187
Determining a Fair Price for Carriage?: Applying
a “Fee-Driven” Factor and Reverse Auctions to
Adjudicating Carriage Motions in Ontario
Timothy Law
: Since the introduction of the Class Proceedings Act, 1992, car-
riage motions have been assessed on the basis of an indeterminate and
multi-factor test that provides a wide degree of discretion for judges. This
has resulted in inconsistent outcomes that have not promoted the test’s
consistency with the three objectives of class actions. As noted in Chu v Par-
well Investments, however, one potential remedy is to place greater emphasis
on fee arrangements in the form of a determinative “reverse auction.”
This paper proposes that courts in Ontario should seek to formalize
the goals encompassed within a new “fee-driven” factor that emphasizes
the court’s use of a reverse auction.
Judicial oversight is one differentiating factor between how reverse
auctions have been previously applied in the United States and how this
concept is being considered in Ontario. The paper proposes that Ontar-
ian courts should cultivate this culture of judicial oversight to ensure
that any future application of a reverse auction substantively contributes
towards all three objectives of class actions. This would allow the court
to passively structure the fee-driven factor towards providing economic
savings for the plaintiff class and incentivizing both class counsel and
third party funders to structure more equitable funding practices.
This fee-driven factor is intended to compliment the multi-factor test
and may be introduced via incremental progress in jurisprudence. Con-
sequently, the paper’s proposal provides pragmatic options that easily
integrate with the Law Commission of Ontario’s pre-existing recommen-
dations and recent amendments to the CPA introduced by the Smarter
and Stronger Justice Act.
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189
DETERMINING A FAIR PRICE FOR
CARRIAGE?: APPLYING A “FEE-DRIVEN”
FACTOR AND REVERSE AUCTIONS TO
ADJUDICATING CARRIAGE MOTIONS IN
ONTARIO
Timothy Law*
A. INTRODUCTION
class actions have been an evolving area of law, largely with the purpose
of maximizing the three primary objectives of access to justice, behaviour
modification, and judicial economy. While certain aspects of class actions
have seen dramatic reforms and improvements, the assessment of car-
riage motions continues to be an area where little progress has been made.
Despite the introduction of recent legislative amendments to the CPA
under the Smarter and Stronger Justice Act, 2020,2 which seek to reform
this area of class actions, carriage motions continue to be assessed on the
basis of an indeterminate multi-factor test that provides a wide degree of
discretion to judges. This results in inconsistent and unpredictable out-
comes for class counsel. As noted by Belobaba J in Chu v Parwell Invest-
ments, however, one potential remedy is to place greater emphasis on fee
arrangements by implementing determinative reverse auctions.3 As fee
1 SO 1992, c 6 [CPA].
2 Bill 161, Smarter and Stronger Justice Act, 2020, 42d Parl, 1st Sess, Ontario, 2020, cl 16
(assented to 8 July 2020), SO 2020, c 11.
“reverse auction” as used in Chu and in this paper is distinct from prior jurisprudential
conceptualizations and rhetoric of a problematic reverse auction. As noted in the
2005 case Currie v McDonald’s Restaurants of Canada Ltd, 2005 CanLII 3360 at para 26
(Ont CA) [Currie], the problematic conceptualization of a reverse auction may be
described as a circumstance whereby a “sophisticated defendant may persuade
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