THE ADVOCATE 505
VOL. 79 PART 4 JULY 2021
CLASS ACTION SETTLEMENTS BEFORE
CERTIFICATION: COUNSEL BEWARE!
By Brendan Brock
British Columbia is one of the only jurisdictions in Canada
where court approval of class action settlements or discontinuances
before certification is not mandated by class proceedings
legislation.1 The lack of this requirement—along with jurisprudence
holding that, before certification, proposed class counsel is not in a
solicitor-client relationship with putative class members2—may give the
impression that an action commenced under B.C.’s Class Proceedings Act3
(the “CPA”) can be settled before certification without regard to the interests
of putative class members, including at a premium to the proposed representative
plaintiff’s actual loss. Such a conclusion ignores principles underpinning
class proceedings legislation and may expose proposed class
counsel to civil liability to the proposed class.
The emphasis Canadian courts have placed on counsel’s sui generis relationship
with putative class members and their protection in the context of
settlement has formed the substrate for a novel cause of action in negligence
against counsel who commence a proceeding under class proceedings
legislation only to settle it before certification without regard for the
interests of putative class members. Until the CPA is amended to require
court approval of pre-certification settlements—and it should be4—counsel
must take care to ensure any settlement or discontinuance before certification
of any proposed class action does not prejudice the claims of putative
class members. Failing to do so risks exposing counsel to an action in negligence
by absent putative class members for breach of a sui generis duty
and a potentially large damages award, notwithstanding that court approval
of pre-certification settlements is not strictly mandated in our province.
COURT APPROVAL OF CLASS ACTION SETTLEMENTS
A “class proceeding” in British Columbia may be settled, discontinued or
abandoned only with approval of the B.C. Supreme Court. The court is
guided by the principle that class action settlements must be “fair and reasonable
and in the best interests of the class as a whole”5 and must consider