Third party litigation funding of class actions in Ontario

In Houle v. St. Jude Medical Inc., 2017 ONSC 5129, Bentham IMF Capital Inc., an Australian-based litigation financing firm, entered into a financing agreement with Mr. and Mrs. Houle. They are plaintiffs in a proposed class action alleging negligent manufacture and distribution of implantable cardiac defibrillators and failure to warn of rapid, premature battery depletion.

As for contingency fee, the later the stage at which the action is resolved, the larger the payout that Bentham would receive. Justice Perell reviewed existing case law. His Honour stated that third party funding agreements could be approved only if they were legal, fair and reasonable. However, the Bentham funding agreement failed some conditions that had to be satisfied in order for a court to approve a third-party funding agreement. It ran the risk of overcompensating Bentham and interfered with the lawyer-client relationship.

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Summarized by Natalia Tsar.

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