington Street Wes~
Suite 3000, Box 270 Toronto-Dominion Centre Toronto, Ontario M5K 1N2
John Fabella Tel: 416.865.8228 Fax: 416.865.7380 Email: [email protected]
David Bish Tel: 416.865.7353 Email: [email protected]
Andrew Gmy Tel: 416.865.7630 Email: [email protected]
Lawyers for the Underwriters named in Class Aclions
AND LENCZNER SLAGHT ROYCE SMITH TO: GRIFFIN LLP
Suite 2600, 130 Adelaide Street West Toronto, Ontario M5H 3PS
Peter H. Griffin Tel: 416.865.9500 Fax: 416.865.3558 Email: [email protected]
Peter J. Osborne Tel: 416.865.3094 Fax: 4 I 6.865.3974 Email: [email protected]
Linda L. Fuerst Tel: 416.865.3091 Fax: 416.865.2869 Email: lf'[email protected]
Shara Roy Tel: 416.865.2942 Fax: 416.865.3973 Email: [email protected]
Lawyers for Ernst & Young LLP
AND MERCHANT LAW GROUP LLP TO: Saskatchewan Drive Plaza
100-2401 Saskatchewan Drive Regina, Saskatchewan S4P 41-18
E.F. Anthony Merchant, Q.C. Tel: 306.359.7777 Fax: 306.522.3299 [email protected]
Lawyers for the Plaintiffs re Saskatchewan action
AND GOODMANS LLP TO: 333 Bay Street, Suite 3400
T01:onto, Ontario MSH 2S7
Benjamin Zarnett Tel: 416.597.4204 Fax: 416.979.1234 Email: [email protected]
Robert Chadwick ·Tel: 416.597.4285 Email: [email protected]
Brendan O'Neill Tel: 416.979.2211 Email: [email protected]
Caroline Descours Tel: 416.597.6275 Email; [email protected]
Lawyers for Ad Hoc Committee of Bondholders
AND· ONTARIO SECURITmS COMMISSION TO: Suite 1900,20 Queen Street West
Toronto, Ontario MSH 3S8
Hugh Craig Senior Litigation Counsel Tel: 416.593.8259 Email: [email protected]
AND TO:
OSLER, HOSKIN & HARCOURT LLP I First Canndian Place I 0.0 King Street West Suite 6100, P.O. Box 50 Toronto, Ontario MSX IB8
Larry Lowenstein Tel:· 416.862.6454 Fax: 416.862.6666 Email: [email protected]
Edward Sellers Tel: 416.862.5959 Email: [email protected]
Geoffi"ey Grove Tel: ( 416) 862-4264 Email: ggrove@osleJ".com
. Lawyers for the Board of Directors of SinoForest Corporation
AND SISKINDS LLP TO: 680 Waterloo Street
P.O. Box 2520 London, 01itario N6A3V8·
A. ·oiinitri Lascaris· Tel: 519.660.7844 Fax: 519.672,6065 Email: dimitri.lascaris@siskinds;com
Charles M, Wright Tel: 519.660.7753 Email: Charles. [email protected]
Lawyers for an Ad Hoc Comrnittee of ·Purchasers of the Applicant's Securities, including the Representative Plaintiffs in the Ontario Class Action against the Applicant
AND TO:
COHEN MILSTEIN SELLERS & TOLL PLC 1100 New York, Ave., N.W. West Tower, Suite 500 Washington, D.C. 20005
Steven J. Toll Tel: 202.408.4600 Fax: 202.408-.4699 Email: [email protected]
Matthew B. Kaplan Tel: 202.408.4600 Email: mkaplan@cohenmilstein:com
Attorneys for the P·laintiff and th~ PJ'oposecl Class re. New York action
AND KOSKIE MINSKY LLP TO: 20 Queen Street West, Suite 900
Toronto, Ontario M5H 3R3
.Kirk M. Baert Tel: 416.595.2117 Fax: 416.204.2899 Email: [email protected]
Jonathan Ptak Tel: 416.595.2149 Fax: 4 16.204.2903 Email: [email protected]
Garth Myers Tel: 416.595.21 02 Fax: 416.977.3316 Email: [email protected]
Lawyers for an Ad Hoc Committee of Pi.1rchasers of the Applicant's Securities, including the Representative Plaintifts in the Ontario Class Action against the Applicant
AND TO:
COHEN MILSTEIN SELLERS & TOLL PLC 88 Pine Street, 14111 Floor New York, NY 10005
RichardS. Speirs Tel: 212.838.7797 Fax:. 212.838.7745 Email: [email protected]
Stefl\nie Ramirez Tel: 202.408.4600 Email: [email protected]
Attorneys for the Plaintiff and the Proposed Closs t·e New York action
AND THOMPSON HINE LLP TO: 335 Madison Avenue- 12111 Floor
New York, New York 10017-4611
Yesenia D. Batista Tel: 212.908.3912 Fax: 212.344.6101 -gmail: yescnia:[email protected] ine.com
Irving Apar Tel: 212.908.39.64 Email: [email protected]
Curtis L. Tuggle 3900 Key Center, 127 Public Square Cleveland, Ohio 44114 Tel: 216.566.5904 Fax: 216.566.5800 Emai 1: Cmtis. tuggle@thompson h ine.com
Lawyers for Senior Note Indenture Trustee
AND TO:
AND TO:
LAW DEBENTURE .T.RUST COMPANY .OF NEW YORK 400 Madison Avenue--4111 Floor }'lew York, NewYork 10017
James D. Heaney Tel: 646-747-1252 Fax: 212-750-!'361 Email: ja·[email protected]
Senior Note lndentu!'e Trustee
THE BANK OF NEW YORK MELLON Global Cm'porate Trust 10 I Barclay Street- 41h Floor East ·New York, New York 10286'
David M. Kerrj Vice President Tel: 212.8.15.56.50 Fax; 732.'667.9322 Email:. david ,tl)[email protected] ,yOTi1
Conve1iible· Note Indenture Trustee
AND THE BANK OF NEW YORK MELLON TO: 320 Bay Street, II'" Floor
Toronto, Ontario MSH 4A6
George Brllgg Tel: 416.933.8505 Fax: 4I6.360.1711/416.360.1737 Email: George:[email protected]
Convertible Note Indenture Trustee
AND WARDLE DALEY BERNSTEIN LLP TO: 2I 04-40 I Bay Street, P.O. Box 21
Toronto Ontal'io MSH 2Y4
Peter Wardle Tel: 416.351.2771 Fax: 416.351.9196 Ema'i.l: [email protected]
Simon Bieber Tel: 416.351.2781 Email: [email protected]
Erin Pleet Tel: 416.351.2774 Email: [email protected]
Lnwyers for David Horsley
AND THE BANK OF NEW YORK MELLON TO: 12/F Three Pacilic Ph1ce
I Queen's Road East, Hong Kong
Marelize Coetzee, Vice President Relationship Manager, Default Administration Group-APAC Tel: 852.2840.6626 Mobile: 852.953 8.50 I 0 Em a i 1: [email protected]
Grace Lau Emnil: [email protected]
Convertible Note Indenture Trustee
AND LINKLATERS LLP TO: I 0111 Floor, Alexandra House
18 Chater Road Hong Kong China
Melvin Sng Tel: 852 2901 5234 Fax: 852 2810 8133 Email: [email protected]
Lawyers for Sino-Forest Corporation (Hong Kong)
AND LINKLATERS LLP TO: 1 0111 Floor, Aiexandra House
18 Chatei· Road Hong Kong China
Hyung Aim Tel: ·ss2 2842 4199 Fax: 8.52 281 0 8 I 33 Email: [email protected]
Samantha Kim Tel: 852.2842 4197 Email: [email protected]
Jon Gray Tel: 852.2842.4188 Eri1ail: [email protected]
Lavvyers for Sino-Forest Corporation (U.S.)
AND l):ING AND WOOD MALLESONS TO: 9th Floor, Hutchison House
Central, Hong Kong Island Hon~ Kong (SAR)
Helena Huang Tel: 8.52.2848.4848 Email: [email protected]
·Tata Sun Tel: 852.2848.4848 Email: [email protected]
Lawyers for Sino-Forest Corporation (PRC)
A NO APPLEBY GLOBAL TO: .Jayla Place, Wickham's Cay!
AND TO:
P .0. Box~ 190, RoadTciwn Tortola VG Ill 0 BV.I
Eliot siillpSOil Tel: 284.852.5321 Fax: 284.494.7279 Email: [email protected]
Andrew Will ins Tel: 284 852 5323 Email: awilli)[email protected]
Andrew ~owett Tel: 284 852 5316 Email: [email protected]
Lawyers for Sino-Forest Corporation (BVI)
T.HORNTON GROUT FINNIGAN J.LP Stlite 3'200, 1 OQ Well.ington Stree.t West P. 0. Box 329, Toronto-Dominion Centre Toronto, Ontario MSK lK7
James H. ·a rout. Tel: 416.304.0557 Fax: 416.304.1313 Email:· [email protected]
Lawyers for the Ontario Securities Commission
AND McCARTHY TETRAULT LLP TO: Suite 2500, I 000 De La Gauchetiere St.
West Montreal, Quebec, H3B OA2
Alain N. Tardif Tel: 514.397.4274 Fax: 514.875.6246 Email: [email protected]
Mason Poplaw Tel: 514.397.4155 Email: [email protected]
Celine Legendre Tel: 514.397.7848 Email: [email protected]
Lawyers for Ernst & Young LLP
AND CHAITONS LLP TO: 5000 Yonge Street, l 0111 Floor
Toronto, Ontario M2N 7E9
Harvey G. Chaiton Tel: 416.218.1129 Fax: 416.218.1849 Ema.il: [email protected]
Lawyers for the Law Debenture Trust Company of New York
AND RUETER SCARGALL BENNETT LLP TO: 250 Yonge Street
Suite 2200 Toronto, Ontario MSB 2L7
Robert Rueter Tel: 416.869-3363 Email: [email protected]
Sara J. Erskine Tel: 416.597-5408 Email: [email protected]
Jason Beitchman Tel: '116.597 .5416 Email: [email protected]
Ltr1.vyers for Allan Chan
AND TO:
PA LIARE ROLAND ROSENBERG 'ROTHSTEIN LLP !55 Wellington Street, 35' 11 Floor Toronto, Ontario !'yi5V 31-1 I
Ken Rosenberg Tel: 416.646.4304 Fax: 416.646.430 I Email: [email protected]
Massimo (Max) Starnino Tel: 416.646.7431 Email: [email protected]
Lawyers for an Ad Hoc Committee of Purchasers of the Applicant's Securities, including the Representative Plaintiffs in the Ontario Class Action against the Applicant
AND ERNST & YOUNG LLP TO: .222 Bay Street, P.O. Box 251
Toronto, Ontario M5K 1J7
AND TO:
Mike P. Dean Tel: 416-943-2134 Fax: 416-943-3300 Email: [email protected]
FASKEN MARTINEAU LLP 333 Bay Street, Suite 2400, Bay-Adelaide Centre, Box 20 Toronto, Ontario MSH 2T6
Stumi Brotman Tel: 416.865.5419 Fax: 416.364.7813 Email: [email protected]
Conor O'Neill Tel: 416 865 4517 Em a i I: [email protected]
Cnnnclian Lnwycrs for the Convcttiblc Note Indenture Trustee (The Bank or New York Mellon)
AND LAPOINTE ROSENSTEIN TO: MARCHA-ND MELAN~~ON,
S.E.N;C.R.L.
AND TO:
1250, boul. Rene-Levesque Ouest, bmeau. 1400 Montreal (Quebec) Canada H3B 5E9
Bernard Gravel Tel: 514.925.6382 Fax; 51.4.925.5082 Email: [email protected]
Bruno Floriani Tel: 514.925.6310 Email: [email protected]
Quebec counsel for Poyi·y (Beiji1ig) Consulting Company Ltd.
DAVISLLP 1 First Canadi~n Place, Suite 60QO PO· I3ox36.7 100 King StreetWest Toronto, Ontario M.5X 1E2
Susan E. Friedman Tel: 416.365.3503 Fax: 416.777.7415 Email: sfi·[email protected]
Bruce Darlington Tel: 416.365.3529 Fax: 416.369.5210 Email: [email protected]
Brandon I3arnes Tel: 416.365.3429 Fax: 416.369.5241 Email: [email protected]
Lawyers for Kai Kat Poon
AND CLYDE & COMPANY TO: 390 Bay Street, Suite 800
Toronto, Ontario !VISH 2Y2
Maty Margaret Fox Tel: 416.366.4555 Fax: 416.366.6110 Email: marymargaret. fox@clydeco .. ca
Paul Emerson Tel: 4 I 6.366.4555 Email: [email protected]
Lmvycrs for ACE INA Insurance and Chubb Insurance Compmiy of Canada
AND RICKETTS, HARRIS LLP' TO: Suite 816, 181 University Ave
Toronto ON MSH 2X7
Gmy H. Luftspring Tel: 647.288.3362 Fax: 647.260.2220 Email: [email protected]
Lawyers for Travelers Insurance Company of Canada
AND DAVIES WARD PHILLIPS & TO: VINEBERG LLP
155 Wellington Street West Toronto, ON M5V 3.17
hy Swartz Tel: 416.863.5520 fax: 416.863.0871 Email:. jl]_warlz({il,h~pv .com
James Dot·is Tel: 416.367.6919 Fax: 416.863.0871 Email: jporis!lildwpv,conl
Canadian Counsel for the Plaintiff and the Proposed Class reNew York action
CLYDE & COMPANY 390 Bay Street, Suite 800 Toronto, Ontario M5H 2Y2
Mary Margaret Fox Tel: 416.366.4555 Fax: 416.366.6110 Email: [email protected]
Pau I Emerson Tel: 416.366.4555 Email: [email protected]
Lawyers fot' ACE INA Insurance and Chubb Insurance Company of Canada
TABLE OF CONTENTS
PART I- OVERVIEW OF THE MOTION ......................................................................... 4
PART II- THE FACTS .......................................................................................................... 5
A. Background of These Proceedings and Settlement with the Independent Directors ..... 5
B. Class Counsel's Time and Disbursements ..................................................................... 6
C. Fees Pursuant to the Retainer Agreements .................................................................... 7
D. Counsel's Efforts to Advance the Ontario Class Action .............................................. 10
E. Context of Contingency Fee retainers in Class Proceedings ....................................... 14
PART III- ISSUES AND THE LAW .................................................................................. 16
A. Approach to Fee Approval in Class Proceedings ......................................................... 16
B. Class Counsel's Fees and Disbursements are Fair and Reasonable ............................. 18
C. Conclusion: The Requested Fees Should be Approved ............................................... 21
PART IV- ORDER REQUESTED ..................................................................................... 21
SCHEDULE "A"- LIST OF AUTHORITIES ................................................................... 22
SCHEDULE "B"- RELEVANT STATUTES .................................................................... 23
PART I- OVERVIEW OF THE MOTION
1. The plaintiffs bring this motion for approval ofthe fees and disbursements ofSiskinds
LLP and Koskie Minsky LLP ("Class Counsel") in the amount of$43,750 (exclusive oftax)
for fees and $25,000 for disbursements. The requested fee amounts to 17.5% of the class
action settlement with William Ardell, James Bowland, James Hyde and Garry West (the
"Independent Directors").
2. In October 2015, the plaintiffs reached the settlement with the Independent Directors
(the "Independent Directors Settlement"). The Independent Directors Settlement provides
for payment of $250,000 by the Independent Directors in full settlement of all actions, causes
of actions, claims and/or demands which have or could have been made in relation to Sino-
Forest as against the Independent Directors, subject to court approval.
3. The fee request is fair and reasonable under all of the circumstances:
(a) The fee request is lower than what the retainer agreements between Class Counsel and the plaintiffs in the Ontario class action would allow.
(b) The requested fees here are below the range of percentages that Ontario courts have repeatedly endorsed as being fair and reasonable. As noted by Justice Strathy (as he then was) in Baker (Estate) v Sony BMG Music (Canada) Inc, fees in the range of 20% to 3 0% are very common in class proceedings and are repeatedly approved as fair and reasonable. 1
(c) The allegations, claims and basis for the case against the Independent Directors were distinct in fact and law from the case against the other defendants.
(d) Class Counsel took on significant risk for claims against the Independent Directors because of the possibility that they could not satisfy any judgment and had limited and diminishing insurance coverage which was being rapidly depleted by defense costs of multiple parties.
1 Baker (Estate) v Sony BMG Music (Canada) Inc, 2011 ONSC 7105 at para 63, Book of Authorities of the Moving Plaintifflndependent Directors Fee Approval ("Fee BOA"), Tab 1.
(e) As the Sino-Forest Plan of Compromise ("Plan") limited recovery on any claims against the Independent Directors to the available insurance proceeds, there was significant risk that there would be no recovery from the Independent Directors.
(f) Class Counsel took on the risk of no success, while at the same time having to devote a massive commitment of time, money and other resources to the prosecution of this action.
(g) Class Counsel is of the view that there is no evidence to suggest that the Independent Directors committed a fraud and the OSC did not make any allegations against the Independent Directors.
4. In summary, Class Counsel's requested fees and disbursements are fair and reasonable
under the circumstances and ought to be approved.
PART II- THE FACTS
A. Background of These Proceedings and Settlement with the Independent Directors
5. These proceedings relate to the precipitous decline of Sino-Forest Corporation
following allegations on June 2, 2011 that there was fraud at the company and that its public
disclosure contained misrepresentations regarding its business and affairs. 2
6. On July 20, 2011, this action was commenced against Sino-Forest, the Independent
Directors and other defendants in Ontario under the Class Proceedings Act, 1992. Siskinds
LLP and Koskie Minsky LLP are counsel to the plaintiffs in the Ontario class action.3
7. On March 30, 2012, Sino-Forest applied for and was granted protection from its
creditors pursuant to the Companies' Creditors Arrangement Act ("CCAA").4
2 Affidavit of Jonathan Ptak, sworn March 18, 2016 ("Ptak Fee Affidavit") at para 3, Motion Record of the Moving Plaintifflndependent Directors Fee Approval ("Fee MR"), Tab 2. 3 Ptak Fee Affidavit at para 4, Fee MR, Tab 2. 4 Ptak Fee Affidavit at para 5, Fee MR, Tab 2.
8. In October 2015, the plaintiffs reached the Independent Directors Settlement which
provides for payment of $250,000 by the Independent Directors in full settlement of all
actions, causes of actions, claims and/or demands which have or could have been made in
relation to Sino-Forest as against the Independent Directors, subject to court approval. 5
9. The settlement negotiations with the Independent Directors were conducted on an
adversarial, arm's length basis.6
B. Class Counsel's Time and Disbursements
10. Class Counsel and insolvency counsel have already expended more than $12.6 million
in docketed time (without HST) and more than $2.7 million in disbursements since this action
was commenced in June 2011. 7
11. Counsel has expended $187,819.57 in time and $108,560.21 in disbursements since
the hearing to approve the fee and disbursement request in connection with the Dealers
settlement on October 26, 2015. 8
12. Siskinds LLP and Koskie Minsky LLP have devoted a team of lawyers to the class
proceeding and insolvency proceeding. This was necessary given the complexity of factual
and legal issues and the volume of motions and other hearings brought at the same time and
often with short timelines. The work was properly allocated and divided to avoid duplication
of effort and to efficiently advance the litigation. 9
5 Ptak Fee Affidavit at para 18, Fee MR, Tab 2. 6 Ptak Fee Affidavit at para 34, Fee MR, Tab 2. 7 Ptak Fee Affidavit at para 21, Fee MR, Tab 2. 8 Ptak Fee Affidavit at para 22, Fee MR, Tab 2. 9 Ptak Fee Affidavit at para 24, Fee MR, Tab 2.
13. Class Counsel has also been assisted by the U.S. firm of Kessler Topaz Meltzer &
Check LLP, experts in United States securities law. Kessler Topaz has docketed time of
USD$405,147.00 and disbursements of USD$6,346.02. Consistent with the direction of
Ontario courts in other class proceedings, Kessler Topaz will be paid from the counsel fees
awarded to Class Counsel. In this case, Class Counsel has agreed that Kessler Topaz will be
paid from the overall fee request, as an agency fee. Accordingly, there is no additional fee
request for Kessler Topaz. 10
14. Considering the amount of work required, the steps taken, the division of work and
responsibility between the firms, the amount of time spent is reasonable. 11
C. Fees Pursuant to the Retainer Agreements
15. Class Counsel have acted in these proceedings on a contingency fee basis. They
collectively seek approval of $43,750, plus $5,687.50 in HST (totaling $49,437.50), plus
$25,000 for their disbursements incurred. This request for fees is less than the time value
incurred in respect of claims against the Independent Directors. 12
16. The retainers agreements between the plaintiffs and Class Counsel13 were approved by
order of this court dated December 27, 2013. The order provided that "the contingency fee
retainer agreement entered into between the plaintiffs and Class Counsel is approved ... " 14
10 Ptak Fee Affidavit at para 26, Fee MR, Tab 2. 11 Ptak Fee Affidavit at para 27, Fee MR, Tab 2. 12 Ptak Fee Affidavit at para 28, Fee MR, Tab 2. 13 Exhibits "C(l) to C(5)", Ptak Fee Affidavit, Fee MR, Tab 2. 14 Labourers' Pension Fund of Central and Eastern Canada (Trustees of) v Sino-Forest Corp (December 27, 2013) Toronto, Ontario Superior Court File No.: CV-12-9667-00CL (Order of the Honourable Justice Morawetz), Fee BOA, Tab 7.
17. The retainer agreements provide for a sliding scale of compensation for class counsel
depending on the monetary level of success and the stage of the litigation, as follows: 15
For the first $20 For the portion For the portion For the portion million of any of the Recovery ofthe Recovery of the Recovery Recovery between $20 between $40 in excess of $60
million and $40 million and $60 million million million
If the Action is settled or there is twenty-five twenty percent fifteen percent ten percent judgment before the Court renders percent (25%) (20%) (15%) (10%) a decision on a certification motion
If the Action is settled or there is twenty-seven twenty-two seventeen and twelve and a judgment after the Court renders a and a half and a half a half percent half percent decision on a certification motion percent percent (17.5%) (12.5%) and before the commencement of (27.5%) (22.5%) the Common Issues trial;
If the Action is settled after the thirty percent twenty-five twenty percent fifteen percent commencement of the Common (30.0%) percent (20.0%) (15.0%) Issues trial or is determined by (25.0%) judgment after the trial.
18. This grid is meant to ensure that class counsel is paid in a manner that is tied directly
to the stage of the action (reflecting anticipated work done) and degree of success achieved in
the action, while at the same time ensuring the overall fees are not excessive. Accordingly, the
grid provides that the larger the recovery as against each defendant, the less class counsel will
be paid as a percentage of that recovery. 16
19. In addition, the fee grid provides that class counsel is paid less on a particular
settlement if that settlement is reached early in the proceeding. There are three different time
periods contemplated: (a) settlement before a certification decision; (b) settlement after a
15 Ptak Fee Affidavit at para 30, Fee MR, Tab 2. 16 Ptak Fee Affidavit at para 31, Fee MR, Tab 2.
certification decision and before the commencement of the common issues trial; and (c)
settlement after the commencement of trial or a judgment after trial. 17
20. These different time periods are meant to reflect the resources that class counsel had
expended in pursuing the claims and securing recovery. For instance, had the defendants all
settled the action within 30 days of its commencement in July 2011, class counsel would have
committed relatively few resources to the action. In contrast, had the action proceeded to a
common issues trial and success achieved only through judgment, class counsel would have
committed an enormous amount of resources to this litigation. The grid is meant to take into
account this increasing level of resources, but uses objective measures of stages in the
proceeding in order to determine when the next level of compensation would be awarded. 18
21. On the face of the retainer agreement, the second row of the grid applies as there was a
certification decision in the Ontario class action in September 2012 relating to the settlement
with Poyry (Beijing) Company Limited, and the court certified the balance of the action in
January 2015. Additionally, on the face of the retainer agreement the first column of the grid
apply, as the recovery from the Independent Directors is below $20 million. If the second row
and first column of the grid were applied, class counsel would receive fees of $68,750,
representing 27.5% of the settlement amount, plus HST and repayment of disbursements. 19
22. Although the retainer agreement does not specifically refer to successive settlements,
interpreting it this way is consistent with the purpose of this grid, which is to acknowledge the
resources that class counsel has expended in respect of each class of defendants and the very
17 Ptak Fee Affidavit at para 32, Fee MR, Tab 2. 18 Ptak Fee Affidavit at para 33, Fee MR, Tab 2. 19 Ptak Fee Affidavit at para 34, Fee MR, Tab 2.
different cases on both the facts and the law which apply to each class of defendants.
Recovery pursuant to the Ernst & Young, Horsley, and Dealers settlements is not tied to the
recovery in the Independent Directors Settlement, given that the claims advanced against the
Independent Directors are distinct in fact and law from those advanced against Ernst &
Young, Horsley or the Dealers. 20
23. However, Class Counsel, in consultation with the plaintiffs, have decided to request a
lower fee of 17.5%, or $43,750, plus HST and repayment of disbursements. This fee will be
shared among all of Canadian class counsel, including Koskie Minsky LLP, Siskinds LLP,
and Siskinds Desmeules (counsel in a parallel Quebec action), and Class Counsel's U.S.
agent, Kessler Topaz Meltzer & Check, LLP. This proposed fee request reflects that the case
against the Independent Directors is distinct in fact and law. 21
24. The plaintiffs in the Ontario action have approved the fee request. A fee award of
$43,750 plus HST and disbursements is fair and reasonable in all of the circumstances at this
time. 22
D. Counsel's Efforts to Advance the Ontario Class Action
25. Class Counsel have made significant progress and considerable efforts to advance the
Ontario class action. These efforts are detailed in paragraphs 10-33 of the affidavit of
Jonathan Ptak sworn March 18, 2016 in support of settlement approval. 23
20 Ptak Fee Affidavit at para 35, Fee MR, Tab 2. 21 Ptak Fee Affidavit at para 36, Fee MR, Tab 2. 22 Ptak Fee Affidavit at para 37, Fee MR, Tab 2. 23 Affidavit of Jonathan Ptak, sworn March 18, 2016 ("Ptak Settlement Affidavit"), Exhibit "D", Ptak Fee Affidavit, Fee MR, Tab 2.
26. In summary, Class Counsel, along with insolvency counsel and counsel for the
plaintiffs in the Quebec Action, have taken the following steps to advance claims against the
defendants:
(a) undertook a preliminary investigation of the allegations against the defendants;
(b) prepared for and argued a motion for carriage of the Ontario action;
(c) prepared for and argued a motion for directions in the Ontario action, including a request for an order for substituted services, compelling insurance information, and requiring delivery of statements of defence;
(d) undertook further investigations and prepared voluminous materials for the motion for certification of the Ontario action as a class proceeding under the Class Proceedings Act, 1992 and the motion for leave to proceed with statutory misrepresentation claims under the Securities Act;
(e) negotiated the litigation funding agreement between the plaintiffs m this action and CFI and brought a motion for approval of the agreement;
(f) negotiated and settled with the defendant Poyry (Beijing) Company Limited ("P6yry (Beijing)"), prepared for and argued the motions for certification for settlement purposes and approval of the Poyry (Beijing) settlement in Ontario and Quebec, and obtained and reviewed evidence from Poyry (Beijing);
(g) designed and implemented a notice program and opt out process for the Ontario and Quebec actions;
(h) prepared for, argued or attended approximately 26 motions and other appearances in the Sino-Forest CCAA proceeding;
(i) prepared proofs of claim in the CCAA proceeding for the Ontario and Quebec actions, including detailed claims submissions;
U) reviewed tens of thousands of Chinese and English documents in the SinoForest data-room for mediation;
(k) prepared for and attended the two-day all-party mediation in August 2012;
(I) undertook extensive negotiations over the course of more than six months in respect of the Sino-Forest plan of compromise and restructuring (the "Plan") to ensure the claims in the Ontario and Quebec class actions were minimally affected, particularly as it related to non-debtor defendants;
(m) prepared for and attended at a two-day mediation with Ernst & Young in November 2012, which resulted in a settlement, prepared for and made submissions in support of the motion to sanction the Plan, along with responding to a motion for leave to appeal from the sanction order by cettain objectors, designed and implemented a notice program for the Ernst & Young
settlement approval hearings, prepared for and argued the motion for settlement approval of the Ernst & Young settlement and responded to the efforts of certain objectors to appeal the settlement approval order including a motion for leave to appeal to the Court of Appeal, a motion to quash a purported direct appeal to the Court of Appeal and an application for leave to the Supreme Court of Canada, prepared plan of allocation to distribute the Ernst & Young settlement and other materials for approval of the plan of allocation and the within motion, moved for and obtained recognition of the Ernst & Young settlement in Quebec and the United States;
(n) designed and implemented a notice program for the approval hearings of the settlement with David Horsley, and prepared for and argued the motion for settlement approval of the Horsley settlement, which was heard concurrently with a motion for recognition and enforcement of the order approving the Horsley settlement in the United States;
( o) designed and implemented a notice program for the approval hearings of the settlement with the Dealers, prepared for and argued the motion for settlement approval of the Dealers settlement, and sought recognition and enforcement of the order approving the Dealers settlement in New York Bankruptcy Court;
(p) began review of more than 1 million Chinese and English documents;
(q) proposed amendments to the statement of claim to assert additional claims under U.S. law against the Dealers and others;
(r) amended the Quebec pleading;
(s) prepared for and cross-examined twelve (12) defendant experts and fact witnesses in Toronto, New York, and Hong Kong, including two (2) experts and two (2) fact witnesses that swore affidavits in support of the Dealers' opposition to the plaintiffs' motion for certification and to amend the claim, and prepared for and defended five (5) experts and six (6) proposed representative plaintifffrom cross-examination;
(t) prepared for and argued a refusals motion and a motion to strike affidavits;
(u) prepared for the motion for certification and filed a factum in respect of the motion for certification;
(v) prepared for the motion for leave and filed a factum in respect of the motion for leave under Part XXIII.l of the Securities Act;
(w) argued an outstanding issue before Justice Perell against Sino-Forest, Judson Martin, Simon Murray and Edmund Mak in respect to their opposition to leave and certification of claims made on behalf of former noteholders;
(x) negotiated a Discovery Plan and set a timetable for delivery of documents;
(y) responded to numerous class member inquiries;
(z)
(aa)
undertook extensive negotiations with the Independent Directors to reach the Independent Directors Settlement; and
designed and implemented a notice program for the approval hearings of the settlement with the Independent Directors. 24
27. By order dated July 25, 2012, this Court ordered mediation of the claims in the
Ontario and Quebec actions. The all-party mediation took place on September 4 and 5, 2012.
It did not result in a settlement with any of the parties. 25
28. On October 2, 2015, Gary Luftspring, counsel to Travelers Guarantee Insurance
Company, the last of the four layers available to the Sino-Forest insureds, advised that the
limits of liability under the Travelers policy would be exhausted no later than the end of
October 2015.26
29. Given the rapidly dwindling insurance proceeds responsive to the claims made against
the Independent Directors, Class Counsel reengaged counsel to the Independent Directors in
settlement discussions?7
30. An agreement was reached on October 23, 2015, and the minutes of settlement were
finalized in February 2016. The Minutes of Settlement represent the agreement amongst the
parties reached on October 23, 2015?8
24 Ptak Fee Affidavit at para 14, Fee MR, Tab 2. 25 Ptak Fee Affidavit at para 15, Fee MR, Tab 2. 26 Ptak Fee Affidavit at para 17, Fee MR, Tab 2. 27 Ptak Fee Affidavit at para 18, Fee MR, Tab 2.
28 Ptak Fee Affidavit at para 18, Fee MR, Tab 2.
31. Class Counsel was mindful of the significant challenges of the claims against the
Independent Directors and their limited involvement as compared to other defendants, who
were more central in the allegations asserted by the class action plaintiffs. 29
32. On January 20, 2016, Mr. Luftspring advised that the Travellers policy had been
exhausted. 30
E. Context of Contingency Fee retainers in Class Proceedings
33. A class proceedings practice creates unique challenges for counsel.
34. First, class proceedings involve a significant commitment of time and financial
resources. These actions are typically taken on a contingency fee basis. It is common to
dedicate thousands of lawyer hours and hundreds of thousands of dollars in disbursements to
a particular case. Significant investigation and expert expenses are typical.31 As stated by the
Law Reform Commission:
While not receiving any remuneration for his or her work, the usual expenses of running an office are being incurred. Moreover, substantial advances must be made by counsel to pay for the enormous expenses incurred in the action, which would augment significantly the financial risk assumed by the class lawyer. 32
35. Second, class proceedings are highly adversarial and are often protracted. The concept
that class proceedings often settle soon after the motion for certification is not correct. Cases
are increasingly continuing beyond certification, through productions, examination for
discovery and trial. The defendants tend to be well-resourced. The defendants bring motions
29 Ptak Fee Affidavit at para 19, Fee MR, Tab 2. 30 Ptak Fee Affidavit at para 20, Fee MR, Tab 2. 31 Ptak Fee Affidavit at para 9, Fee MR, Tab 2. 32 Ontario Law Reform Commission, Report on Class Actions (Vol3) at 676, Fee BOA, Tab 10.
for almost any dispute and appeal almost all decisions. A scorched-earth approach is common.
As a result, costs are high and litigation proceeds slowly.33
36. Justice Strathy (as he then was) in Baker (Estate) v Sony BMG Music (Canada) Inc
noted the inevitable resource disparity between class counsel and defendants in class
proceedings. Defendants are well-resourced and represented by large firms. They tend to have
"virtually unlimited resources and no incentive to roll over and play dead". Defendants are
able to "frequently employ a strategy of wearing down the opposition by motioning
everything, appealing everything and settling nothing." 34
37. Third, there are a number of risks arising from the class proceedings procedure:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
the risk that the action will not be certified as a class proceeding;
the risk that a large number of class members opt out;
the risk that the defendant successfully moves to decertify a class proceeding;
the risk that an award of aggregate damages on a class-wide basis is denied and individual issues trials are ordered;
the risk that individual issues trials are ordered but are not economically feasible;
the risk that the court does not approve a settlement agreement after lengthy, time-consuming and expensive negotiations; and
the risk that the court does not approve class counsel fees, or approves them only at a reduced rate. 35
38. Fourth, class counsel's obligation to the class do not end at settlement approval, even
where all defendants settle and the litigation is at an end. Class Counsel typically perform the
following work as part of settlement administration, including:
33 Ptak Fee Affidavit at para 10, Fee MR, Tab 2. 34 Baker (Estate) v Sony BMG Music (Canada) Inc, 2011 ONSC 7105 at paras 65 and 66, Fee BOA, Tab 1.
35 Ptak Fee Affidavit at para 11, Fee MR, Tab 2.
(a) identifying class members;
(b) advising and instructing class members with questions concerning the settlement agreement and claims process;
(c) providing information to class members, including relevant documents;
(d) assisting class members with claim forms, if necessary;
(e) providing documentation to the accountants and financial advisors of class members to assist with determinations of tax implications of settlement proceeds;
(f) facilitating the claims process;
(g) monitoring settlement implementation to ensure the processed are be followed;
(h) liaising with the claims administrator; and
(i) overall coordination of the settlement distribution. 36
PART III- ISSUES AND THE LAW
APPROVAL OF COUNSEL FEES
39. The fees and disbursements requested are consistent with the retainer agreements with
the plaintiffs which have been approved by this court, and are fair and reasonable in light of
the significant risks that Class Counsel and insolvency counsel undertook in these
proceedings and the success achieved.
A. Approach to Fee Approval in Class Proceedings
40. The retainer agreement is the starting point for the approval of contingency fees. In
Cannon v Funds for Canada Foundation, Justice Belobaba stated, "contingency fee
arrangements that are fully understood and accepted by the representative plaintiffs should be
36 Ptak Fee Affidavit at para 12, Fee MR, Tab 2.
presumptively valid and enforceable, whatever the amounts involved."37 In addition, the
court may determine whether the fees and disbursements as provided for in the retainer
agreement are fair and reasonable, failing which the court has discretion to determine the
amount owing to class counsel for fees and disbursements.38
41. Courts assessing the fairness and reasonableness of fees focus on two main factors:
( 1) the risk that class counsel undertook in conducting the litigation; and (2) the degree of
success or result achieved?9 Risk in this context is measured from the commencement ofthe
action.40 These risks include all of the risks facing class counsel such as the liability risk,
recovery risk, and the risk that the action will not be certified as a class proceeding.41 As set
out above, there are unique risks arising from the class proceedings procedure. The
prosecution of these claims in particular have also involved significant risk (described in
detail at paragraphs 56-61 of the Affidavit of Jonathan Ptak sworn March 18, 2016 in support
of Settlement Approval.42 In particular:
(a) Class Counsel took on significant risk for claims against the Independent Directors because of the possibility that he could not satisfy any judgment and had limited and diminishing insurance coverage which was being depleted by the defence costs of multiple parties;
(b) there was significant risk that there would be no recovery from the Independent Directors arising from the limitation on recovery from the Independent Directors as set out in the Plan;
37 Cannon v Funds for Canada Foundation, 2013 ONSC 7686 at para 8, Fee BOA, Tab 2. 38 Class Proceedings Act, 1992, SO 1992, c 6, s 32(2) and (4), Schedule "B"; Baker(Estate) v Sony BMG Music (Canada) Inc, 2011 ONSC 7105 at para 58, Fee BOA, Tab I; Cassano v Toronto-Dominion Bank, [2009] OJ No 2922 (SCJ) at paras 59 and 63, Fee BOA, Tab 3. 39 Parsons v Canadian Red Cross Society, [2000] OJ No 2374 (SCJ) at para 13, Fee BOA, Tab 8; Sayers v Shaw Cablesystems Ltd, 2011 ONSC 962 at para 35, Fee BOA, Tab 9. 40 Gagne v Silcorp Ltd, [1998] OJ No 4182 (CA) at para 16, Fee BOA, Tab 5. 41 Gagne v Silcorp Ltd, [1998] OJ No 4182 (CA) at para 17, Fee BOA, Tab 5; Endean v Canadian Red Cross Society, 2000 BCSC 971 at paras 28 and 35, Fee BOA, Tab 4. 42 Ptake Settlement Affidavit, Exhibit "D", Ptak Fee Affidavit, Fee MR, Tab 2.
(c) Class Counsel took on the risk of no success, while at the same time having to devote a massive commitment of time, money and other resources to the prosecution of this action. Class Counsel has already committed millions of dollars in resources to this action, including 32,018.8 lawyer hours and out-ofpocket disbursements exceeding $12.6 million; and
(d) Class Counsel is of the view that there is no evidence to suggest that the Independent Directors committed a fraud and the OSC did not make any allegations against the Independent Directors.43
B. Class Counsel's Fees and Disbursements are Fair and Reasonable
42. The requested fees and disbursements are consistent with the retainer agreements
entered into with the plaintiffs and are fair and reasonable. They are well within the range of
percentages typically approved by Ontario courts.
(1) Fees as a percentage of recovery are within the appropriate range
43. The requested fees are below the range of percentages that Ontario courts have
approved in the past and are lower than the percentage awarded by this court pursuant to the
Ernst & Young settlement. 44
44. In Baker (Estate) v Sony BMG Music (Canada) Inc, Justice Strathy (as he then was)
stated that fees in the range of20% to 30% are ''very common" in class proceedings.45 There
have been a number of instances in recent years in which this court has approved fees that fall
within thatrange:
Abdulrahim v Air France, [2011] OJ No 326: Ainslie v Afexa Life Sciences Inc., [2010] OJ No 3302 Robertson v ProQuest LLC, [2011] OJ No 2013
Osmun v Cadbury Adams Canada Inc., [20 1 0] OJ No 2093: Pichette v Toronto Hydro, [2010] OJ No 3185:
43 Ptak Fee Affidavit para 42, Fee MR, Tab 2.
30% 19.4% 24%
25% 28.5%
44 Labourers' Pension Fund of Central and Eastern Canada v Sino-Forest Corporation, 2014 ONSC 62 at paras 38 and 49, Fee BOA, Tab 6. 45 Baker (Estate) v Sony BMG Music (Canada) Inc, 2011 ONSC 7105 at para 63, Fee BOA, Tab 1.
Robertson v Thomson Canada Ltd, [2009] OJ No 2650: 36% Cassano v Toronto- Dominion Bank, [2009] OJ No 2922: 20% Martin v Barrett, [2008] OJ No 2105: 29%
45. Justice Strathy explained that compensating counsel through a percentage of recovery
is "generally considered to reflect a fair allocation of risk and reward as between lawyer and
client."46 It induces the lawyer to maximize the recovery for the client and is fair to the client
because there is no pay without success.47
46. Justice Cullity (as he then was) in Cassano v Toronto Dominion Bank also endorsed a
percentage approach-in approving a retainer agreement that provided fees of20%, which in
that case resulted in fees of $11 million out of a $55 million settlement. His Honour adopted
the reasoning of Justice Cumming in Vitapharm Canada Ltd v F Hoffmann-La Roche Ltd, in
emphasizing the value of a percentage approach to fees: "[u]sing a percentage calculation in
determining class counsel fees properly places the emphasis on quality of representation, and
the benefit conferred on the class. A percentage-based fee rewards "one imaginative, brilliant
hour" rather than "one thousand plodding hours."48
4 7. In this case, the requested fees are 17.5% of the settlement amount. This is below the
range of fees that Ontario courts typically approve and, as set out below, there were
considerable risks in this litigation and significant success as against the Independent
Directors.
46 Baker (Estate) v Sony BMG Music (Canada) Inc, 2011 ONSC 7105 at para 64, Fee BOA, Tab 1. 47 Baker (Estate) v Sony BMG Music (Canada) Inc, 2011 ONSC 7105 at para 64, Fee BOA, Tab 1.
48 Cassano v Toronto-Dominion Bank, [2009] OJ No 2922 at paras 50-63 (SCJ), Fee BOA, Tab 3.
(2) Recovery risk was high from the outset of the litigation
48. Class Counsel were always confident that they would establish liability against Sino-
forest and some senior insiders at Sino-forest. However, from the outset, establishing liability
against defendants who could actually satisfy a large judgment was the greatest risk for this
litigation and thus for Class Counsel.
49. The claims asserted against the Independent Directors are (i) statutory liability in
respect of primary market purchasers; (ii) statutory liability in respect of secondary market
share and note purchasers pursuant to Part XXIII. I of the OSA; and (iii) common law and
equitable claims for negligent misrepresentation and negligence. 49
50. If successful, those claims could result in an award for significant damages against all
defendants. However, the extent of damages which were caused, and which could be proven
and collectible against any one defendant would be far lower. In particular, recovery from the
Independent Directors was limited by the Plan to the insurance policies. 50
51. Further, the claims against the Independent Directors raise complex legal issues that
are largely untested in Canadian courts. There has never been a trial of claims under Part
XXIII. I of the OSA. Its detailed provisions that create defenses and place limits on damages
are uncertain and will be contentious. There have also been few securities trials of negligent
misrepresentation claims. 51
49 Ptak Settlement Affidavit at para 54, Exhibit "D", Ptak Fee Affidavit, Fee MR, Tab 2. 50 Ptak Fee Affidavit at paras 55-57 and 60, Fee MR, Tab 2.
51 Ptak Fee Affidavit at para 58, Fee MR, Tab 2.
52. Finally, the Independent Directors had a more limited role in the oversight of Sino-
Forest. Unlike other individual defendants named in this proceeding, they were not inside
directors who also held management roles. 52
C. Conclusion: The Requested Fees Should be Approved
53. Given all of the factors outlined above, including the multiple legal and practical
impediments to establishing liability and recovering damages under Canadian and U.S. law,
the time and expense devoted to pursuing the claims against the Independent Directors, and
Class Counsel's risk of no success and minimal recovery, the requested fees and
disbursements are extremely fair and reasonable under the circumstances and ought to be
approved.
PART IV- ORDER REQUESTED
54. Class Counsel request that this court make an order approving their fees of $43,750
(exclusive of tax) and disbursements of $25,000.
52 Ptak Fee Affidavit at para 59, Fee MR, Tab 2.
Siski · Lascaris and Serge Kalloghlian
s LP
Koskie M.
Class Counsel
SCHEDULE "A"- LIST OF AUTHORITIES
PRIMARY SOURCES
Baker (Estate) v Sony BMG Music (Canada) Inc, 2011 ONSC 7105
Cannon v Funds for Canada Foundation, 2013 ONSC 7686
Cassano v Toronto-Dominion Bank, [2009] OJ No 2922
Endean v Canadian Red Cross Society, 2000 BCSC 971
Gagne v Silcorp Ltd, [1998] OJ No 4182
Labourers' Pension Fund of Central and Eastern Canada v Sino-Forest Corporation,
2014 ONSC 62
Labourers' Pension Fund of Central and Eastern Canada (Trustees of) v Sino-Forest Corp, (December 27, 2013) Toronto, Ontario Superior Court File No.: CV-12-9667-00CL (Order of the Honourable Justice Morawetz)
Parsons v Canadian Red Cross Society, [2000] OJ No 2374
Sayers v Shaw Cablesystems Ltd, 2011 ONSC 962
SECONDARY SOURCES
Ontario Law Reform Commission, Report on Class Actions (Vol. 3) (Excerpt)
SCHEDULE"B"-RELEVANTSTATUTES
Class Proceedings Act, 1992, SO 1992, c 6
32. (1) An agreement respecting fees and disbursements between a solicitor and a representative party shall be in writing and shall,
(a) state the terms under which fees and disbursements shall be paid;
(b) give an estimate ofthe expected fee, whether contingent on success in the class proceeding or not; and
(c) state the method by which payment is to be made, whether by lump sum, salary or otherwise.
(2) An agreement respecting fees and disbursements between a solicitor and a representative party is not enforceable unless approved by the court, on the motion of the solicitor.
(3) Amounts owing under an enforceable agreement are a first charge on any settlement funds or monetary award.
( 4) If an agreement is not approved by the court, the court may,
(a) determine the amount owing to the solicitor in respect of fees and disbursements;
(b) direct a reference under the rules of court to determine the amount owing; or
(c) direct that the amount owing be determined in any other manner.
33. (1) Despite the Solicitors Act and An Act Respecting Champerty, being chapter 327 of Revised Statutes of Ontario, 1897, a solicitor and a representative party may enter into a written agreement providing for payment of fees and disbursements only in the event of success in a class proceeding.
(2) For the purpose of subsection (1), success in a class proceeding includes,
(a) a judgment on common issues in favour of some or all class members; and
(b) a settlement that benefits one or more class members.
(3) For the purposes of subsections ( 4) to (7),
"base fee" means the result of multiplying the total number ofhours worked by an hourly rate; ("honoraires de base")
"multiplier" means a multiple to be applied to a base fee. ("multiplicateur")
( 4) An agreement under subsection (1) may permit the solicitor to make a motion to the court to have his or her fees increased by a multiplier.
(5) A motion under subsection (4) shall be heard by a judge who has,
(a) givenjudgment on common issues in favour of some or all class members; or
(b) approved a settlement that benefits any class member.
(6) Where the judge referred to in subsection (5) is unavailable for any reason, the regional senior judge shall assign another judge of the court for the purpose.
(7) On the motion of a solicitor who has entered into an agreement under subsection ( 4), the court,
(a) shall determine the amount of the solicitor's base fee;
(b) may apply a multiplier to the base fee that results in fair and reasonable compensation to the solicitor for the risk incurred in undertaking and continuing the proceeding under an agreement for payment only in the event of success; and
(c) shall determine the amount of disbursements to which the solicitor is entitled, including interest calculated on the disbursements incurred, as totalled at the end of each six-month period following the date of the agreement.
(8) In making a determination under clause (7) (a), the court shall allow only a reasonable fee.
(9) In making a determination under clause (7) (b), the court may consider the manner in which the solicitor conducted the proceeding.
The Trustees of the Labourer's Pension Fund of Central and Eastern Canada, et al.
Plaintiffs
and Sino-forest Corporation, et al. Defendants
Court File No: CV-12-9667-00-CL
ONTARIO SUPERIOR COURT OF JUSTICE
Proceedings Under the Class Proceedings Act, 1992
Proceeding commenced at Toronto
FACTUM OF THE MOVING PLAINTIFF INDEPENDENT DIRECTORS FEE APPROVAL
(Returnable March 29, 2016)
KOSKIE MINSKY LLP 900-20 Queen Street West, Box 52 Toronto, ON M5H 3R3 Kirk M. Baert (LSUC#: 309420) Tel: 416.595.2117/Fax: 416.204.2889 Jonathan Ptak (LSUC#: 45773F) Tel: 416.595.2149/Fax: 416.204.2903
SISKINDS LLP 680 Waterloo Street, Box 2520 London, ON N6A 3V8 A. Dimitri Lascaris (LSUC#: 50074A) Tel: 519.660.7844/Fax: 519.660.7845 Serge Kalloghlian (LSUC#: 55557F) Tel: 416.594.4392/Fax: 416.594.4393
Lawyers for the Ad Hoc Committee of Purchasers of the Applicant's Securities, including the Class Action Plaintiffs
