SCC sets guidelines for class actions involving an adjudication process

The Indian Residential Schools Settlement Agreement was a negotiated settlement between the parties, and it provided for two avenues of compensation: i) a common experience payment; and ii) an Independent Assessment Process. The IAP determines what kind of compensation a claimant should receive for specific harm that they suffered, and decisions are made by adjudicators. Each province and territory has a supervising judge to oversee how the settlement agreement is applied.

At issue in the case was the right of review by a supervising judge, i.e., whether a judge was permitted to intervene in an adjudicator’s decision.

The appellant had made a claim under the IAP, alleging that the incident he suffered while attending the residential school constituted compensable sexual abuse within the meaning of the IAP. His claim was rejected by the initial adjudicator because, although she believed J.W.’s account, she was not satisfied that the perpetrator acted with a sexual purpose, which she concluded was an essential element to demonstrate that the incident was compensable.

Under the adjudication process, J.W. was entitled to two levels of internal review, both of which were unsuccessful. He then brought a “request for directions” to a supervising judge, pursuant to the agreement. The supervising judge found errors in the adjudicator’s interpretation of the IAP warranting judicial intervention and remitted J.W.’s claim for re‑adjudication. A reconsideration adjudicator allowed J.W.’s claim and awarded him compensation of $12,720. However, before the reconsideration decision was implemented, the government appealed the supervising judge’s decision. The Manitoba Court of Appeal found that there was no basis upon which the supervising judge could intervene and overturned his decision.

In concurring reasons, five judges were split 3/2. Three judges, led by Justice Rosalie Abella, with Chief Justice Richard Wagner and Justice Andromache Karakatsanis concurring in her reasons. They decided that judicial intervention, i.e., by the supervising judge, was necessary in the face of unauthorized modification of the agreement. In concluding that a sexual purpose was an essential element of the offence committed against J.W., Abella, Wagner and Karakatsanis found that the first adjudicator had modified the agreement without authorization and contrary to the intention of the parties, meaning the supervising judge was permitted to intervene.

Failure to correct the error would undermine purpose of the whole agreement, they found.

In concurring reasons, Justice Suzanne Côté, also writing for Justice Michael Moldaver (and with the support of the two dissenting judges on this point), found that judicial recourse was only available when the adjudicator failed to apply the terms of the agreement. This case, they found, was not a case of failure to apply the terms of the agreement. What the supervising judge did was to substitute his own opinion for what the IAP provided, when the role of the supervising judge should be only to determine the category of the claim (e.g., sexual assault).

However, Côté wrote, this case raised unusual circumstances that required a court to intervene and involved a “unique dilemma” for which the agreement required no internal recourse. The chief adjudicator of the Indian Residential Schools Adjudication Secretariat had conceded that the decisions of the initial and review adjudicators in this case were aberrant and that he had no authority to reopen J.W’s claim despite this conclusion. The chief adjudicator’s inability to remedy such an error in IAP decisions is, therefore, inconsistent with the role conferred upon him by the parties and represented an injustice to J.W.

In dissenting reasons, justices Russell Brown and Malcolm Rowe found that there should be no court intervention in this case; they agreed with the concurring view that intervention should be possible given a procedural gap in the IAP, but they saw no gap in this case.

Martin Kramer, a partner in Olschewski Davie in Winnipeg and counsel for the appellant, called the decision complicated in that there are two decisions concurring in the result and a dissent that would have dismissed the appeal.

The decision of Côté, which concurred in the result and allowed the appeal, was consistent with the dissenting decision on standard of access to the courts, Kramer told Legal Feeds. “That construal that they appear to agree on is fairly narrow, whereas the other decision allowing the appeal, of Abella and two others, construed the standard of access to the courts [in such cases] in a slightly less narrow way.”

In Kramer’s view, probably the broadest implication of the case is that “in the future, when there is a settlement of a class action that involves the creation of an adjudication process for the adjudication of individual claims, that the parties need to be very careful in how they delineate the basis on which the individual claimants will have access to the court if they are unhappy with the results of the adjudication process.”

This case will have implications for how those settlement agreements are drafted. However, given that the independent assessment process is almost complete, the implication of the decision for other cases is likely to be somewhat limited, Kramer said.

In an emailed statement, a federal government spokesman from the Crown-Indigenous Relations and Northern Affairs Canada department provided Legal Feeds the following comment: 

"Canada is committed to ensuring all survivors of Residential Schools receive the compensation they are entitled to under the Indian Residential Schools settlement agreement.

"Today, the Supreme Court of Canada provided some much needed clarity on the laws around the settlement agreement. We are carefully reviewing the decision and looking forward to working with parties to ensure the letter and spirit of today’s decision is respected."