Authorson (Litigation guardian of) v. Canada
PROCEEDING UNDER the Class Proceedings Act, 1992
Joseph Patrick Authorson, deceased by his Litigation
Administrator, Peter Mountney and by his Litigation
Guardian, Lenore Majoros, plaintiff, and
The Attorney General of Canada, defendant
 O.J. No. 5589
263 D.L.R. (4th) 521
 O.T.C. 1124
49 C.C.P.B. 161
144 A.C.W.S. (3d) 867
145 A.C.W.S. (3d) 62
2005 CarswellOnt 7485
Court File No. 99-GD-45963
Ontario Superior Court of Justice
J.H. Brockenshire J.
Heard: May 24-27, 2005.
Judgment: December 29, 2005.
Pensions and benefits law -- Pensions -- Administration of pensions -- Investment of funds -- Federal Government liable for aggregate damages of $4.6 billion for failing to meet its obligation as a trustee to prudently invest veterans' pensions and allowances for period of 85 years.
Pensions and benefits law -- Pensions -- Government plans -- Armed forces -- Veterans' pensions -- Federal Government liable for aggregate damages of $4.6 billion for failing to meet its obligation as a trustee to prudently invest veterans' pensions and allowances for period of 85 years.
Motion by the plaintiffs for summary judgment fixing aggregate damages for their action brought under the Class Proceedings Act. The class action involved the issue of the entitlement of veterans of the Armed Services of Canada to interest on pensions and allowances that had been held in trust by the Federal Government over 85 years. The Government had failed to invest the money or to credit any interest on the money that it held. The Government amended its Veteran's legislation on January 1, 1990 to bar any action claiming interest prior to that date and thereafter began to pay interest at 90 per cent of the T-bill rate. The trial court and Court of Appeal held that the Government was liable for breach of trust and that a statutory bar against a claim for interest was contrary to the Canadian Bill of Rights. The Supreme Court of Canada found that the statutory bar was within the authority of the Government of Canada. When the matter came back before the trial court, the court found that the class was entitled to damages but the amount of interest had to be deducted from the total figure. This decision was being appealed to the Court of Appeal. The trial court also held that an aggregate assessment of damages was appropriate and that the equitable obligation of the Government to invest required that it invest in a mixed portfolio of assets. The class position on damages was that $4.6 billion in potential earnings would have accrued if the amounts were properly invested. The expert employed by the class who calculated the potential damages used the benefit of hindsight as directed by the court to make one shift per year in favour of the asset class that did the best in the proceeding year. The Crown argued that the assessment should not have been conducted on a summary judgment motion, as the evidence raised genuine issues for trial. It also argued that when it started paying interest in 1990, it meant that nothing but interest was recoverable from and after that date. The Crown also argued that it was against public policy to award aggregate damages because most of the veterans involved were now dead and had no spouses or dependents, and the court had found in favour the statutory provision calling for the lapsing of estates of veterans who had died while their pensions and allowances were under administration. It further argued that the court should take transaction costs into account in determining the amount of damages it had to pay.
HELD: Motion allowed. The calculated amount of $4.6 Billion was a fair and reasonable amount for the award of aggregate damages. Pre-judgment interest was awarded from December 31, 2004 onwards. There was a general lapsing provision for treatment allowances and a lapsing provision covering pensions and other allowances up to 1986. It had not been argued whether a damage award for failing to invest would be caught by a lapsing provision. The issue of who was entitled to what portion of the damage award and what portion reverted to the Crown could be determined at a later date. When treatment allowances were held in trust by the Government, the equitable requirement to invest as a prudent trustee did not apply from 1920 until the end of 1954. It was appropriate to make some deduction for transaction fees. The expert appropriately utilized the concept of the application of the full benefit of hindsight. He did not attempt to include shifts within asset classes or attempt to time the market. His approach produced a result more modest than what could have been produced if full hindsight had been applied. As of January 1, 1990, the Department of Veterans' Affairs Act was amended to provide that no claim for interest could be made prior to that date. However, there was no corresponding legislative provision providing that veterans would be entitled to nothing more than a Government decreed rate of interest. The Government was still required to meet its obligation as a trustee to satisfy the common law and equitable duties of a trustee to invest the funds properly while they were held.
Statutes, Regulations and Rules Cited:
Canadian Bill of Rights,
Class Proceedings Act, 1992, s. 12
Courts of Justice Act, s. 130
Department of Veterans Affairs Act,
Financial Administration Act, s. 21(2)
Indian Act, s. 61(2)
Indian Oil and Gas Act,
Ontario Rules of Civil Procedure, Rule 25.11
Pension Act, R.S.C. 1985, c. P-6, s. 31, s. 31(1), s. 31(2), s. 31(3) C
Veterans Treatment Regulations, s. 52
Raymond G. Colautti, David G. Greenaway, Peter Sengbusch, for the Plaintiff
John Spencer, William A. Knights, Roslyn Mounsey, Sheila Hepworth, Cynthia Koller, for the Attorney General
MOTION FOR SUMMARY JUDGMENT - QUANTUM OF AGGREGATE DAMAGES
REASONS FOR DECISION
J.H. BROCKENSHIRE J.:--
1 This is, hopefully the last of a series of decisions by me in Summary Judgment Motions brought before me following the decision of the Supreme Court of Canada on the Bill of Rights issue in this Class Action.
2 The object of the hearing before me from May 24th to the 27th, 2005, was the fixing of the aggregate damages that would have accrued to the thousands of veterans of the Armed Services of Canada who, from the end of 1919 to the present time were entitled to pensions and allowances and who were found, under the Veteran's Legislation to be incapable of handling such pensions and allowances, so that the Federal Government, as a Trustee, took in and held those funds for them. The Government failed to invest this money, and although it held it in the Consolidated Revenue Account, so that it was available to the Government to use, it failed, except for a few isolated incidences, to even credit any interest on it. What the Federal Government did do, when Auditor General's Reports pointed out this impropriety and the potential liability of the Government, was to, by legislation effective January 1, 1990, amend the Veteran's Legislation to bar any action claiming interest prior to that date, and started to pay interest at 90% of the T-Bill rate, thereafter.
3 This class action was commenced on behalf of all of those veterans, and a decision of this court, upheld by the Court of Appeal, found the Government liable for a breach of trust. Those same decisions also held that the statutory bar against a claim for interest was contrary to the Canadian Bill of Rights. That issue alone went to the Supreme Court of Canada where that Court found that the statutory bar was within the authority of the Parliament of Canada.
4 The matter then came back again to this court, a finding was made that the Supreme Court of Canada decision was limited to the issue of interest and found that the class was entitled to damages, but that the amount of "interest" as calculated under the Veterans' legislation had to be deducted from the total figure. That decision, reported in 69 O.R. (3d) 106, is being appealed to the Court of Appeal.
5 Pending that appeal, a further hearing held before this court, which did not allow a number of Crown defences, determined that an aggregate assessment was appropriate, and that the equitable obligation of the Government to invest, which was not limited in the legislation that made it a Trustee, called for much more than buying T-Bills, then deducting 10% as the Crown suggested. However I concluded I could not complete the assessment of damages on the basis of the information then before me, because there were a number of other pieces of information I needed, and that Professor Charette (the expert retained by class counsel) had indicated he needed, which I listed in Paragraph 77 of that decision, now found at p. 155 of 69 O.R. (3d).
6 In due course, both class counsel and Crown counsel gathered together great quantities of information which was presented to me and argued on September 20-23, 2004. I released a further decision dealing with the information and the arguments that had been presented to me on December 31, 2004, which is now reported at 249 D.L.R. (4th) 214. In Paragraph 158 of that decision (p. 255) I had summarized my findings. The findings at (8) and (9) of that paragraph are the ones that were the basis for a request for still further information. For convenience I reproduce them as follows:
(i) The appropriate investment, for the entire period covered in this lawsuit, and until payment of the amount to be assessed, is a mixed investment portfolio.
(ii) The appropriate asset mix, for the entire period, is 60% bonds, 35% equities and 5% cash, with the provisos that, for flexibility to respond to changing market conditions, and to maximize annual returns, the proportion of bonds could rise to 70% or drop to 50%, the proportion of equities could rise to 45% or drop to 25%, and the proportion of cash could rise to 20%, but not drop below 5%.
7 I added to this, in paragraph 148 of my decision, after citing authority therefore, that: "The task of making and justifying such changes in asset allocations is to be done as of the time of trial, with the full benefit of hindsight."
8 Having made those findings, I adjourned the assessment of damages for Professor Charette, to calculate.
The best annual income that could be earned from the portfolio above found to be most suitable, using the figures of Mr. Hodson, accepted by all counsel as the best available as to the total principal to be invested each year, and the figures adopted by Professor Charette from the comments of Mr. Gorham, a Crown expert, as to the annual earnings of each type of asset, and using the limited flexibility permitted to vary from the asset mix indicated as the norm, with explanations to be given if such deviations are made.
9 I directed that the results of those calculations would be shared and commented on and the assessment would be completed on the basis of either written or oral submissions, as soon as possible. I ended by asking counsel, if any factual errors were found in my reasons, to bring the same to my attention, for possible correction, before any formal order was taken out. I also advised that if any further direction should be needed, I could be spoken to.
10 No one contacted me about factual errors, or sought further directions. A formal order based on my reasons, was not taken out. However, in due course, class counsel filed a one-volume record, containing the calculations of Professor Charette and his explanations therefore, and later filed a supplementary record containing further calculations of Professor Charette, after he had received the critiques of the defence experts. The Crown filed an 8-volume motion record, consisting of affidavits of several of their experts, with voluminous schedules attached. Class counsel brought a preliminary motion under Rule 25.11 to strike all of this material as prejudicial, scandalous and vexatious and as an abuse of process.
11 In order to shorten this decision, and keep it focused on the amount of the aggregate damages, I have prepared a separate decision on that motion to strike, which will be released at the same time as this decision.
12 During the hearing before me, in May of 2005, Crown counsel raised arguments relating to my taking, in Paragraph 147 of my decision released December 31, 2004, judicial notice of the practice of providing a basic asset allocation mix for an investment portfolio, but with provision for variance from the norms within fixed limits. The use of that provision for variance had a huge effect -- Professor Charette's numbers utilizing the authority are some two billion dollars higher than the result if the asset allocations in the portfolio were held to their basic percentages for the 85 years under consideration. I directed a trial of the issue of whether the foundation existed for taking such judicial notice, which trial took place August 25th, and 26th, 2005.
13 I resolved the issue of whether I could take such judicial notice in the affirmative. Again, to keep this decision focused on the quantum of the aggregate damages, I have prepared separate reasons for my decision on the trial of the issue, which reasons will be issued at the same time as this decision.
14 Some of the matters discussed in these two ancillary decisions may have some bearing on the ultimate question addressed here, and if so, may be addressed in this decision.
15 Following the completion of the hearing before me in May of 2005, Crown counsel sent to me, in addition to a banker's box full of materials for the trial of the issue, what ended up as some two further banker's boxes full of either historical material, or calculations and tables, and revised calculations to add to the three banker's boxes from the hearing itself.
16 Mr. Colautti for the class, forwarded to me a 17-page letter dated October 3, 2005, which I take to be the class submissions on all of this new material, some of which, he argues, is favourable to the class position.
17 On October 7, 2005, Mr. Knights of the Crown Defence team forwarded to me a further volume of calculations by Mr. Gorham and advised that the Crown did not intend to file any further information or submissions.
18 While this flow of additional information was undoubtedly intended to provide completeness to the file, and to correct errors in previous documentation, including the inadvertent error by a Crown expert in failing to deduct some interest from annual damage amounts, which led to a complete recalculation, it had the effect of delaying this decision, and its companion decisions for many months past what I had thought would be a reasonable time to release my findings, when the hearing ended before me on May 27, 2005.
SPECIFIC ISSUE FOR DETERMINATION
19 The issue before me at this hearing was the quantification of the aggregate damages due by the Crown on the basis of the reasonable earnings over 85 years on the principal amounts held by the Crown for the class members, if such principal had been invested in the mixed portfolio I had described, with full benefit of hindsight and with interest, as defined in the D.V.A. Legislation, deducted.
THE RESULTING NUMBERS
20 The motion record for the present hearing has appended to it, the calculations of Dr. Charette, supported by his affidavit of February 11, 2004. The net amount which he arrived at, after deducting the D.V.A. interest, was $5,924,965,393.00 as of December 31, 2004.
21 That is a huge number. Professor Charette, in subsequent calculations and reports, reduced down the number, and input from Crown counsel and the Crown experts produced deductions from that number as well as recalculations of the figures upon which the final number was to be calculated, so that the final position of class counsel, in a submission letter of October 3, 2005, was in support of a figure of $4,646,581,722.00. While smaller, this is also a huge number.
22 Some explanation is, in my view, required as to how the figures could become this large. After all we are dealing with monthly pension numbers, which individually, through the years, would be relatively small, and then because the pensions themselves were received by or on behalf of the veterans, we are looking simply to the potential earnings that would have accrued if those amounts were properly invested.
23 It must be remembered that firstly we are looking at thousands of accounts. During the 70's and 80's, the Crown experts estimated there were 10,000 or more of them. Secondly, the period ran from the end of 1919 to the end of 2004 -- 85 years. Thirdly, we are looking to investing with a limited power of hindsight, because asset allocations could be shifted within limits. Dr. Charette in an accompanying report, also as of February 11, 2004, indicates the figure, without power to change the asset classes from 60% bonds, 35% equities and 5% cash would have been $2,066,611,180.00. Fourthly, we are dealing with the truly remarkable phenomenon of compounding. I think that everyone has seen, at one time or another, a depiction on a graph of the effect of compounding interest. The graph depicts a line which starts off nearly horizontal and then gradually, but inexorably rises, until at the right hand side of the graph, it is going nearly straight up. This case provides a graphic example of the power of compounding.
24 In his Affidavit of February 11, 2004, Dr. Charette notes that as of March 31, 1999, when this action was commenced, the damage figure would have been $3,508,536,385.00. As of October 31, 2000, when the original judgment was delivered by this court, the damages would have been $4,196,063,694.00. As of March 31, 2002, around the time the Court of Appeal delivered its decision, the damages were up to $4,404,734,063.00. To this I add, looking to the same tables, if the Government had addressed this problem in 1985, when the Auditor General's Reports made it plain and obvious that the earlier suspicions of the higher echelons of the bureaucracy were correct and that the Government was in breach of its obligations, the number would have been in the neighbourhood of $66,000,000.00.
25 At the same time, while the veterans were out their money the Government had at least the opportunity to have invested it. Even if they put it into a conservative portfolio of 60% bonds, 35% equities and 5% cash, and never varied those proportions, they would have, on Dr. Charette's calculations, earned over two billion dollars.
26 These "huge" numbers should in my view, be also viewed from the perspective of other governmental spending. For example, recent news releases indicate that the Government proposes spending $4.6 billion dollars on buying sixteen transport planes for the Armed Services.
THE CHARETTE CALCULATIONS
27 The initial report of Professor Charette on the Quantum of Damages is found in the Plaintiff's Motion Record at Tab 4, with the supporting and explanatory affidavit at Tab 2. It explains that the principal amounts used, on which to calculate the earnings are the revised Hodson balances of July 2004. Using the annual balances he applied the individual rates of return for bonds, equity and cash as set out in the Gorham report in June of 2004. Both Mr. Hodson and Mr. Gorham were experts retained by the Crown, which endorsed the figures they reported.
28 Professor Charette notes that while I specified that a base portfolio would be made up of 60% bonds, I had not specified any specific allocation within the bond component, so Professor Charette allocated that component to 20% Government of Canada Bonds, 20% Provincial bonds and 20% Corporate Bonds. I agree with that allocation. No Crown expert seriously disputed it.
29 To deal with the swings I permitted within the portfolio among the asset classes, Professor Charette formulated an algorithm. I quote the terms of that algorithm from Paragraph 11 of his affidavit as follows:
(i) Pursuant to the simple terms of the algorithm, if in any given year:
(b) The return on bonds is greater than the return on equity and if the return on bonds is greater than the return on cash, then the asset mix would be 70% bonds, 25% equities and 5% cash;
(ii) If the return on equity is greater than the return on bonds, and the return on equity is greater than the return on cash, then the asset mix would be 50% bonds, 45% equities and 5% cash;
(iii) If the return on cash is greater than the return on bonds, and the return of bonds is greater than the return on equities, then the asset mix would 55% bonds, 25% equities and 20% cash.
(iv) If the return on cash is greater than the return on equity, and the return on equity is greater than the return of bonds, then the asset mix would be 50% bonds, 30% equities, and 20% cash.
30 Professor Charette then carried out the calculations of the returns on the total year-end principal on hand using each of the three annual asset return rates, and then did a weighted average by weighing each individual asset class rate of return by its share in the asset allocation in that year.
31 He then deducted the value of the interest in each year under the Department of Veterans Affairs Act that I had found not claimable on my interpretation of the Supreme Court of Canada decision herein, and the interest actually paid by the D.V.A. starting in 1990, using the rates provided by Mr. Hodson in his supplementary report dated August 27, 2004.
32 Treatment Allowance Accounts, covered by specific regulatory provisions calling for the payment of simple interest thereon to March 19, 1953, were segregated in Mr. Hodson's report. And as directed in my decision of December 31, 2004, Professor Charette calculated simple interest only to March 19, 1953, and portfolio rates thereafter, on the Treatment Allowance Accounts.
33 After the affidavits and reports of the Crown experts were received, Professor Charette considered them all and prepared a further report of April 15, 2005. I concluded, in the Motion to Strike decision, that the materials from Professor Kirzner, Mr. Hodson and Mr. Gorham all related directly to estimating damages in accord with my December 2004 decision, but also noted that the three experts did not provide estimates based on a consistent set of assumptions and method of calculation.
34 However, Professor Charette did make amendments to his own calculations and prepared additional schedules based on both his own fund balances and the revised Hodson fund balances and following the most recent suggestions of Mr. Gorham on rates of return. He did not, in his own figures, change the presumed sub-allocation in the bond fund of 1/3 Government of Canada, 1/3 Province of Ontario and 1/3 corporate bonds, or did he change his algorithm.
PROFESSOR CHARETTE'S ALGORITHM
35 Professor Charette's approach to applying hindsight to the authority given in my earlier reasons for limited shifts among asset classes initially caused me some concern. His approach calls for making one shift, to the maximum permitted, in favour of the asset class that did the best in the proceeding year, effective as of the first of that year. Thus, on a once a year basis, it would capture, within the limits set out in my previous decision, the return for the year from the best of the three asset classes.
36 From the point of view of preparing calculations, this certainly has the benefit of relative simplicity -- only one calculation per year was needed. From the information available to Professor Charette, it would have been the only practical way in which he could make use of the authority given to make shifts in the asset bases. Professor Charette, the expert employed by the class, did the mathematical calculations, but he was instructed to do them based upon the figures produced by Mr. Hodson, a Crown expert, as to a value of the principal available for investment in each year, and using the annual figures for yields from equities, bonds and cash from the tables prepared by Mr. Gorham, another Crown expert. Those tables showed annual yields only.
37 The Crown experts, in their affidavits and reports, and the Crown, made much of the concept that asset allocation shifts are often permitted, but seldom used except as a way of holding market "drift" until rebalancing can be done, and characterized sudden large shifts in asset allocations as "tactical asset allocation," or market timing, which has proved in practice not to be successful. I view the annual review, and asset allocation changes, as called for by the algorithm, to be more in the nature of an annual review of the investment policy statement, which Mr. Barrasso, in his 2004 affidavit, and in the R.B.C. Portfolio Management Policy and Guidelines annexed, indicated was one of the basics of responsible investment. I did not note any disagreement among the Crown experts with the importance of an investment policy statement, and of its regular review.
38 The Crown experts commented in their affidavits, after seeing Professor Charette's algorithm, that if a fund manager changed asset allocations to the extreme limit of the range permitted, that would smack of tactical asset allocation, and would immediately get the manager in trouble, because if the selection was right, the day after the shift he would be in breach of his mandate, as the chosen class would continue to grow and thereby exceed the maximum value permitted for that asset class. Those comments, in my view, ignore the limited power of hindsight given in the authority to change the asset allocations, and more importantly ignore the fact that this is not a proposal for ongoing management into the future, but rather an attempt to produce an approximation of the potential gain that might have been there to be had in the past.
39 The concept of application of the full benefit of hindsight was put forth in the Supreme Court of Canada by Wilson J. in Guerin v. The Queen (1984), 13 D.L.R. (4th) 321, then by McLachlin J. (as she then was) in Canson Enterprises Ltd. v. Broughton & Co. (1992), 85 D.L.R. (4th) 129, summarized and accepted at Paragraph 93, of Cadbury Schweppes Inc. v. F.B.I. Foods Ltd. (1999), 167 D.L.R. (4th) 577 where Binnie J. at para. 93 quoted McLachlin J. saying, "... the plaintiff's actual loss as a consequence of the breach is to be assessed with the full benefit of hindsight ... but it is essential that the losses made good are only those which, on a common sense view of causation, were caused by the breach."
40 Here the loss was the loss of investment income on the funds held by the Crown, which included the loss of the opportunity to invest the funds as advantageously as possible. However, that loss is to be approached from a common sense point of view.
41 It is the common sense limitation that stands in the way of adopting the suggestion made by one of the Crown experts, that with the full benefit of hindsight, the prudent thing would be to invest in the winning numbers on the 649 Lottery.
42 My decision of December 31, 2004, based on the evidence of Mr. Barrasso, the only expert produced on investing funds held in a fiduciary capacity or in trusts or estates, was to direct that the funds be treated as if invested in a mixed portfolio with a limited authority to make changes in the asset allocations. In my view, this direction incorporates "a common sense view of causation" because the "breach" of the Crown was its failure to invest the funds in just such a portfolio.
43 Professor Charette, in dealing with this, made no attempt to include shifts within the asset classes -- such as moving from stocks in mines and minerals to stocks in say banks or food retailers, or from long bonds to short bonds, the kind of moves which the Crown experts indicated are part of investment management.
44 Neither did Professor Charette attempt to "time the market." Thus for instance in 1929 he did not propose a move from equities to bonds the day before the market crash. He simply looked to the income produced by each asset class over the entire year, even though it would obviously have been more profitable to hold stocks as the market rose, then be out and into bonds or cash just before the stock market collapsed.
45 In my view, this approach of Professor Charette, while perhaps the only practical one given the limitations on the information available that he could use, nevertheless produces a result more modest than what could have been produced if full hindsight had been applied.
PROFESSOR CHARETTE'S RESPONSES TO CROWN EXPERTS
46 Professor Charette, in the introduction to his review of the Defence Motion Record, dated April 15th, 2005, and found in the Supplementary Motion Record of the Class, concludes (in my view correctly) that Mr. Neufeld's affidavit does not deal substantively with my specific instructions in my December 31st, 2004, decision. Likewise, Mr. Scott's affidavit, while addressing some issues specific to the estimate of damage, does not attempt to follow my instructions. He notes that the affidavits of Professor Kirzner, Mr. Hodson, and Mr. Gorham all provide estimates of damages which seem to relate to the instructions I have given, but they are not based on a consistent set of assumptions and method of calculation. A lot of the estimates produced do not appear to relate to the specific instructions given by me, and there is no indication in the responding motion record which of the variety of estimates is being advanced as the most appropriate one.
47 My own comments on these affidavits may be found in my decision on the Motion to Quash, issued contemporaneously with this decision.
48 Professor Charette does deal generally with the question of the degree of precision possible in a damage estimate of this type, and specifically with a number of views and criticisms put forth by Mr. Hodson and Mr. Gorham.
49 Professor Charette points out that consistent rate of return series do not exist for most of the portfolio assets under consideration. He notes, for example, that from 1920 to 1948, while there were rates of return available on federal debt, there were no comparable rates available on provincial or corporate debt. Therefore, he had simply used a federal rate for that entire period. He notes that the specific provincial and corporate rates through that period could have been researched and somehow estimated, but that would have been very time consuming and very expensive, none of the defence experts had suggested it, and in his view it was reasonable not to do it.
50 He also notes that the figures on the basic principal amounts being considered in each of the years, provided by Mr. Hodson, which appear from the tables to be very accurate numbers, are in fact estimates, but as Mr. Hodson had said in his report of September 16th, 2002, "... it is a better estimate than the initial range of values advanced by the plaintiff based solely on the public accounts."
51 Professor Charette, in his affidavit, continues by responding to and commenting on various specific areas of disagreement between himself and Messrs. Hodson, Gorham and Kirzner. Class counsel, many months after the hearing in May, and after completely new calculations were done by Mr. Hodson, and Mr. Gorham had also done a great number of new calculations, had accepted the figure $4,646,581,722.00 produced by Mr. Hodson. Because of this, I mention the areas of disagreement that Professor Charette pointed out simply to illustrate the failure of the experts to collectively arrive at a single number.
52 Professor Charette notes that Mr. Gorham provided new rates of return based on the "revised C.I.A. rates." He also suggested basing the bond returns on the SCN Universe Bond Return index. Professor Charette says that index began in 1980 and that means approximating for the 60 year period from 1919 through 1979. Professor Charette also notes that Mr. Gorham, while referring to the "revised C.I.A. rates" seemed to have doubts about their accuracy. Professor Charette notes the wide variation in the total damage estimates produced by the experts, even when they all purported to use my portfolio formula. He attributes this in part to a difference in theory on how to handle the "backing out" of interest paid by the D.V.A., or in effect deemed to have been paid, to comply with the Supreme Court directive. He also notes that while both Mr. Hodson and Mr. Gorham purported to follow Mr. Kirzner's estimated transaction fees, they ended up some $170,000,000.00 apart. In his view, Mr. Gorham's suggestion of changing the year end from the calendar year to mid year would simply introduce a whole series of new estimates, and move the experts further apart on their final conclusion. Also, he feels that a misunderstanding on how to handle capital gains led to further confusion and diversity in the defence reports.
53 The defence experts, in their affidavits, of course had a great deal to say about Professor Charette and his approach. Two concepts raised by Professor Kirzner particularly point out that the numbers produced by all the experts are in fact really estimates. The first is "survivorship bias." Professor Kirzner points to the simple fact that an annual figure on the earnings of stocks or bonds captures the earnings of the individual entities making up the index that are still there at the end of the year. An investor may well have invested, during the year, in a company that went broke during the year so that its stocks and its bonds would have produced nothing. The result is that the earning index figures would be higher than what would actually have been earned in those markets by an investor, and in years of depression the difference could have been substantial. The other is "buying the market." The index numbers would be the result of statistical calculations of the total earnings of stocks or bonds during a year. In the present age of computers, it is now possible to buy mutual funds, traded on the stock market, that replicate all or part of the actual market. However, only a few years ago it would have been a massive undertaking for an individual to attempt, through a broker, to acquire all of the actual stocks or actual bonds that made up such a market. In my view, both of these concepts add to the appreciation that the apparently solid and accurate numbers produced by the experts are in fact ephemeral estimates.
54 Firstly, the Crown made clear, once again, that its fundamental position is that this law suit "... ended with the final defeat of the Plaintiff's Claim in the Supreme Court of Canada on July 17th, 2003." This was formally raised in the Crown factum to make clear that the Crown takes issue with the principles upon which this damage assessment has been proceeding. In my view, that issue was fully canvassed by me in my decision released December 22nd, 2003, reported in 69 O.R. (3d) 106. That decision is the subject of an appeal currently pending in the Court of Appeal.
55 Second, the Crown complained that the directives of this court, in continuing with the assessment, obliged the Crown to present evidence and develop assumptions that "... are fundamentally incompatible with the practices, role, and nature of the Crown under Canada's Constitution and system of law and government." I would comment that nevertheless Crown counsel rose to the task, gathered a most substantial body of evidence, presented before, during, and after the hearing, which in fact resulted in class counsel's position being $1.2 billion less at the end than it was at the beginning of the exercise.
56 Third, the Crown argued that this assessment was not an appropriate subject for a summary judgment motion, as the evidence presented raised genuine issues for trial. That argument has been raised on all of the many hearings in this case. In fact, all of the formal hearings in this case since its inception, except for the one trial of the issue of judicial notice, the Reasons for Judgment for which are being released concurrently with this decision, have been conducted in the format of summary judgment motions. I note that the appellate courts have not had any difficulty with that format in review of previous decisions in the case. The position of class counsel on this argument, which I have accepted before and accept now, is that there is no dispute on the facts themselves. The facts are found in the government's own records, or are facts within general public knowledge, and the dispute, if any, is with the interpretation of those facts by the various experts and in law. There was no dispute over the credibility of any of the experts, or their qualifications and expertise, or for that matter over their integrity, and the sincerity of their views. In the particular hearing before me, while there was strong dispute about my previous finding that the appropriate investment was in a mixed portfolio with limited power to alter the asset mix with hindsight, there was no dispute that Professor Charette in fact did use that proposal as the basis for his tables. Neither was there any dispute that in fact the basis of the tables were the calculations of annual principal available, produced by Mr. Hodson, a Crown expert, and the rates of return of the asset classes, produced by Mr. Gorham, another Crown expert. Also, in the end, class counsel indicated preparedness to accept a final number produced by Mr. Hodson, after he prepared and filed a completely revised set of schedules. I had commented in an earlier decision that in a case of this kind, with great volumes of material produced by a number of experts, the search for truth is much better carried out by the experts preparing the materials and supporting reports, which are reviewed by the other experts and if need be cross-examined upon by opposing counsel, and then dealt with by the court in written form rather than depending on the vagarities of oral testimony before the Court. Certainly, this last hearing has demonstrated that in spades, because exchanges among the experts continued after the formal hearings in May, resulting in completely new schedules and the acceptance by class counsel of the results of one of the many sets of calculations carried out by the Crown expert, Mr. Hodson. When those final schedules were produced by him, there was no indication by the Crown that it had reason to challenge any of the calculations of its expert.
57 Fourth, in paragraph 14 of the Crown factum, an objection was raised that there was no authority to permit a summary judgment motions judge to adjourn the proceeding on his own motion and to call for further evidence. Crown counsel complains that this permits the Plaintiff to reformulate the issues, the theory of the case, and the evidence relied upon in support. The factum goes on to say that the onus upon a Defendant to meet such a constantly shifting target is foreign to the summary judgment process. My observation is that, as the foregoing, and as my decision on the Motion to Strike indicates, it was the Crown that was reformulating its case and putting forth further evidence, not only on the issue in question, but on issues previously decided.
58 This is a class proceeding, governed by the Class Proceedings Act. Section 12 of that Act says that the court, on request, may make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination. It was the request of the class and its expert, Professor Charette, for a specific direction as to the type of investments the court felt was appropriate that led to the adjournment after the last decision, to allow Professor Charette to carry out the necessary calculations for further consideration. Further, the issue in question is the assessment of damages and it is a common and very practical approach of the court to make specific findings and then adjourn for actuaries or other experts to calculate the result in an assessment.
59 The fifth objection is to the portfolio asset allocation. I elaborated on this objection in my decision on the Motion to Strike. Briefly, if the Crown argument is to be taken as an argument that I had erred in my previous decision, the Crown is in the wrong forum. That belongs in the Court of Appeal. If the position is that, because no formal judgment was taken out after my last decision, it is still open to the Crown to request a reconsideration, certainly no such request was made to me, and the wording in the factum does not suggest that such a request was being made. I repeat that fundamentally, the Crown arguments are that if any investing was to be done, it was to be done in a way that the federal government wanted to do it, rather than in a way that a trustee holding funds on behalf of others would be required by the law of equity and the court to do it. I repeat that I based my decision on the appropriate investment portfolio on the evidence of Mr. Barrasso, a vice-president of R.B.C./Royal Trust, who testified as to the typical investment portfolio used by Royal Trust, the largest trust company in Canada, when investing as a fiduciary over the entire period in question in this law suit. He was called on behalf of the class. The Crown did not call anyone with specific expertise in acting in a fiduciary capacity or in investing as an executor or trustee on behalf of a trust or an estate.
60 Crown counsel puts forth, as an example of the federal government's ability as an investment manager, the Canada Pension Plan. This reference is at the bottom of page 21 and the top of page 22 of the factum. In fact, it was generally known throughout Canada that under government management, forecasts increasingly indicated that the Canada Pension Plan would not be able to meet the obligations promised to all of the Canadians who, by statute, were forced to invest in it. It was not until 1999, when an independent board, knowledgeable about investments, was appointed that investment in a range of assets, including equities, commenced. Recent widely circulated newspaper reports indicate that now the fund is safe for the foreseeable future.
61 In paragraph 57 of the factum, the Crown, in support of its argument that the Veterans' funds had to be kept liquid, points to three years (1921, 1975, and 1991) where a five per cent cash position would have been insufficient to meet the liquidity needs. In fact, under the Charette algorithm, in both 1975 and 1991, the cash position would have been 20 per cent. It is true that in 1921, under the algorithm, the cash position would have been only five percent, but that was at the very start up of the growth of the fund when, under Mr. Hodson's figures, there would be less than half a million on hand, and Mr. Gorham in his report, page 25, as quoted in paragraph 59 of the factum, indicated that even when there were large fund withdrawals some securities could have been sold to cover the cash demand. I am not persuaded that the spectre of demands for cash from the veterans, relied upon by the government experts to support holding these funds in deposit accounts or in low yielding investments, was ever necessary at all.
62 I do not accept any of the above defence positions put forth by the Crown.
NEW CROWN THEORIES
63 In the materials filed for the final quantification hearing in May of 2005, the Crown through the affidavit and report of its expert Ronald W. Scott introduced two new theories that had never been before the court before. I dealt with the Scott documents in my decision on the motion to quash, where I struck the portions of those documents relating to these theories. However, as these theories were argued before me orally by Crown counsel, and in the Crown factum, I deal here with the legal argument.
64 The first theory was that when the Crown started paying interest effective January 1, 1990, that meant that nothing but interest was recoverable on behalf of the veterans from and after that date. Crown experts devoted many pages in their reports to showing year after year starting in 1990, nothing but interest being paid.
65 Class counsel objected on the basis that it was now too late to introduce any such theory, as I had earlier decided that the funds of the veterans should have been in a mixed investment portfolio form the start in 1920 until resolution of this matter. The Crown argument, developed in paragraphs 100 to 113 of its factum, found at pp. 49 to 54, argued that this payment was in accordance with Order in Council, P.C. 1970-300, which was delegated legislation under the Financial Administration Act, and then cited Ocean Port and other authorities to the effect that a court could not superimpose common law duties unto a statutory regime created by clear legislative language.
66 I agree with the decisions in the various authorities cited. However, I do not agree that they apply to the situation here. I fail to find clear legislative language, such as that I had found in the estate's branch of this case, in my decision cited at (2003), 63 O.R. (3d) 707 at 722. There I found that the legislative scheme clearly provided that the funds under management of an incompetent veteran who died would, with exceptions, vest with the Crown until 1986, when provision was made that such funds could be paid out to the veterans' estate.
67 Here, as of January 1, 1990, the Department of Veterans' Affairs Act was amended to provide that no claim for interest could be made prior to that date. However there was no corresponding legislative provision anywhere in the Veterans' legislation or regulations that provided that from and after that date, the veterans would be entitled to nothing more than a Government decreed rate of interest. Instead, what was introduced into evidence at the hearing before me, and according to class counsel had never been produced before, was a letter dated December 18, 1990, from the then Deputy Minister of Finance Frederick W. Gorbet, to Mr. David Broadbent, then the Deputy Minister of the Department of Veterans' Affairs, advising that he had approved pursuant to ss. 21(2) of the Financial Administration Act, payment of interest on veteran's administered accounts held in the consolidated revenue fund. The letter goes on to say that this interest would be calculated and paid from January 1, 1990, would be at a rate of 90% of the average of the weekly 3 month treasury bill tender rates, and for information concerning the administrative arrangements for the payment of interest on this account, Veterans' Affairs should contact a named person in the financial services division in the Department of Finance. The Order in Council cited, was apparently intended to establish a uniform interest rate for payments authorized under a number of different named Orders in Council and also per ss. (ii), subject to any other act, "in respect of money received by or on behalf of her Majesty for any special purpose and paid into the consolidated Revenue Fund ..."
68 I take that to simply be the administrative authority to pay interest and do not take it to be in any way a limitation on the obligation of the Government when acting as a trustee, to satisfy the common law and equitable duties of a trustee to invest the funds properly while so held.
69 I find that the total affect of the commencement of the payment of interest in 1990 is simply to have the deduction of an interest figure from the portfolio earnings, to comply with the Supreme Court of Canada Ruling, end on January 1, 1990. However, presumably these accounts all received interest after January 1, 1990, per the Administrative Direction of Deputy Minister Gorbet, so a deduction would have be made after that date of such interest amounts from the earnings of the mixed portfolios to prevent a double payment accruing to the class members.
70 As I received assurances from counsel that the experts had appropriately "backed out" interest, I trust this is reflected in the numerous iterations of the accounts which had been prepared.
71 The second new theory of the Crown was that the investment portfolio that should have been adopted was that of the "Hepatitis C" class action's settlement rather than the portfolio that I had ordered in my previous decision.
72 This concept was put forth by Ronald W. Scott, p. 8 of his report, filed for use on this hearing. After criticizing the portfolio I had ordered as being much too risky, he put forth as "distinctly more realistic" the fund parameters under the 1986-1990 Hepatitis C settlement.
73 In the Crown factum this suggestion was discussed in Paragraph 65 to 68. Paragraph 66 of the factum says "the investment strategy and objectives for these funds were established by the private sector in the late 1990's without Government involvement." No authority was given for that statement. In fact, a review of the settlement agreement at the website reference provided by Mr. Scott, shows the first named defendants in these multiple class actions are the Federal Government, a number of Provincial Governments, and Territorial Governments. Since they were signatories to the settlement agreement I can only presume they had some input into its terms.
74 I accept as accurate Mr. Scott's statement that the fund is made up of 1.2% cash and receivables, 99.1% fixed income investments, and 7.7% equity investments. Incidentally, Mr. Scott made no comments about liquidity problems with this fund.
75 The Crown did not provide any details of the background of these class actions nor of the individual class members that were intended to benefit from the fund and most importantly no information as to the negotiations that resulted in the settlement terms. I could infer that this was an agreed settlement and that the courts in a number of provinces and territories accepted it on behalf of the class members. These would not be judgments pronounced against resisting defendants. Further, it was a settlement of a class damage action, based presumably on negligence, not a finding of the quantum due after a finding of a breach of fiduciary obligations.
76 The Crown in its factum puts the Hepatitis C Fund forward as an example to bolster an argument that the mixed investment portfolio that I had ordered was too aggressive. No evidence was presented to show that purposes of that fund and the one I proposed to deal with damage claims of the veterans were in way comparable. Indeed during the trial of the issue of judicial notice, I heard evidence from people who have been handling investments for fiduciaries or for estates or trusts who described the portfolio called for in my decision as "conservative" or "typical". In my previous decision I had based the makeup of the portfolio on the evidence of Mr. Barrasso, the only person to provide evidence of the practice in dealing with investments by a fiduciary.
77 Because of a lack of a relevant evidentiary base, the Hepatitis fund theory is not acceptable.
78 Also, as I noted in the decision to strike, the presentation of these two new theories was out of time, as it should have been done in preparation for the last hearing, not this one. Also their presentation at this point took unfair advantage of class counsel who came into this hearing expecting to complete the final step -- presenting and defending the calculation of the resulting dollar amounts from the portfolio previously laid down, rather that putting themselves one or two steps back and in to arguments on the general parameters of the calculation of damages.
79 For all of the foregoing reasons, I do not accept or apply either of the two new theories advanced by the Crown.
THE PUBLIC POLICY ISSUE
80 Starting at Paragraph 235 at p. 98, and continuing to paragraph 250 ending at p. 106 in its factum, the Crown put forth an argument that I may summarize as; it is futile, and against public policy, to award aggregate damages in this case, because most of the veterans involved are now dead, there is evidence that many of them had no spouses or dependents, and many of them would have died while their funds were under administration, and I had found in favour the statutory provision calling for the lapsing of the estates of the veterans who died while their pensions and allowances were under administration, to the Crown. Crown counsel noted that the Court of Appeal agreed with that finding, and the Supreme Court of Canada refused to grant leave. Crown counsel argued that the basis for that lapsing provision was a general policy determination by the Federal Government that pension and allowance funds should not go to distant relatives or strangers of a deceased veteran. Therefore, as the argument went, it would be against public policy and equity to now grant a large aggregate damage award.
81 My response to this, which in part picks up the response of class counsel, is that in this class action claims relating to veterans and the claims relating to the estates of veterans were treated as two separate items, because they involved separate statutory provisions. The principal legislation re: estates was s. 31 of the Pension Act, R.S.C. 1985, c. P-6. Until 1986 that had provided that,
ss. 31(1) Any pension or allowance held in trust by the Commission, or the Department and due to a deceased pensioner at the time of his death does not form part of the estate of the deceased pensioner.
ss. 31(2) The commission may, in its discretion, direct the payment out of a pension or an allowance referred to in subsection (1), either to the surviving spouse or child or children of the pensioner, or the surviving spouse and a child or children, or may direct that it be paid in whole or in part to any person who has maintained, or been maintained by, the pensioner or towards the expenses of the pensioner's last sickness and burial.
ss. 31(3) If no order for the payment of a pension or an allowance referred to in subsection (1) is made by the Commission, the pension or allowance shall not be paid.
82 I had found and the Court of Appeal agreed that up until 1986, the lapsing provision was in full force and effect, but from the time of the 1986 amendment it was no longer in effect, because the amendment permitted the payment funds on hand to the estate of the deceased pensioner. The Court of Appeal also found that I had erred in concluding that the Veterans Treatment Regulations, which also contained a lapsing provision, were bound up with the provisions under the Pensions Act, so that the lapsing provision there would also end in 1986. The Court of Appeal concluded that the Veterans Treatment Regulations, which contained the lapsing provision governing the allowances thereunder, was separate from the Pensions Act and so that lapsing provision, which had never been changed, continued.
83 Therefore, for treatment allowances, there is a general lapsing provision. There was a lapsing provision covering pensions and other allowances to 1986, but not thereafter. That lapsing provision only took effect if the pension or allowance was held in trust by the Commission or Department and due to a deceased pensioner at the time of his death. It has not been argued before me whether a damage award for failing to invest, which would be due to a veteran at the issuance of the judgment, would be caught by that lapsing provision. It can be assumed that many of the veterans, members of this class, are now deceased, but the numbers have not been quantified before me. Neither has it been quantified how many of such veterans died while the Commission or Department was acting as their trustee. I did receive evidence that the Department many years ago, made a concerted effort to get out of the management of veterans affairs, and many of the accounts were passed off to friends or relatives of the veterans, or to Provincial Public Trustees, and many veterans, including, if I recall is correctly Mr. Authorson, after years and years of being diagnosed as being incompetent were suddenly found to be competent, and the funds on hand turned over to them.
84 The general political comments about not wanting to see pension money going to distant relatives and strangers was put forward as a policy reason for imposing a lapsing provision on a "grace and bounty" grant of pensions and allowances to veterans. I conclude that those same considerations, even if proven to have been Government policy, would not effect the obligation that the Government undertook as a trustee without limitations, to manage what was, at least as long as the veteran was alive, the veteran's property.
85 The granting of an aggregate damage award would serve to crystallize the extent of the wrong done by the Government over a period of 85 years to veterans that had been rendered helpless and incompetent, on the Crown's own finding, while serving their country in its armed forces.
86 The issue of what individuals are to receive what amounts, the issue of what in fact might go back to the Government, either because of lapse provisions or as tax on income earned, and finally if there be money left over what should be done with it on a cy pres application, are all matters for another day.
87 I am not persuaded that there is anything in the lapsing legislation or in the law of equity which would stand in the way of an aggregate damage award in this case.
88 This is a matter that was alluded to in the original submissions relating to damages, and was raised in some detail in the experts reports and counsels' submissions before the present hearing, and in the follow-up submissions and further documentation, the issue was explored further, both as to principle and as to the details of calculation.
89 The basic issue is simple. If the Government paid nothing, or simply paid interest on money it was holding, it would not have to pay any fees to anyone. However, if the Government as a Trustee was to purchase and sell stocks and bonds in the market, it would have to deal through brokers or traders, and pay the charges that would be made by the market itself, and the brokers or traders dealing on its behalf in that market. With a possible exception of Federal Government securities such as treasury bills or Government Bonds acquired and held to maturity, such transaction costs would appear to be unavoidable by the Federal Government in its capacity as a Trustee.
90 Class counsel accepted this proposition in principle. They did not put forth evidence of experts as to the quantum or calculation of such transaction costs, but looked to the figures produced by the Crown experts. Professor Charette, in his April 15, 2005, report, simply compared the March 31, 2005, Gorham Schedule 5, (without transaction costs) to the Hodson April 1, 2005, Schedule (with Kirzner transaction costs) in his own table, to conclude that such costs would reduce the damages 3.5%. The Crown experts, and Crown counsel, criticized this conclusion as overlooking many factors, including other differences in the reports, and the effect of compounding, and dismissed it as simplistic.
91 Class counsel made it abundantly clear that the concession of the deductibility of some figure for transaction costs was limited to just that, and did not extend in any way to "management fees", which had been raised in earlier submissions and which were disallowed by this court.
92 Professor Eric Kirzner, a well-known expert on investments and finance, in his report, found in Volume I of the Crown Motion Record returnable May 24, 2005, starting at p. 47, deals with the issue of commissions, starting at p. 66. He points out that the commission rates for trading stocks were fixed by the Stock Exchanges in Canada up until 1983, although they were negotiable for trades in excess of $500,000.00. He remarks that the literature indicates that the Canadian equity markets however are relatively thin, that historic Canadian equity prices are somewhat unreliable, and the commissions on Canadian equities were considerably higher than the commissions on U.S. equities.
93 He then looks to studies of the U.S. markets, and concludes that the trading costs charged include not only brokerage commission, but also the bid-ask spread and the price concession which would apply to block trades. He notes that there have never been direct charges made on bond purchases and sales, with the remuneration of the bond dealer being built into the bid/ask spread. He also notes that on the purchase or sale of large blocks of shares, commission rates are usually different from the usual, or advertised rates.
94 Professor Kirzner extensively reviews a paper on trading costs published by T.F. Loeb in 1983, based on U.S. data. He comments that the Loeb figures appear high, and some traders have argued they are unrealistically large. However, he notes the Loeb study is referenced frequently in journals and therefore he uses the Loeb numbers. However, after he comments that the Canadian markets are thin and the transaction costs for trading equities are much higher than those in the U.S., he apparently arbitrarily increases the Loeb numbers by 50%. Professor Kirzner then produces a Table, found at p.70 of Volume I of the Defence Motion Record, showing transaction costs as a percentage of the size of the transaction, which ranges from 1.35% to 15%. However, the comparative table from the Loeb Report, found on p. 69 is a spread sheet, with the other axis containing not only a range for the capitalization of the corporations, but an average price for shares of corporations that fit in that range. Professor Kirzner picked only one of these variables, which he felt represented the typical market capitalization of the average company listed on the T.S.E. In support of this he noted another study came up with an average share price on the T.S.E. within $1.50 or so of the average price in the range of the Loeb Report he chose. He refers to another study that found on the T.S.E. a one-way total transaction cost estimate for retail investors would range from 3.3% to 38.2% in 1999.
95 For bond trades, he opined at p. 64 his report that bid/ask spreads would have varied considerably over the period of this lawsuit. However, he chose to use a bid/ask spread of 1.5%, which he speaks of as typical of bond trading over the period. The support for this is a newsletter found on the Internet. He also feels it is consistent with the typical 1.25% to 1.75% Management Expense Ratio (MER) charged by Canadian Bond Funds. He then applied the transaction costs he had arrived at for equities and bonds to the trading information in the version of the Charette report which he had, and concluded that the transaction costs could be $1,049,931,468.00. The actual calculations used to produce that number, down to the last dollar are not set out in either the report or its appendix. However at p. 75 of his report he notes that this number is a "conservative estimate and overstates the damages as it is based on the Veterans net cash flows rather than the total cash inflows and outflows as per Charette Schedule I. If data on the total cash inflows and all new cash inflows were available the transactions costs would be higher and the resulting damages numbers lower."
96 As the foregoing review suggests, while the figure given by Professor Kirzner is likely arithmetically correct, the underlying data is remarkably soft, and so are the assumptions made based upon it.
97 The other Crown expert that gave an opinion on transaction costs, directly relevant to the issues before the court, was Mr. Gorham. Mr. Gorham is an actuary, who graduated with a Bachelor of Science in Actuarial and Computer Sciences from the University of Toronto in 1976, received fellowships as an actuary in 1980 and has spent his professional career providing pension benefits and actuarial consulting services. He also teaches pension and benefits courses at Humber College. He has been with Morneau Sobeco, an Actuarial firm, as a partner since 1998. That firm was retained by the Crown to review the report of Professor Charette, and then later to provide further reports. In his report dated March 31, 2005, filed in these proceedings as Volume 8 of the Motion Record, Mr. Gorham dealt with the costs of investing on pgs. 13 to 20 of his report.
98 Initially, Mr. Gorham included expenses of investment management, custodial charges, accounting charges, and audit fees as part of these costs in addition to brokerage, trading costs and bid/ask spreads, and also discussed the costs of unitization -- that is the need to identify the holdings of each veteran as "units" of the total fund.
99 At p. 15, he comments that the costs of investing have decreased during the period of the lawsuit with most of the decrease starting in the mid-1980's and picking up speed through the late 1990's. His opinion was that it would be most appropriate to look to the costs from the 1960's and 1970's as a "reasonable average applicable to institutional traders for the entire period."
100 He continues on p. 16 by saying that he had discussed appropriate assumptions for bid/ask spreads and brokerage fees with Professor Kirzner and accepted Professor Kirzner's advice that "a typical bid/ask spread during this period would have been 1.5% of the trade amount." Further he received advice from Professor Kirzner that the average cost for brokerage fees, bid/ask spread and block trade impact on prices for equities would be between 4.5% and 7.5%. He therefore "assumed a cost for brokerage fees and the bid/ask spread of 6%."
101 Mr. Gorham continues, by discussing the possible cost savings in a commingled fund by in effect funding payouts by diverting pay-ins rather than selling assets, which he describes as common in commingled funds, but which he does not bring into his later calculations.
102 On p. 17 he discusses other investment costs, like investment management and simply says, "I have assumed that for bonds, these costs would have averaged 0.40% during the period of the lawsuit, and for equities the cost would have averaged 0.60%." No basis as given for these assumptions, in contrast to the basis of the direct costs -- advice received from Professor Kirzner.
103 Mr. Gorham then takes a further step of developing "a total investment cost as a single percent of the total investment assets." Through this he made an assumption about the turnover of invested assets. He states that during the period of the lawsuit a typical conservatively managed fund with low security turnover would have experienced about 10% to 15% annual turnover for equities. He observes that during most of the period bonds tended to be bought and held to maturity and that instead of security trades, as in equities, with both a purchase and a sale, with bonds you would have only a purchase. He looks to a bond duration of 5 to 7 years and comes to the conclusion that the bond turnover would therefore be 20% per year (query -- why not the average of 6 years and a turn-over rate of 18%?). Likewise for cash, he assumed the majority of the investment would have been in 91 day notes which would give a turn-over of four times per year.
104 In the Table that follows, while it shows the assumed annual turnover for equities to be 25%, which I assume would represent the average of 10 to 15%, doubled, as he is assuming an equity turnover would involve both a purchase and a sale, it shows the brokerage fee for equities at 3% rather than the 6% he got from talking to Professor Kirzner. He tells us that after adding up the direct costs plus his figures for investment management, custodial etc., he arrived at 1% as the annual percentage charge on the total fund amounts. On p. 19 he factors in investment costs associated with allocation shifts, and notes that in 51 of the 85 years of the period, there would have been an asset shift required, and concluded that the average annual cost of the transactions for asset shifts would have been 0.43% of the total assets.
105 When Mr. Gorham was cross-examined on his affidavit and report, in response to a question from Mr. Colautti, he undertook to provide the annual figure for the cost of investing in a portfolio with asset shifts, less the administrative expenses he included in his tables. His written response to that undertaking provided the figure of 0.94% and Mr. Colautti, on behalf of the class, tentatively adopted that in argument, as a useable figure for a deduction from the gross annual earnings calculated by Mr. Charette in each year.
106 In considering the reports of the two Crown experts, Professor Kirzner and Mr. Gorham, I note that it is clear on the face of the record and not disputed, that Professor Kirzner is an acknowledged expert in finance and investment while Mr. Gorham's area of expertise is as an actuary. I previously commented on the many assumptions made by Professor Kirzner and the softness of his resulting numbers. Mr. Gorham, on the face of the record went to Professor Kirzner and obtained the initial numbers, which he used, from him. Following that, Mr. Gorham added to the mix a series of further assumptions and estimates made by himself. The conclusion inevitably has to be that in this area, I prefer the figures put forth by Professor Kirzner, and conclude that on a balance of probabilities, they would be more accurate than of those produced by Mr. Gorham.
107 Mr. Hodson did a final report, dated September 23, 2005, in which all of the various calculations were re-done and brought up-to-date, and in which among the various alternatives he shows in Table 6 the net result of a calculation, shown in his Appendix G-1, with the numbers shown in detail in his Appendix R-21, that incorporates, as a deduction the Kirzner transaction costs. This is a set of supplementary calculations not only not objected to by the Crown, but put forth by the Crown as further corrected evidence before me. It is accepted by counsel for the class.
Law re: Damages
108 Class counsel deals with the issues of estimating losses at page 32 of their factum in paragraph 112. Professor Waddams deals with the issue in his text The Law of Damages (looseleaf edition) Canada Law Book Inc. in Chapter 13, particularly paragraphs 13.30 through 13.90.
109 Class counsel quotes from the old case of Docker v. Somes (1832) 2 MY & K 655 at 673-674, the last paragraph of the decision of Lord Brougham. This was in a case where apparently estate trustees mixed up estate funds with other funds in a business venture and apparently then argued that the resulting profits, if any, could not be traced. Lord Brougham said:
When did a court of justice, whether administered according to rules of equity or of law, ever listen to the wrongdoers argument to stay the arm of justice, grounded on the steps he himself had successfully taken to prevent his inequity from being traced? Rather let me ask when did any wrongdoer ever yet possess the hardihood to plead, in aid of his escape from justice, the extreme difficulties he had contrived to throw in the way of pursuit and detection, saying, "You had better not make the attempt, for you will find I have made the search very troublesome?" The answer is: "The court will try."
110 That principle was expounded on in later English cases, adopted here in Canada, and stated in Wood v. Grand Valley Railway Co. (1915), 51 S.C.R. 283 at 289 by Davies, J.:
(a) It was clearly impossible under the facts of that case [Chaplin v. Hicks] to estimate with anything approaching to mathematical accuracy the damages sustained by the Plaintiffs, but it seems to me to be clearly laid down there by the learned judges that such impossibility cannot 'relieve the wrongdoer of the necessity of paying damages for his breach of contract' and that on the other hand the tribunal to estimate them whether jury or judge must under such circumstances do 'the best it can' and its conclusion will not be set aside even if the amount of the verdict is a matter of guess work.
111 This statement was adopted in other Supreme Court of Canada and appellate court decisions, most laterally in Cadbury Schweppes Inc. v. F.B.I. Foods Ltd. (1999), 167 D.L.R. (4th) 577.
112 Professor Waddams, at paragraph 13.40 of his text adds this commentary to the above cases that: "The claimant must do as much by way of proof as can reasonably be expected in the circumstances but need not do more. Evidence of accountants, while admissible, and useful in many cases, cannot be conclusive. Assessment of damages is a task for the court not for accountants."
113 Crown counsel did not submit any case law opposing the foregoing.
Crown Cases Submitted
114 On December 12th, 2005, Mr. Spencer of the Crown counsel team sent to me copies of two recent decisions. Quite properly, he said nothing more than "I wish to draw to your attention two recent decisions you may chose to review when addressing the captioned matter." He did however, supply, in addition to the citations, reference to the paragraphs in these lengthy decisions which he thought had some relevance to the case before me. Also quite properly, he sent copies to Mr. Colautti of the class counsel team. I have heard nothing from class counsel regarding these late arrivals.
115 I would mention that Crown counsel did provide, for the hearing in May, two thick volumes of case law, containing some 47 decisions, a number of which are previous decisions of myself or of appellate courts in this particular case. Several more cases were passed up during argument. While I have not referred to them individually in this decision, I have looked at all of them.
116 The first of the two cases sent to me is British Columbia v. Imperial Tobacco Canada Ltd., a judgment rendered September 29, 2005, found in 257 D.L.R. (4th) 193. The case deals with a statute passed in British Columbia, similar to statutes passed in a number of American states, authorizing British Columbia to sue tobacco manufacturers for the health care costs incurred by the province in dealing with the health problems of its residents arising from tobacco use. One of the many defences raised by the tobacco industry was that the rule of law requires legislation to be general in character and devoid of special advantages for the government. Major, J., writing for the majority in the Supreme Court, cited two cases contrary to that submission -- Air Canada,  1 S.C.R. 1161, cited in paragraph 74 and Authorson v. Canada, where the Supreme Court of Canada decision, at  2 S.C.R. 40, 2003 SCC 39, and 227 D.L.R. (4th) 385 was cited as supporting federal legislation aimed specifically at defeating certain disabled veterans' claims, the merits of which were undisputed, against the federal government. While that citation was helpful to the position of British Columbia, it does nothing to advance the position of the Crown in this case. This entire branch of this case has been devoted to interpreting the Supreme Court decision in assessing the damages perceived to be outside of the four corners of that decision.
117 The second case is Chief Victor Buffalo v. Her Majesty the Queen,  F.C.J. No. 1991, 2005 FC 1622, the massive trial decision of Teitelbaum, J. released November 30, 2005. The 800 paragraph judgment deals at least in part with claims for interest on royalties from oil and gas deposits under an Indian reserve. Part of the claim was that the Crown was a trustee for the Indians affected (which was admitted) and was liable to manage the funds in the same manner as a private law trustee, which was strongly disputed. As I understand this part of the case, Teitelbaum, J. found that section 61(2) of The Indian Act specifically contemplated that the Indian money be held in the consolidated revenue fund, which was confirmed by the Indian Oil and Gas Act, and Section 61(2) of The Indian Act mandated that interest be paid on those funds at a rate to be determined by Order in Council. He therefore found that the Crown's obligation as a trustee was limited by the specific statutory provisions, in the same way that I have found that the claim of a general obligation to invest in relation to treatment allowances was limited from 1920 to March 30, 1954, by the legislative provision that if such funds were held for a veteran, simple interest was to be calculated on such funds at the time they were paid out.
118 In Buffalo, Section 61(2) of The Indian Act governed all aspects of the government's trusteeship. In this case, except for the above mentioned specific limitations, re: treatment allowances, and the specific lapsing provisions in relation to veterans' estates, dealt with in my decision of March 24th, 2003, reported at 63 O.R. (3d) 707, the Crown had simply accepted the position of a trustee without any statutory limitations on its obligations. Therefore, on the issues now before this court, the reasoning in Buffalo is not helpful.
119 Incidentally, I see at paragraph 662 Teitelbaum, J. cited Callie v. Canada,  2 F.C. 379 in support of his reasoning. Callie was a case, before Authorson, where another veteran had sued in the Federal Court seeking damages for the Crown's failure to invest, in which Joyal, J. found against the claimant. In the first Authorson decision of October 11th, 2000, found at 53 O.R. (3d) 221, I discussed Callie v. Canada, supra, in paragraph 27 and concluded I was not bound by, and disagreed with the findings and result in that case. The Court of Appeal did not indicate any disagreement with that conclusion. However, in the context of Buffalo, where statutory provisions required the Indian monies to be deposited in the consolidated revenue fund, and interest be credited upon them in accordance with Orders in Council, the decision in Callie is indeed supportive of the decision of Teitelbaum, J.
120 These allowances constituted a relatively small portion of funds held in trust by the D.V.A. for veterans deemed incompetent to manage their own affairs. They are dealt with by their own regulations under the Department of Veterans' Affairs Act, which laid out a code covering the various entitlements thereunder and importantly for the present purposes, containing wording regarding interest on funds held in trust, different from the wording re: pensions, that has been the primary focus of this litigation. During previous hearings, the court had been provided with some of these regulations, or quotes from them. In response to a question from the bench, relating to other Orders in Council, Crown counsel, on August 19, 2005, provided to me supplementary submissions dealing with the regulations and also a compendium containing, among other things, P.C. 1953-415 effective April 1st, 1953, and P.C. 1954-1933, passed December 8th, 1954, which revoked P.C. 1953-415 and substituted new regulations.
121 Section 52 of the regulations adopted in March of 1953 provided, with limitations, that "when an account is being closed, the Department may authorize the payment of simple interest at the rate of three percentum per annum on the amounts of allowance or other monies withheld pursuant to these regulations or any other authority ..." I was given to understand by Crown counsel that while many other details of this regulation had been changed through the years, treatment allowances and the regulations governing them had been in effect since 1920 and always had the limiting position of payment of simple interest only, at a fixed rate. The new regulations, passed December 8th, 1954, contained a new Section 52, as follows:
The Department may authorize the payment of interest at a rate fixed from time to time by the Minister of Finance with the approval of the Governor in Council,
(a) On monies received and paid into a trust fund; or
(b) On amounts of allowance or other monies payable out of, or paid into a trust fund from, an appropriation by Parliament, in respect of a veteran ...
122 In my opinion, the wording adopted in December of 1954, which has been carried forward since, is permissive, permitting the payment of interest, and not restrictive, as the previous wording was, which provided for simple interest only, and at a fixed rate. Therefore, in my opinion, when treatment allowances were held in trust by the government, the equitable requirement to invest as any other trustee would have to did not apply to treatment allowances from 1920 until the end of 1954, because the government had sufficiently limited its liability by the wording of its regulation. However, from after December of 1954, in my view, while the specific regulation dealing with treatment allowances refers to payment of interest, the provision is permissive only, and does not limit the obligation on the government to properly invest funds held in trust, any more than the administrative provisions in relation to paying interest on pension funds held in trust limits the government's obligations.
123 In my decision released December 31st, 2004, in this case, I had referred to the payment of interest on treatment allowances in paragraphs 23 to 28, and had referred to paragraph 317 of the Crown factum about the various regulations. From that source, I had the start date of November 21st, 1919, which I assume is accurate, but I had taken the end date for payment of simple interest to be March 19th, 1953. Obviously that is wrong, because on March 19th, 1953, the regulation adopted continued the simple interest provision. As above indicated, the simple interest regime continued until the new regulation passed December 8th, 1954, revoked it. The references in my judgment of December 31st, 2004 to 1953, or March 19th, 1953, should be taken as amended to December 8th, 1954. This would apply particularly to the declaration I gave in paragraph 28, and repeated in paragraph 151(1) of my decision of December 31st, 2004.
124 I see that, either through instructions from the Crown or his own research, Mr. Hodson got the date right because in his tables, he shows simple interest on treatment allowances running through to the end of 1954, and then returns from the mixed portfolio, with power to vary, that I had called for, starting in 1955.
THE QUANTUM OF DAMAGES
125 As I have indicated in foregoing sections of this decision, my previous choice of a mixed portfolio as the appropriate form of investment over the 85 years under consideration was discussed in great detail in the Crown's submissions and in the materials provided by a variety of experts called by the Crown. Mr. Barrasso, a vice-president of R.B.C.-Royal Trust, was the only expert called at the previous hearing who had experience in making investments for trustees, estates and trusts. His opinion, backed by documentation from Royal Trust, was that a mixed investment portfolio was the standard investment for such clients over the entire 85 year period. The particular asset mix which I had set out in my previous decision was somewhat more conservative than the standard mix used by Royal Trust over the period of this litigation. In testimony at the trial of the issue of judicial notice, I heard other experts describe my asset mix as "conservative." In making it conservative, I had in mind the presumed financial circumstances and health conditions of these veterans, as well as the need for more liquidity than usual. I continue to be satisfied that the mixed portfolio with the asset mix which I provided, together with the limited power to make asset shifts with full hindsight, is the most reasonable vehicle to provide a rational estimate of what could have been earned if the money of these veterans had been properly invested through the past 85 years.
126 I have provided for authority to make limited changes in the asset mix because in the previous hearings I had been exposed to evidence of, among other things, the great swing away from equities during the great depression and to the many changes in the world of finance over the 85 year period. Based on what I understood to be a well known and often used practice by portfolio managers, I provided for limited swings, and I found on the trial of the issue of judicial notice that no one could say that I was wrong in my understanding. The discussions, in reports and oral testimony of various Crown experts about tactical versus strategic allocations, gave me some concern over the algorithm adopted by Professor Charette. However, as I hope I have indicated, the fact that the only investment return figures he had available were annual ones, together with the fact specifically brought out in Mr. Barrasso's materials, and touched on by other experts, of annual or at least frequent reviews of the general investment policy portfolio, together with the evidence of the majority of experts that a range of ten per cent for asset shifts was common, led me to conclude that both the asset shifts I had provided for, and their utilization by Professor Charette under his algorithm was a reasonable, sensible, and conservative way of approximating what could have happened in the real world. The concept of adjusting asset mixes with the use of hindsight was of course unfamiliar to all of the financial experts, but as I have indicated in a case such as this it is dictated by the highest legal authority. My conclusion was and is that the limits placed by me on the ranges of such swings fits the limitations discussed in those legal authorities.
127 The subject of transaction fees and related management fees was explored and documented in the reports of Crown experts. I remain convinced, as I indicated in my previous decision, that with a fund of this size, outside managers are not needed because the Crown can hire a few people to do all of the investment management and provide the ancillary services spoken of. The Crown has through the years hired thousands of people to take care of other aspects of the welfare of veterans, so it would be completely out of character for the D.V.A. to not pick up the salaries of a few more people specifically dedicated to managing financial matters. However, it was made clear to me that the buying and selling of securities would involve brokerage fees, or bid ask spreads in the bond market, and the cost of these had to be quantified and deducted from projected earnings. For the reasons expressed above, my conclusion was that the transaction fees proposed by Mr. Kirzner were the most realistic.
128 The subject of treatment allowances, and the limitations on investment thereof has been explored and, with the aid of the Crown compendium provided after the hearing herein, my questions resolved, even to the extent of my recognizing an error in dates in my previous decision.
129 As indicated herein, extensive tables, setting out a bewildering combination of calculations were prepared both before and after the hearing in May, and the tables that arrived after May were again revised. I am assured by Crown counsel, which assurance was concurred in by class counsel, that the latest figures have appropriately "backed out" amounts relative to estates that cannot be claimed because of the lapsing provisions and amounts relating to interest that are not collectable due to the Supreme Court of Canada decision, or that were paid by the Crown and cannot now be claimed because that would be double compensation.
130 The last set of calculations prepared by Mr. Hodson were couriered to me on September 26th, 2005. This includes his report, which explains the details of the computer programme set up to run off all of these various tables, together with the tables themselves. The tables take up five, four inch thick, looseleaf binders. They comprise every possible combination of calculations that could somehow be imagined as arising from this rather complex factual situation. Unfortunately, the many pages are not numbered.
131 These tables are provided by Crown counsel as information provided by its Crown expert. Crown counsel, in forwarding them, did not express any choice among the various tables but simply stated that the Crown hoped the information would be of assistance. The last indication of any choice by the Crown was in Crown counsel's letter of August 22nd, 2005, where Crown counsel repeated the Crown's basic position that the Supreme Court of Canada had ended the litigation, with the alternate positions put forth of adopting schedules prepared by Mr. Scott, which would result in a nil figure; or alternatively of adopting a schedule prepared by Mr. Yu, another Crown expert, who advocated a laddered bond portfolio, which would produce a very low number; or as a distant alternative, one prepared by Mr. Gorham which would give damages of $366,843,346.00.
132 Class counsel reviewed the September 2005 figures of Mr. Hodson, and in a 17 page letter dated October 3rd, 2005, indicated that in its view the one combination of schedules that best met the criteria laid down by this court was that found in Appendix G-1 which produced a net figure of $4,646,581,722.00. For the reasons that follow, I concur with this conclusion of class counsel.
133 In the sixth and seventh pages of Mr. Hodson's accompanying report, he explains that he produced calculations under three separate alternatives in relation to the treatment allowance funds. "Treatment Allowance Alternative Two", used in Appendix G-1 and shown in full at a table at Appendix R-3, is simple interest calculated from 1920 to March 31st, 1954. This roughly agrees with the period when simple interest was called for per the regulations above discussed under the heading of "Treatment Allowance." Thereafter, investment income on the treatment allowance fund was calculated using the portfolio scenario. There is no explanation in the report of why a March 31st, 1954, date was chosen. Perhaps the computer calculations were run using the federal fiscal year instead of the calendar year, as Appendix R-3 itself shows the use of portfolio rates starting in the year 1955.
134 Per the report, "Other Balances" refer to all of the funds held in trust except the treatment allowance fund, and tables were run on five alternatives for investment of those funds. "Other Balance Alternative One" refers to using the portfolio scenario for the entire period from 1920 to December 31st, 2004. The reference to "Charette Allocation With Ranges" would be to what is described in the report on its ninth page as Asset Allocation Strategy One, which is the specific portfolio, with asset shifts within the ranges, set out in my reasons of December 31st, 2004. "Fee Structure One" consists of the transaction fees that Mr. Kirzner set forth as approximating what would have been charged on the purchase or sale of bonds and equities in the market. To this point, the various tables produce an estimate of the total income that would have been produced under the criteria laid down in my previous decision, net of what I had indicated in this decision as the best estimate of transaction fees.
135 The final deduction was for interest under the Department of Veterans' Affairs Act. At the tenth page of his report, Mr. Hodson indicates that he calculated this interest from 1920 to March 31st, 1954, across all of the funds on the basis of simple interest. Afterwards, he calculated it as compounded annually to January 1st, 1970, and then compounded monthly. That is in accord with my previous findings as to when the necessary computing capacity would have been available.
136 Mr. Hodson explains in his note on the bottom of page 10 that if interest is to be compounded annually from 1920 to March 31st, 1954, on funds other than treatment allowance then the deduction from the gross damages in the tables would have to be increased from $409,599,108.00 to $432,522,754.00. In fact, my finding had been that the provision for simple interest was peculiar to treatment allowances. Therefore, that deduction figure has to be increased by $22,953,646.00 to the larger figure of $432,522,754.00. This gives me a figure of $4,623,628,076.00, as the arithmetic estimate of the quantum of damages, using the factors dictated in my decision of December 31, 2004.
137 I had earlier discussed the great number of estimates and approximations that underlay the numbers produced in all of the reports by all of the experts, which seem to indicate accuracy to the last dollar. The mention, immediately above, of the question of when the simple interest calculation re: treatment allowances was supposed to end, simply adds one further item of uncertainty to the arithmetical process. My conclusion is that the figure produced in Mr. Hodson's appendix G-1, when adjusted re: the interest deduction, is the closest approximation to the damage figure that I had envisioned being produced by applying the earnings of the mixed portfolio I had described, including the limited ranges for changes in asset allocations, to be used with hindsight. All of that was intended by me to produce a rough proxy for what competent financial specialists might have set up, and amended year by year through the 85 year period, and it was imposed upon figures for principal that Mr. Hodson had modestly described as estimates, but better than the estimates coming from the national accounts.
138 In the physical sciences, including surveying, the concept of significant figures is used to express the degree of accuracy of a measurement or calculation. I feel this is a useful concept to apply here, to bring into account a number of uncertainties, as above referred to, some of which could go one way and some another, thus in part cancelling each other out.
139 I have been giving long and careful consideration to the final figure to be awarded. I recognize that the calculated amount of $4,623,628,076.00 is an arithmetic product, based on uncertain figures, and various assumptions. However, nothing that has been produced to me through the best efforts of Crown counsel and the Crown experts has persuaded me that the figure should be lower. I have mentioned some things, like the limitation of only having annual figures for total asset classes, that prevented factoring in shifts among, say various classes of equities, or shifting the mix just before changes in the market, that led me to think the figure could be higher. I realize that a small difference, such as the differences between yields on federal and provincial bonds, that was not reflected in the calculations before 1980, could, because of the power of compounding, make a huge difference on the upside. However, these things have not been established before me on the balance of probabilities, or quantified. I am therefore not persuaded that the figure should be higher. I am, however, persuaded that the result should be expressed as not more than two significant figures, in these reasons.
140 My conclusion is that the fair and reasonable amount for the aggregate damages of the class members, as of December 31st, 2004, at $4.6 billion. I accordingly grant judgment to the Plaintiff class in that amount.
141 I direct that amount be forthwith transferred by the defendant into a specially designated trust account in the consolidated revenue fund of the Government of Canada. The funds in the specially designated trust account, together with pre-judgment and post-judgment interest, and the earnings of that fund shall be held intact, and separate from the general funds of the Government of Canada, pending the further orders of this court.
142 Pursuant to s. 130 of the Courts of Justice Act, in view of the special circumstances of this case, I conclude that it is appropriate and just to order that pre-judgment interest from December 31, 2004, to today shall be at a rate equal to the amount to be calculated under the formulas developed by Mr. Hodson to produce the December 31, 2004, figure shown in his Appendix G-1 to his report of September 2005, as varied by me in paragraph , supra. This pre-judgment interest amount shall also be paid forthwith into such specially designated trust account. The resulting total amount shall be invested in the mixed portfolio described in my decision of December 31, 2004, with the limited power to change asset allocations as appears advisable, but without the power of hindsight. Until such a portfolio is established and the funds so invested, there shall accrue monthly amounts of post-judgment interest, calculated in the same manner as the pre-judgment interest. If appropriate annual or monthly yield figures for equities or bonds are not currently available, the monthly deposits shall be calculated using the past yield figures then available, and adjusted when the appropriate figures become available.
143 In discussions during the course of this current litigation, the Crown had indicated that it was prepared to hold the funds, if a judgment was granted against it, and counsel for the class agreed the government itself would constitute the safest depository for such funds.
144 It will now be necessary to give appropriate directions and orders relating to the distribution of the aggregate damages, including the steps to be taken to identifying and locating the class members or their heirs and assigns. I anticipate that implementation of this would be held in abeyance pending the completion of the appeal process. However, as that will be a complex task, I suggest thought be given to it now.
145 One matter that does require immediate attention is the issue of costs. That should be settled at this level before the appeals are perfected and I would appreciate early submissions in that regard.
146 As before, I ask counsel, if any factual errors are found in these reasons, to bring the same to my attention, for possible correction, before any formal order is taken out. And again, I would indicate that if any further direction should be needed I may be spoken to.
J.H. BROCKENSHIRE J.