Stanway v. Wyeth Canada Inc.

In a 2013 decision in the same matter (2013 BSCS 1585), the Court considered whether LFAs can be approved in the class action context, and concluded:

• LFAs may be approved in B.C., but the Court must hear the defendants’ submissions on it, even in no-costs regime.
• “I must consider whether the funding agreement appropriately manages the risks to the plaintiff’s control of the litigation, the independent professional judgment of counsel and disclosure of sensitive information” (para. 42).
• The LFA is subject to privilege in respect of specific aspects: litigation strategy, litigation budget and other “highly sensitive” aspects (para. 43).

In this 2014 decision, the Court considered a specific agreement for approval. It cited extensively from Bayens and Kinross from Ontario, and found that under the Ontario jurisprudence, “the LFA must be fair and reasonable and provide the representative plaintiffs with access to judgment, without compromising the principles of independence of counsel, confidentiality agreements between the parties be observed and, not to the disadvantage of the representative plaintiffs” (para. 17).

Court found that the LFA, which guaranteed the funder a minimum of 150% return on its investment and has no cap on potential recovery, was reasonable and fair. The funder may receive a “windfall”, but there “is every probability of a protracted litigation and the result is speculative” (para. 18).

Court did not find the counsel’s independence was compromised by the funder’s right to terminate if the representative plaintiff changes counsel or altered the strategic course of litigation, or by the funder’s right to provide strategic advice (para. 19).

The Court rejected the argument that the representative plaintiff should be required to obtain independent legal advice; since Court approval is being obtained, such legal advice adds little benefit (para. 20).