What is a class proceeding?
A class proceeding (often referred to as a class action) is a type of lawsuit where a group of people who have been subjected to the same, or similar, legal wrongs are represented collectively by one or more members of the class, who act as the voice for the group as a whole and who instruct the lawyers for the plaintiffs on behalf of the whole class.
A proposed class proceeding is not a class proceeding until the court determines that it has met the requisite legislative test and certifies the action as a class proceeding.
Class proceedings have three main goals: access to justice, behaviour modification, and judicial economy. A class proceeding makes the legal process simpler and more manageable for each class member seeking to make a claim. It often does not make economic sense for each person of an affected class to sue the defendant individually, because the money sought on an individual basis is less than the legal costs it would take to prosecute the case. A class proceeding functions as an affordable procedural vehicle for the victims of mass wrongs.
What is this proceeding about?
Veterans Affairs Canada administers certain disability benefits for current and former members of the Canadian Armed Forces and the Royal Canadian Mounted Police, which must be adjusted annually. The class proceeding seeks damages for alleged underpayments that occurred between 2002 and the present because of errors in the calculation of annual adjustments under section 75 of the Pension Act.
What are the allegations in the proceeding?
Annual adjustment provisions under Part V of the Pension Act require that the basic pension amounts listed in Schedule I be adjusted annually based on the statutory formula set out in section 75 of the Pension Act.
Annual adjustments ensure that basic monthly disability pensions and awards keep pace with the cost of living and price inflation. The annual adjustments are based on calculations that take into account: (a) annual increases in the Canadian Consumer Price Index; and (b) average wages of certain categories of federal public sector employees minus income tax for a single person calculated in the province with the lowest combined provincial and federal income tax rate (“Wage Rate”).
On 5 November 2018, Canada’s Veterans Ombudsman announced that his office had discovered that Veterans Affairs Canada (“VAC”) had failed to factor the basic provincial tax credit into the Wage Rate used in indexing calculations under section 75 of the Pension Act, which resulted in “an accounting indexation error” by VAC and lower annual adjustment rates than what the rates would have been in the absence of the error. This error led to reduced payments to eligible recipients of disability benefits. The Veterans Ombudsman reported that VAC estimated that this error affected about “270,000 Veterans” of the Canadian Armed Forces and the Royal Canadian Mounted Police as well as “survivors and their estates”. The Government of Canada has publicly acknowledged this error and announced that $165 million had been secured for correcting the error, which Canada has said it will pay out without interest.
Based on access to information requests and other investigations made since the Veterans Ombudsman discovered the original indexation error, the Plaintiffs have learned about additional errors in VAC’s annual indexing calculations under section 75 of the Pension Act, and allege:
- VAC failed, from 2002 to present, to calculate the Wage Rate using the province or territory with the lowest combined provincial and federal income tax rate (the Nunavut income tax rate should have been used instead of the rates applicable in Ontario and British Columbia);
- VAC failed, from 2007 to present, to include the Canada Employment Amount in its calculation of the Wage Rate; and
- VAC failed, from 2002 to present, to include the Northern Resident Deduction in its calculation of the Wage Rate.
The Plaintiffs allege that affected individuals are entitled to interest on the amounts wrongfully withheld and that they are entitled to equitable compensation for loss of use of entitlements on the amounts wrongfully withheld.
Who can participate in this class proceeding and why would you?
The Federal Court has defined the class as:
All members and former members of the Canadian Armed Forces and Royal Canadian Mounted Police, and their spouses, common law partners, dependants, survivors, orphans, and any other individuals, including eligible estates of all such persons, who received – at any time between 2002 and the present – disability pensions, disability awards and other benefits from Veterans Affairs Canada that were affected by the annual adjustment of the basic pension under section 75 of the Pension Act including, but not limited to, the awards and benefits listed at Schedule “A” of the certification order:
- Pension Act: pension for disability; pension for death; attendance allowance; allowance for wear and tear of clothing or for specially made apparel; and exceptional incapacity allowance;
- Veterans Well-being Act: disability award; and clothing allowance;
- Veterans Well-being Regulations: remuneration of an escort;
- Veterans Health Care Regulations: remuneration of an escort; and treatment allowance;
- Veterans Review and Appeal Board Act: compassionate award;
- Civilian War-related Benefits Act: war pensions and allowances for salt water fishers, overseas headquarters staff, and air raid precautions workers; and injury for remedial treatment of various persons and voluntary aid detachment (World War II);
- Children of Deceased Veterans Education Assistance Act: monthly allowance for education; and
- Flying Accidents Compensation Regulations: flying accidents compensation.
The disability benefits listed at Schedule “A” of the certification order rely on the basic pension indexation provision under section 75 of the Pension Act. The Plaintiffs allege that all benefits relying on the basic pension indexation provision are affected by an error in the indexation calculation under section 75.
If the class proceeding succeeds at trial, or is settled, class members who do not opt out of the class may be entitled to a payment.
What do I need to do to take part in the proceeding?
If you are a member of the class, you don’t need to do anything to be included in the proceeding. All class members have the right to participate in the class proceeding.
If you think you may be a class member and want to receive updates on the progress of the class proceeding and copies of legal notices, please register by completing the online registration form.
You can get more information about the action or class membership by emailing class counsel at [email protected].
Who are the lawyers for the class?
The lawyers for the class (“class counsel”) are:
- Gowling WLG (Canada) LLP (Toronto);
- Michel Drapeau Law Office (Ottawa);
- Murphy Battista LLP (Kelowna and Vancouver);
- Koskie Minsky LLP (Toronto); and
- McInnes Cooper (Halifax).
How much will it cost me to participate in the class proceeding?
There are no out-of-pocket legal fees. The lawyers are paid on a contingency basis under an agreement with the representative plaintiffs.
How much do the lawyers get paid?
If the case is unsuccessful, there will be no legal fees. If the class proceeding is resolved in favour of the class, either through contested litigation or a negotiated settlement, class counsel will be paid at their regular hourly rates for any amount recovered up to $165 million. If the amount recovered exceeds $165 million, class counsel may receive a scaled fee of up to 30% of any amounts recovered above $165 million. The Federal Court must approve class counsel’s fees and any settlement of the class proceeding.
Will I receive compensation if I am a class member?
If you are a class member and the class proceeding is resolved in favour of the class, either through contested litigation or a negotiated settlement, you may be eligible to receive a payment.
How are class proceedings resolved?
Class proceedings that are litigated proceed to a common issues trial where the court will render judgement on the questions of law and fact common to the class. If some or all of these common questions are resolved in favour of the class, it may be necessary for individual issues to then be determined through a court-ordered process.
Class proceedings can also be resolved through a negotiated settlement of the action, which must be approved by the court. A court will only approve a settlement of a class proceeding if it is fair, reasonable, and in the best interests of class members.
Register to participate in the class proceeding
If you are a member or former member of the Canadian Armed Forces or the Royal Canadian Mounted Police – or a spouse, common law partner, or dependant of a veteran – and you received, at any time between 2002 and the present, certain disability benefits from Veterans Affairs Canada, you may be a member of the class. Eligible estates of persons who received these disability benefits may also be class members.