Efficiency Over Fairness: Interpreting the Day School Settlement

By: Katie Pfaff and Jasminka Kalajdzic

In April 2020, former Clinic student caseworker Karly Lyons wrote a blog about a pivotal case for class action settlements – JW v Canada (AG), an appeal arising from the Indian Residential Schools Settlement Agreement (IRSSA). In a three-way split decision, the Supreme Court of Canada established limits on the scope of judicial intervention in class action settlement claims disputes. Four of the seven justices concluded that administrative law remedies are not available to class members because a settlement is a contract between private parties, notwithstanding a court order is required to give effect to the contract. The scope of a court’s supervisory jurisdiction is “limited and shaped by the terms of the agreement, once it is approved and determined to be fair and reasonable, and in the best interests of the class.” As a result, a court may intervene only where there are procedural gaps in the agreement or a failure to apply the terms of the agreement. A bad decision – even an unjust one – will stand so long as the adjudicator turned their mind to the relevant terms of the agreement.

Since JW was decided, a number of courts have confirmed that judicial recourse is extremely limited and that IRSSA and other class action settlement agreements were intended by their drafters to be a complete code.  Almost all of these decisions arise in the context of a denied claim, and an attempt by a claimant to overturn the adjudicator’s decision. The September 23, 2021 decision in McLean v Canada (AG) applies JW to a dispute about a purely administrative decision. The decision illustrates that applying JW narrowly can render the court’s supervisory authority virtually meaningless.


The applicants, Ms. Waldron and Mr. Pooyak, were two class members in the Indian Day School Settlement (IDSSA), an agreement approved by Phelan J on August 19, 2019. The claims process opened January 13, 2020 and will close on July 13, 2022. Claims in this settlement are assessed on Levels from 1-5, with Level 1 claims determined by the Claims Administrator (Deloitte LLP) without any involvement by the Defendant, the Government of Canada. Successful Level 1 applications entitle the class member to a payment of $10,000, while Level 5 compensation for the most severe kinds of abuse is $200,000. Levels 2 to 5 are assessed by the Claims Administrator after Canada has had the opportunity to provide supplemental information regarding eligibility.  If the Claims Administrator determines that an application exceeds the criteria for the class member’s claimed Level, the payment is automatically processed at the higher Level. If the application does not meet the criteria for the level claimed, the class member may seek reconsideration, a process that culminates in a review by a third-party assessor. The right to seek reconsideration is limited to those circumstances where the third-party assessor adjusts the claim downward. Throughout the reconsideration process, a class member is entitled to submit additional documentation. Further documents may also be submitted if requested by the Claims Administrator.

Mr. Pooyak submitted his initial application at Level 2. According to Phelan J., Mr. Pooyak had difficulty disclosing the abuse he suffered, a phenomenon the judge agreed was a “common feature of abuse cases”. Mr. Pooyak submitted his application without the assistance of a lawyer and did not disclose the full details of his experience at Day School. In mid-July 2020, he retained a lawyer to assist him, and in November of that year, his lawyer submitted additional documents in support of a Level 5 claim. Although the Claims Administrator had been accepting applications revising the level designation up to June 15, 2020, they advised that no additional narratives were permitted after that date. Furthermore, even though his original claim had not yet been determined when he submitted his additional documents, the Administrator stated that Mr. Pooyak would only be assessed at his original election as a Level 2 claimant. His Level 2 claim was accepted in February 2021.

Ms. Waldron originally filed a Level 1 claim in mid-2020 without the assistance of a lawyer or any person with knowledge of the IDSSA. She subsequently hired a lawyer who filed another claim on her behalf, outlining abuses that entitled her to Levels 3 or 4 compensation.  Four weeks later, the Claims Administrator informed her that they would not accept the new claim Level selection: “While claimants are invited to send information to complete their claim, they are not entitled to change their Level selection.” Ms. Waldron’s claim was accepted at Level 1 several weeks later.

The Administrator allowed class members to submit additional narratives and revised claim Levels for the first five months of the claims process, until June 15, 2020, but then changed its policy on two weeks’ notice to the class. (The notice was not court-approved but was published on the IDSSA website and on Facebook.) Phelan J. found that the Administrator initially accepted revised claim forms to address problems it had processing claims due to the COVID-19 pandemic as work from home policies were made and employees adjusted to their new working environments. During this “grace period” class members were able to apply and/or make amendments to their claim form if the claim had not been fully adjudicated or payment had not been issued. Mr. Pooyak and Ms. Waldron submitted their updated claim forms after June 15, 2020 but before their original claims were adjudicated and payment was received.

At issue on the motion was whether only one claim form was permitted under IDSSA, as the Administrator and the parties (including Class Counsel) argued, or whether there was ambiguity or a gap in the agreement that permitted Court intervention.

The Decision

Justice Phelan concluded that granting the applicants’ motions would “alter the terms of the IDSSA” and that he was not permitted to do so. He stated that the “Claims Process is intended to be expeditious, cost-effective, user-friendly and culturally sensitive”. Permitting claim Level changes and additional documentation was a decision at the discretion of the Claims Administrator and not one for the Court. When the Claims Administrator chose to end the “grace period” they created, they were applying the ‘one claim form’ rule the parties had intended.

Justice Phelan held that the text and context of the agreement, in addition to the intent of the parties, supported the Claims Administrator’s interpretation. Although the agreement does not expressly prohibit claimants from changing their Level of harm or filing additional documentation, Phelan J. concluded that the use of the singular “application” was consistent with the single claim approach. In terms of context, he stated that IDSSA was designed “to avoid many of the problems associated with the IRSSA, including the IAP process and its progressive disclosure feature.” And in terms of intent, he found it “compelling” that both the defendant and Class Counsel opposed Mr. Pooyak’s and Ms. Waldron’s motions.


Progressive disclosure has been discussed by Indigenous legal scholars as a critical component of trauma-informed lawyering. This process allows survivors of trauma to recount their stories over time to avoid re-traumatization. Legal counsel as well as governments and judges are called upon to be culturally competent and carry out their duties in a non-discriminatory manner.

Ms. Waldron and Mr. Pooyak argued that the administration of the claims process in a culturally competent manner requires an understanding of progressive disclosure.  Justice Phelan did not agree and made no reference to the evidence of Ms. Waldron, whose affidavit outlined the many efforts she had made to get assistance from Class Counsel to complete her form.[1] These efforts included driving 830 km to her Band Office for a session with Class Counsel that was cancelled on short notice, and making repeated unsuccessful attempts to reach someone at the phone number listed on the claim form. She filed her original claim out of confusion and frustration. Only after being referred to a lawyer who listened to her patiently over many meetings was she able to fully articulate what had happened to her. That full narrative was submitted in September 2020 but the Administrator refused to accept it. Ms. Waldron’s uncontradicted evidence was that she was “re-victimized” by the claims process. “It’s not that my story wasn’t believed, it was that no one even cared to hear it.”

Justice Phelan wrote that the intent of the claims process was to limit the effects of re-traumatization and that the Claims Administrator was to take the position that claims were completed honestly and in good faith. Nevertheless, he supported the Administrator’s position that it could refuse to accept claim Level changes and documentation for the sake of efficiency. The effect of the decision is that class members are unable to seek reconsideration or make submissions to the third-party assessor because the refusal to accept a revised claim form is not one of the enumerated grounds on which reconsideration can be sought. In other words, the refusal to even consider the updated claim shields the Administrator from internal review.

Justice Denied

This decision illustrates two kinds of injustice that can flow from an overly narrow interpretation of JW. First, courts will not intervene even when claims administrators appear to be prioritizing their own convenience and the efficiency of the administration process over the rights of class members to get the compensation to which they are entitled. It creates a dangerous precedent that ignores best practices in trauma-informed lawyering and places class members in vulnerable positions after the horrific experiences of their pasts. While the intent of the settlement was to limit re-traumatization, refusing to even read a class member’s full narrative inevitably leads to further trauma.

Second, the decision underscores the very limited rights class members have after a settlement has been approved. In almost all jurisdictions in Canada, class members have no right to appeal an approved settlement. Class members, therefore, are ‘stuck’ with a flawed settlement which they had no say in designing, just as class members are ‘stuck’ with a flawed claims decision, especially when Class Counsel opposes them. A class member whose revised claim will not even be considered, no matter the circumstances that gave rise to the original incomplete application, has no recourse if the court-approved ‘complete code’ gives no remedy.  

The decision by Phelan J. is under appeal. The Clinic will be watching closely to see if the Federal Court of Appeal provides some relief to class members in Ms. Waldron’s or Mr. Pooyak’s position. As courts have said repeatedly, the ultimate goal of class action procedure is access to justice, a discussion of which is noticeably absent in the McLean decision. This goal must be prioritized by all parties involved in a class action, including – perhaps especially – by claims administrators who often, as in this case, maintain responsibility for developing and implementing procedures for processing and making decisions on claims applications. Administrator-centric claims processes should be replaced by class member-centric ones if class actions are to fulfill their access to justice promise.

Class members who have not yet applied for compensation in the Indian Day Schools Settlement are invited to contact the Clinic for assistance. Clinic staff can be reached here. Please note that we will have reduced capacity during the month of December due to staff turnover and the holidays.

[1] Affidavit of Jessie Waldron sworn February 3, 2021 (on file with Clinic).

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