



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Main v. The Hershey Company,









2011 BCCA 21




Date: 20110118

Docket:
CA038259

Between:

Jacob Stuart Main

Respondent

(Plaintiff)

And

The Hershey
Company and Hershey Canada Inc.

Appellants

(Defendants)

And

Cadbury Schweppes
Plc, Cadbury Adams Canada Inc., Itwal Limited,
Mars, Incorporated, Mars Canada Inc. formerly known as Effem Inc.,
Nestle S.A. and Nestle Canada Inc.

Respondents

(Defendants)

The
front page of the judgment was corrected on April 4 and 7, 2011.




Before:



The Honourable Mr. Justice Hall





The Honourable Madam Justice Levine





The Honourable Mr. Justice Tysoe




On appeal from: Supreme
Court of British Columbia, June 10, 2010
(
Main v. Cadbury Schweppes plc
, 2010 BCSC 816, Vancouver Registry S078807)

Oral Reasons for Judgment




Counsel for the Appellants:



J.S. Maidment
A. Boudreau





Counsel for the Respondent, J.S. Main:



L.P. Brasil





Counsel for the Respondents, Cadbury Schweppes plc &
  Cadbury Adams Canada Inc. :



C. Naudie





Counsel for the Respondent, Itwal Ltd.:



M. Lam
D. Houston





Counsel for the Respondents, Mars Inc. & Mars Canada
  Inc.:



J.C. MacInnis





Counsel for the Respondent, Nestle S.A. & Nestle
  Canada Inc.:



D. Neave





Place and Date of Hearing:



Vancouver, British
  Columbia

January 17, 2011





Place and Date of Judgment:



Vancouver, British
  Columbia

January 18, 2011








[1]

LEVINE J.A.
: These appeals are from the orders of a Supreme Court
justice approving a settlement agreement in a class proceeding.

[2]

The class action was brought against four chocolate manufacturers (which
I will refer to in these reasons for judgment as Cadbury, Hershey, Mars, and
Nestle) and a chocolate distributor (ITWAL Limited), alleging price fixing. The
causes of action are the intentional torts of conspiracy and interference with
economic relations, and a statutory claim for damages under s. 36 of the
Competition
Act
, RS 1985, c. C-34, for conduct contrary to Part VI of that
Act
.

[3]

The plaintiff settled with Cadbury and ITWAL. The terms are summarized
in the appellant, Hersheys, factum, as follows:

a)

Cadbury
will pay $5.7 million in respect of the claims of the entire Canadian
settlement class;

b)

ITWAL will
pay no money but instead will assign to the plaintiff any right of action that
ITWAL may have against the NSDs;

c)

The
plaintiff will pursue the NSDs jointly and severally for the alleged
overcharges collected by the SDs;

d)

Any claim
by the NSDs or any other person for contribution and indemnity against Cadbury,
ITWAL or any of the other numerous other Releasees will be prohibited; and

e)

Notwithstanding the settlement with the SDs, the plaintiff will
restrict his claim against the NSDs to the NSDs proportionate share of
liability only if and when the NSDs establish, at trial, that there is a right
of contribution and indemnity. Thus, the NSDs remain exposed to liability for
profits earned and retained by Cadbury and ITWAL.

[4]

The SDs are the Settling Defendants (Cadbury and ITWAL). The NSDs
are the Non Settling Defendants (Hershey, Mars and Nestle), who are the
appellants in the three appeals.

[5]

The approval of the settlement was made pursuant to ss. 12 and 13 of the
Class Proceedings Act
, R.S.B.C. 1996, c. 50:

12.       The court may at any time make any order it
considers appropriate             respecting the conduct of a class proceeding
to ensure its fair and expeditious determination and, for that purpose, may
impose on one or more of the parties the terms it considers appropriate.

13.       The court may at any
time stay any proceeding related to the class             proceeding on the
terms the court considers appropriate.

[6]

The chambers judge followed the reasoning of Strathy J. of the Ontario
Superior Court in the related Ontario proceeding:
Osmun v.
Cadbury Adams Canada Inc.
,
2010
ONSC 2643("
Osmun
settlement reasons"). Subsequent to the BC
approval, the settlement was also approved by the Quebec Superior Court, and
the Ontario Court of Appeal upheld the judgment of Strathy J. (2010 ONCA 841). Counsel
informed us at the hearing of these appeals that applications for leave to
appeal to the Supreme Court of Canada will be made from the order of the
Ontario Court of Appeal, and, if these appeals are dismissed, from the order of
this Court.

[7]

The crux of the settlement agreement is a bar order,
which the appellants refer to as injunctions and stays of proceedings. The
bar order prohibits any claim for contribution or indemnity by NSDs against
SDs, and permits the plaintiffs, unless the law permits the NSDs to claim
contribution and indemnity, to claim joint and several damages from the NSDs
for all of their damages, including those that would have been apportioned to
the SDs if they had not settled.

[8]

The salient provisions of the bar order are:

1.
.... (I)   Proportionate Liability means
that proportion of any judgment that, had they not settled, this Court would
have apportioned to the Cadbury Releasees; and ...

20.
THIS COURT ORDERS that all claims for
contribution, indemnity or other claims over, whether asserted, unasserted or
asserted in a representative capacity, inclusive of interest, taxes and costs,
relating to the Released Claims (including, without limitation, the ITWAL
Claims, whether held by ITWAL or an assignee) which were or could have been
brought in the Main Proceedings or the Additional Proceedings (whether or not
brought in the Main Proceedings or in the Additional Proceedings), by any
Non-Settling Defendant or any other Person or party, against a Cadbury
Releasee, or by a Cadbury Releasee against any Non-Settling Defendant or any
other Person or party (), are barred, prohibited and enjoined in accordance
with the terms of this order.

21
. THIS COURT ORDERS
that if the Court determines that there is a right of contribution and
indemnity or other claim over, whether in equity or in law, by statute or otherwise:

(a)  the members of the BC Settlement Class shall
not be entitled to claim or recover from the Non-Settling Defendants that
portion of any damages (including punitive damages, if any), restitutionary
award, disgorgement of profits, interest and costs (including investigative
costs claimed pursuant to s. 36 of the
Competition Act
) that corresponds
to the Proportionate Liability of the Cadbury Releasees proven at trial or
otherwise; and

(b)  this Court shall
have full authority to determine the Proportionate Liability of the Cadbury
Releasees at the trial or other disposition of this action, whether or not the
Cadbury Releasees appear at the trial or other disposition and the
Proportionate Liability of the Cadbury Releasees shall be determined as if the
Cadbury Releasees are parties to this action and any determination by this
Court in respect of the Proportionate Liability of the Cadbury Releasees shall
only apply in this action and shall not be binding on the Cadbury Releasees in
any other proceedings.

[9]

The chambers judge found, leaving aside the question of the fairness of
the bar orders, that the settlement agreements were fair and reasonable and
... in the best interests of the class (at para. 11). He also found there is
nothing unfair about the terms of bar order (at para. 20):

In summary,
there is nothing unfair about the terms of the bar order. The NSDs continue to
have the ability to claim the right of contribution and indemnity from the SDs.
If they are successful with that argument, the settlement will be
"symmetrical". If they are not successful, it will not. They have not
lost any substantive right as a result of the bar order.

[10]

In their factums, the appellants contended that the broad and sweeping
injunctions are not authorized by ss. 12 and 13 of the
CPA
, and in any
event the chambers judge did not apply the proper legal tests in making the
orders. They maintain that the bar order creates a material risk of unfairness
to the NSDs and others.

[11]

On the hearing of the appeals, counsel for Hershey, who made submissions
that were adopted by the other appellants, argued that the terms of the
settlement are contrary to the intention of the BC Legislature embodied in ss.
4(1) and (2) of the
Negligence Act
, R.S.B.C. 1996, c. 333, and the
principles established by this Court for partial settlements in
British
Columbia Ferry Corp. v. T & N plc
, (1996), 16 B.C.L.R. (3d) 115 (C.A.).
Counsel argued that the
Act
clearly provides that where several
tortfeasers are made subject to joint and several liability, they have a right
of contribution and indemnity against each other: see
Brown v. Cole
(1995), 14 B.C.L.R. (3d) 53 (C.A.), 43 C.P.C. (3d) 111 at para. 29, quoting
Lambert J.A. in
London Drugs Ltd. v. Kuehne & Nagel  International Ltd.
(1990), 45 B.C.L.R. (2d) 1, affirmed [1192] 3 S.C.R. 299. He says further that
the
BC Ferry
model for partial settlements embodies the legislative
intent by limiting a plaintiffs claim against non-settling defendants to their
proportionate liability where claims by the non-settling defendants for
contribution and indemnity against the settling defendants are excluded by the
settlement.

[12]

The appellants say that the law in BC is well-established that the
apportionment provisions in the
Negligence

Act
apply to
intentional torts, and therefore the bar order in this case should have
followed the
BC Ferry
model. Counsel for the appellants argued that the
chambers judge erred in approving the bar order ostensibly on the basis that
the law in BC as to apportionment in cases of intentional torts is unsettled,
citing the chambers judges reasons (at para. 19):

Finally,
I reject the suggestion that the law in British Columbia is different such that
any bar order must contain the symmetrical provisions that are usually seen in
a
B.C. Ferry
release. Courts in other provinces have decided that fault
does not include torts other than negligence. The British Columbia courts have
accepted that fault applies to a broad variety of intentional wrongs:
Anderson
v. Stevens
(1981), 29 B.C.L.R. 355 (S.C.);
Aylsworth v. Richardson
Greenshields of Canada Ltd
(1987), 21 B.C.L.R. (2d) 49 (C.A.); and
Brown
v. Cole
(1995), 14 B.C.L.R. (3d) 53 (C.A.). However, the issue has not been
considered by the Supreme Court of Canada. In
Blackwater v. Plint
, 2005
SCC 58, a case from British Columbia, the Court had the opportunity to consider
the issue but decided that it was not necessary to do so in order to render a
decision (para. 67). More importantly, the specific issue that needs to be
considered in this case -- whether there is a right of contribution and
indemnity between co-conspirators in a case involving price-fixing claims and
breaches of the
Competition Act
-- has not been considered by any court
in Canada. The NSDs' suggestion that the law is settled in British Columbia is,
quite simply, without merit.

[13]

Counsel conceded that the chambers judge was correct when he said that
no court in Canada has considered whether apportionment applies to the
statutory claim under the
Competition Act
. He maintained nonetheless
that the chambers judge has introduced uncertainty into the law where there is
none, and erred in approving the settlement on that basis.

[14]

It is my opinion that the appellants arguments are simply untenable. The
chambers judge made no error in summarizing the present state of the law in BC
or Canada, and the provisions of the bar order clearly contemplate these
circumstances. They bar the NSDs claims for contribution and indemnity, but
provide that where there is a legal right of contribution and indemnity, the BC
plaintiffs claim against the NSDs will not include the proportionate
liability of the SDs -- effectively the
BC Ferry
model. Thus, if the
NSDs are found liable for intentional torts to which the contribution and
indemnity provisions of s. 4 of the
Negligence Act
would have applied
but for the bar order, the BC plaintiffs claims will be limited to the NSDs
proportionate liability. If the NSDs are found liable for damages under s. 36
of the
Competition Act
, and it is determined that no apportionment
provisions apply, the
BC Ferry
model does not apply. All of this is
consistent with the appellants arguments about the policy of the Legislature
embodied in s. 4 of the
Negligence Act
and the principles developed by
this Court in
BC Ferry

Corp.

[15]

Appellants counsel could not identify any prejudice to the NSDs from
the bar order, other than the necessity to continue to be involved in the
litigation and establish the nature of their liability, if any. Such prejudice,
however, does not arise from the bar order but from the litigation itself. The
NSDs settlement prospects, and the strategy they follow in seeking settlement,
are not matters in which this Court can involve itself.

[16]

All other matters concerning the fairness of the settlement have been
thoroughly canvassed in the reasons for judgment of Strathy J. in the
Osmun
settlement reasons and by the chambers judge in his reasons for judgment, and
the appellants did not raise any issues other than the terms of the bar order. I
agree with the Ontario Court of Appeal that the bar order does not interfere
with [the appellants] substantive rights, and accordingly, I would dismiss
the appeals.

[17]

HALL J.A.
: I agree.

[18]

TYSOE J.A.
: I agree.

[19]

HALL J.A.
: The appeals are dismissed.

(submissions by
counsel re. costs)

[20]

HALL J.A.
: It occurs to me that the four counsel who are here for
the respective four appellants will want to say something. There are two
approaches that I could suggest. We do have some written material from learned
counsel for the respondents. If counsel for the appellants deem it requisite or
desirable that they have an opportunity to provide something in writing, we
would certainly be open to that suggestion, but we would not foreclose counsel
at the present moment from saying anything they want to orally.

(submissions by
counsel re. filing written submissions)

[21]

HALL J.A.
: I think that we would afford to counsel for the
appellants a period of 21 days to file written material, they think requisite,
with the Registrar, and that following that the respondents would have 10 days
from that period to file anything in writing that they think is requisite in
response. We would then let you know what we think. My intention is that within
about a month we will have the materials from all sides then we can address the
issue. We will reserve on that issue until we receive the material.

The Honourable Mr. Justice Hall

The
Honourable Madam Justice Levine


