How Will Funding Be Weighed on Your Carriage Motion?

This article reviews court commentary regarding funding arrangements, and the importance funding could be given in the future. While funding has largely been a neutral factor in previous carriage decisions, courts have in various ways emphasized the importance of presenting a reliable funding plan at this stage.

The relevance of funding on carriage motions has somewhat changed over time. While the resources of counsel have long been a factor, methods of funding were not always considered.[1] In the last decade or so, funding had consistently been enumerated amongst the relevant common law factors.[2] Since 2020, the Class Proceedings Act (CPA) now specifically requires courts to consider “the funding of each proceeding, including the resources of the solicitor and any applicable third-party funding agreements” as well as “the sufficiency of such funding in the circumstances”.[3]

Funding has been deemed a neutral or non-determinative factor in most carriage battles to date.[4] However, there is a significant caveat to this observation. Courts will still consider whether each competing firm has a viable method of funding the action; and some form of costs indemnity for the representative plaintiff should be in place.

In cases decided since the CPA amendment, the neutrality of the factor largely depended on the existence of reliable funding arrangements. For example, in Liang v. SSR Mining, Inc., 2024 ONSC 4432, one firm had a third-party funding arrangement and the other stated it would self-fund the action, pointing to a successful track record of doing so in other actions. The Court reasoned that both firms were “capable of handling the financial burden of the case”.[5] The action ultimately granted carriage was the third-party funded one. In Parkin v. TD, 2025 ONSC 1201, there was a self-funding proposal, an arrangement with U.S. counsel, and a third-party funding proposal. The primary reason for the factor’s neutrality was that all three firms had taken steps to arrange funding, without the proposals representing significant difference among the three actions.[6] The action ultimately granted carriage was the self-funded one.

In both of these examples, the self-funding proposals were acceptable on the basis of counsel’s submissions and experience. However, the reasons in both cases first affirmed that the proposals would protect the plaintiff. In Parkin, Justice Leiper noted a legitimate initial concern that the self-funding proposal was not acknowledged in the retainer agreement.[7] In Liang, Justice Morgan cited evidence given by a partner at the self-funding firm, including its track record in holding plaintiffs harmless.[8]

The reasoning in Liang and Parkin is in line with older decisions that explain the relevance of this factor. For example:

• In Mancinelli v. Barrick Gold, 2016 ONCA 571, the Court of Appeal confirmed that funding is an important consideration “because it goes to the issue of whether the class, or, as is usually the case, class counsel, will be able to withstand adverse costs awards as the action progresses…”[9]

• In Kowalyshyn v. Valeant Pharmaceuticals, 2016 ONSC 3819, Justice Perell weighed the main benefit of an indemnity to the plaintiff, without which they would be exposed to the “devastating risk” of an adverse costs award.[10]

• In Winder v. Marriott International Inc., 2019 ONSC 5766, Justice Perell expressed that the lack of an indemnity may have been a “deal breaker” on carriage. He noted with criticism that the unsuccessful counsel group did not undertake to indemnify the plaintiffs until prompted at the hearing. He stated that counsel should not file an action with their commitment contingent on funding, until that funding is secured.^[11]

There has also been recent emphasis outside the carriage context on the need for an indemnity for the representative plaintiff. In Azar v. Strada Crush Limited, 2019 ONSC 4436, on a plaintiff’s motion to appoint new counsel, Justice Morgan took the opportunity to observe that the lack of specific indemnification in the retainer agreement was a “frailty” that must be addressed.^[12] In Navaratnarajah v. FSB Group Ltd., 2023 ONSC 4024, Justice Morgan reiterated that there is an expectation that the plaintiff be indemnified[13] (resulting in a varied costs order payable by plaintiff’s counsel[14]). In Davidson v. T.E.S. Contract Services Inc., 2024 ONSC 4362, Justice Glustein agreed that it was “improper” to proceed without an indemnity, and that a representative plaintiff’s costs exposure must be addressed at the outset of the litigation.[15] These views are consistent with observations in some carriage decisions that the lack of an indemnity can be a “deal breaker”. They suggest that counsel who are not willing to indemnify the representative plaintiff must present a funding arrangement that does so.

When each firm competing for carriage has demonstrated some viable funding arrangement, courts may weigh the cost of each arrangement to the class. However, this often results in marginally more attractive proposals, and a “reverse auction” going to the lowest cost arrangement has rarely been a deciding factor.[16] Such a cost analysis may also take into account the differences in counsel fees, amongst other things. As put by Justice Morgan on refusing B.C. counsel’s request to intervene in a funding approval motion – “cheaper is not always better”.[17]

To summarize, while funding is often a neutral factor if there are equivalent arrangements, it remains important for counsel to demonstrate a plan to handle the financial burden of the case, and some form of indemnification against costs payable by the representative plaintiff.

Therefore, on future carriage motions in different circumstances, the existence of a reliable funding arrangement could be given more weight.

In a recent report on the impact of the Class Proceedings Fund, Remissa Hirji and I present a variety of data collected over 30 years of the Fund’s existence. We discuss how CPF-funding: allows cases to test and advance the law, allows cases to go further, and leads to a higher prospect of success for the class. We report on the significant percentages of Ontario class actions that have been supported by the Fund, and quantify its contributions to access to justice.[18] A similar study would likely reveal similar conclusions about other types of funding. Since the existence of funding has undeniably assisted class counsel and plaintiffs in advancing so many cases, perhaps it not only could, but should, be given more weight on future carriage motions.

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