An Ontario court has approved funding arrangements for a series of proposed class actions against big banks, alleging that customers faced excess fees for failed debit transactions.
Four of the big banks — Bank of Montreal, CIBC, Bank of Nova Scotia, and Royal Bank of Canada — are facing similar class-action suits from the same legal team over the banks improperly charging duplicative insufficient funds (NSF) fees for failed pre-authorized debit (PAD) transactions.
“In each action, the plaintiff pleads that the defendant’s standard form contract does not permit the duplicative charges, and that the defendant’s practice violates consumer protection legislation in Ontario,” the Superior Court of Justice noted in its decision.
That ruling approved amendments to the plaintiffs’ cases to allow them to finance the litigation through identical third-party funding agreements.
Given the overlap among the cases, the court issued one ruling for all four, approving the litigation funding deals. Court approval is required for arrangements where a third party agrees to fund class-action litigation in exchange for a share of the damages.
In this case, the court concluded the funding agreements — which would pay the funder between 7% and 12% of damages, depending when the case is resolved — are fair and reasonable.
“The funding agreements [provide] for a reasonable reward for the funder in exchange for providing the necessary costs indemnity and disbursement funding,” the court said, adding that the plaintiffs didn’t suffer losses large enough to make funding the litigation themselves practical.
“The funding agreements are thus necessary to facilitate access to justice for the class, and promote behaviour modification, if ultimately a court finds the defendants, or any of them, have engaged in behaviour that ought to be modified,” the court said.
The court also found the financier has the resources to pay a costs award against it if the banks prevail in the class actions.
As a result, it granted the plaintiffs’ motions and approved the proposed funding agreements.
In February, the Ontario Superior Court approved $15.9-million settlement of a class-action lawsuit against Toronto-Dominion Bank, which focused on whether the bank had properly disclosed that customers could be twice charged the $48 NSF fee.