Welsh v. Ontario: Regaining Predictability in the Settlement and Fee Approval Process, But at What Cost?

Class action judges are tasked with approving settlements and class counsel’s fees with an eye to protecting vulnerable litigants and ensuring fairness to the class as a whole. But this leaves questions as to how far courts can go to achieve a result that they view to be fair and reasonable. Can a court go beyond simply approving or rejecting a proposed settlement or class counsel’s fees, and unilaterally impose amendments to better achieve what the court views as a fair result? A recent unanimous decision of the Ontario Court of Appeal suggests the answer to this question is: “no”.

In Welsh v. Ontario, 2019 ONCA 41 (Welsh), the Ontario Court of Appeal set aside the motion judge’s decision ordering class counsel to pay a substantial portion of their fees to charity. In doing so, the Court held that judges cannot unilaterally add material conditions to an executed settlement agreement. 

This decision brings welcome predictability to the settlement and fee approval process. The Ontario Court of Appeal has reassured the class actions bar that judges cannot – in the absence of the submissions by, or the consent of, the parties – “rewrite” the settlement they achieved.