The Importance of Precise Settlement Agreements in Class Actions: McLean v. Canada (Attorney General)
In McLean v Canada (Attorney General), 2023 FC 1093, the Federal Court refused to extend the deadline for survivors of Indian Day Schools to file claims for compensation under a class action settlement agreement. McLean emphasizes the importance of clear and specific settlement terms, as the Court’s supervisory jurisdiction cannot be used as a tool to modify settlements. Rather, Courts can only intervene in exceptional circumstances, such as where a settlement agreement has not been properly implemented.
In 2018, the Federal Court certified a class proceeding on behalf of “all persons… who attended an Indian Day School” as well the survivor’s family members. Canada and representatives of the survivors entered into a settlement agreement. In 2019, the Federal Court approved the settlement. Under the settlement agreement, class members had until July 13, 2022 to claim compensation. Individual claimants could request an extension for special reasons until January 13, 2023.
In December 2022, a class member and the Six Nations of the Grand River Elected Council (the largest on-reserve First Nation community in Canada and the one with the most day schools) brought a motion to extend the deadline to make a claim to December 31, 2025. The moving parties argued that insufficient efforts were made to inform survivors about the details of the claims process, there was a lack of support for survivors who wished to file a claim, and these difficulties were compounded by the COVID-19 pandemic. As a result, the moving parties requested the extension, which they argued the Court could provide under its supervisory jurisdiction over class actions. The moving parties also sought an independent determination of the take-up rate under the settlement agreement. The plaintiff and the defendant opposed the motion.
The Court started with the principle that its supervisory jurisdiction “is limited and shaped by the terms of the agreement, once it is approved and determined to be fair, reasonable and in the best interest of the class.” Courts will exercise their supervisory jurisdiction to give effect to a settlement agreement but not to amend it.
Courts can intervene in situations such as a breach of agreement terms, disputes over provision interpretation, failures to implement the settlement agreement, or when there are gaps in the terms of the settlement agreement. In declining to exercise supervisory jurisdiction to extend the claims deadline, the Court concluded that none of these factors applied:
- No breach of the agreement terms: The moving parties’ evidence did not demonstrate a systematic failure to deliver the promises or assistance to class members. While the Court acknowledged specific barriers faced by Indigenous communities and the nature of the harm from Indian Day School, the Court did not find that a significant number of class members were unable to submit their claims before the deadline due to encountered barriers. Nor did the COVID-19 pandemic deprive the class members of the assistance promised in the settlement agreement. The evidence the moving parties brought did not show that there was, on a class-wide basis, a failure to provide notice or class member assistance as promised by the settlement agreement.
- The proper interpretation of the agreement did not allow for an extension of the deadline for the entire class: The moving parties argued that the settlement agreement provided the Court flexibility to extend the claims deadline. The relevant provision was as follows:
- It is recognized that in some extraordinary cases, a Claimant may be entitled to relief from strict application of the Claims Deadline; however, in no event may the Claims Deadline be extended by more than six (6) months.
The moving parties agued the provision provided two distinct rights: one for a maximum six-month extension and another for relief from strict application, not subject to the six-month limit. The Court disagreed: the provision permits an individual to apply for an extension of no more than six months.
- There were no gaps in the settlement agreement: The moving parties asked the Court to imply a term in the settlement agreement allowing for an extension of the claims deadline where the claims process is affected by a significant public health crisis. The Court found that the absence of a specific provision permitting an extension of the claims deadline for unforeseen circumstances was not a gap in the settlement agreement. Rather, it indicated that the parties did not anticipate granting extensions beyond the stipulated six-month limit. However, the Court reiterated that the clause does allow for extensions in individual cases, especially under "exceptional circumstances," which may encompass the effects of the COVID-19 pandemic on an individual class member.
- The Court could not amend the settlement agreement: The settlement agreement did not establish a minimum participation rate, nor did it outline specific measures if a certain threshold was not met. The Court found it could not unilaterally add such provisions.
Lastly, in declining to order an independent review of the take-up rate under the settlement agreement, the Court noted that its primary role was to assess whether the moving parties met the criteria for it to exercise its supervisory jurisdiction. It was not for the Court to undertake its own investigation of the claims process, as “others are in a better position to conduct a more fulsome assessment of the claims process.”