2003 Annual Report
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Schedule A - Report of the Joint Committee for the period ending March 31, 2003
OVERVIEW AND SUMMARY
- The 1986-1990 Hepatitis C Fund (the “Trust Fund”)
completed its third full year of operation on March 31,
2003 (“Year Three”).
- Since inception, a total of approximately $301,208,043.00
million has been paid in benefits in response to approximately
7,565 claims. There are a further 1,310 claims, which are
in process awaiting the submission of further information
by the claimants or the completion of a traceback search,
or both.
- The Investment Summary of The Eckler Partners Ltd. at
Schedule “M”
indicates a value of $794,040,000.00 held by the Trustee
as at March 31, 2003. The total unpaid liability of the
provincial governments is approximately $254,761,000.00
for a total available to class members of approximately
$1.05 billion.
- The following chart summarizes the budget versus actual
expenses for the service providers in the past year ended
March 31, 2003:
|
Service Provider
|
Budget to March 31, 2003
|
Actual
|
Variance from
budget
|
Note |
Auditor (Deloitte & Touche)
[audit only] |
$48,000.00 |
$66,233.00 |
$18,233.00 |
See paragraphs 15 to 22 below.
|
Trustee
(Royal Trust)
|
$166,870.00 |
$120,000.00 |
($ 46,870.00) |
No monies beyond actual expenses have been paid. |
Investment Manager
(TD Asset Management Inc.)
|
$263,004.00 |
$183,074.42 |
($79,929.58) |
No monies beyond actual expenses have been paid. |
| Eckler Partners – Actuarial Services and Investment Review |
$60,000.00
[excludes special orders] |
$28,194.00 |
Only $35,000.00 from budget received - credit balance
$6,806.00 |
Credit balance will be offset by billings in Year 4 |
Administrator
(Crawford)
|
$3,874,054.00 |
$3,938,174.00 |
$64,121.00 |
Debit balance will be repaid through billings in Year 4 |
| Canadian Blood Services (CBS) |
$399,762.98 |
$303,300.82 |
($96,462.16) |
No monies beyond actual expenses has been paid |
| PriceWaterhouse-Coopers LLP |
$35,675.00 |
$33,264.00 |
($2,411.00) |
Additional payments were used to offset a shortfall from Year 2. See
paragraph 43. |
- The administration expenses for the twelve-month period
were $7,905,000.00, inclusive of administration, legal and
appeal costs. The Joint Committee expects that the overall
administration expenses in Year 4 will be less than in Year
3. The Joint Committee is recommending that the budgets
for the Administrator and Canadian Blood Services be reduced
in Year 4 to reflect a lower volume of applications and
claims processing.
- The following chart summarizes the proposed budgets for
service providers in Year 4:
|
Service Provider
|
Proposed Budget
to March 31, 2004
(excludes GST)
|
Proposed Monthly
Charges (excludes GST)
|
| Auditor (Deloitte & Touche) |
$71,000.00 |
$5,916.67 |
Trustee
(Royal Trust) |
$130,000.00 |
Up to $10,833.33 |
Investment Manager
(TD Asset Management Inc.) |
$225,000.00 |
Up to $18,750.00 |
Actuary & Investment Review
(Eckler Partners Ltd.) |
$60,000.00 |
$5,000.00 |
Administrator
(Crawford) |
$3,133,100.00 |
$261,091.67 |
| Canadian Blood Services (CBS) |
$269,579.48 |
$22,464.96 |
| PriceWaterhouseCoopers LLP |
$22,500.00 |
$1,875.00 |
- Fund Counsel incurred fees and disbursements in the 12
months ending March 31, 2003 of approximately $715,563.59
exclusive of taxes. It is anticipated that this amount will
be similar in Year 4 as the volume of appeals will be substantially
the same as in Year 3. No amounts are paid to Fund Counsel
without a specific court order.
- Joint Committee fees incurred in the 12 months ending
March 31, 2003 (exclusive of taxes) were approximately $1,102,595.00
exclusive of taxes. No amounts are paid to the Joint Committee
without a specific court order. Joint Committee fees in
the past year were higher than anticipated. The DB9 overpayment
issue and the preparation for and attendance at the fund
sufficiency hearings in June of 2002 increased Joint Committee
time in the last fiscal year.
GENERAL
- This is the third annual report of the Joint Committee
to the Supreme Court of British Columbia, the Superior Court
of Justice for Ontario and the Superior Court of Quebec
(collectively the “Courts”) on the status of
the Trust Fund and the administration of the Hemophilia
HCV plan and Transfused HCV Plan (collectively the “Plans”).
- The Joint Committee is comprised of Harvey Strosberg,
J.J. Camp, Bonnie Tough and Michel Savonitto. Harvey Strosberg
was appointed by Order of the Superior Court of Justice
for Ontario. J.J. Camp was appointed by Order of the Supreme
Court of British Columbia and Michel Savonitto by Order
of the Superior Court of Quebec. Bonnie Tough was appointed
by Order of each of the Superior Court of Justice for Ontario,
the Supreme Court of British Columbia and the Superior Court
of Quebec. This Report is prepared by and on behalf of all
members of the Joint Committee.
- In conjunction with the advice of Deloitte & Touche,
the Joint Committee has, for audit and reporting purposes,
established March 31 as the year-end of the Trust Fund and
the administration of the Plans. The Year 3 Audit Report,
therefore, is based upon a twelve-month cycle commencing
April 1, 2002 and ending March 31, 2003.
- In the period commencing April 1, 2002 and ending March
31, 2003, approximately $90 million was paid to claimants.
Since inception of the Plan a total of approximately $300
million has paid to claimants.
- The budget and expenses of each of the service providers
is discussed in detail below.
- The Joint Committee recommends that the budgets of service
providers include payment through to June 1, 2004 in order
to provide time from March 31, 2004 until June 2004 for
the audit and accounting review of the expenses in preparation
for a report to the Courts in June 2004.
DELOITTE & TOUCHE
- Deloitte & Touche was appointed auditor of the Trust
Fund pursuant to the Orders of the Courts. The Joint Committee
recommends the continuation of this appointment.
- The Courts approved an annual audit budget for Deloitte
& Touche of $48,000.00 for the year ended March 31,
2003. In February of 2003, Deloitte & Touche advised
the Joint Committee that recent changes to the audit requirements
and standards would require a more detailed review of the
statements and a budget overrun to $59,500.00 was expected.
The costs incurred by Deloitte & Touche for the financial
statements and the audit are $59,500.00 plus an administrative
charge of $3,570.00 and travel expenses of $3,163.00 for
a total of $66,233.00. In addition to the audited financial
statements, Deloitte & Touche has provided the Joint
Committee with a confidential report reflecting Deloitte
& Touche’s increased work, a copy of which will
be made available to the courts on a confidential basis.
The Joint Committee recommends approval of Deloitte &
Touche’s audit invoice in the amount of $66,233.00.
- In addition to its audit role, Deloitte & Touche
was asked to conduct a disbursement review for the 6 month
period ending September 30, 2002. The Joint Committee was
particularly concerned, because of the DB9 issue which has
resulted in erroneous payments to approximately 18 claimants,
that the disbursement review be more thorough than in the
past. Deloitte & Touche was specifically asked to review
the systems relating to approval of procedures and payments.
The total cost incurred for this work was $15,000.00 and
the Joint Committee recommends it be approved for payment.
The Schedule of Disbursements is attached as Schedule
“C”.
- In addition to the audit of the Trust Fund, the Joint
Committee requested the following other services from Deloitte
& Touche:
- A cost review (not an audit) of the expenses charged
by CBS and Héma-Quebec to the Trust Fund. Attached
hereto and marked as Schedule
“D” and “E”
and respectively, is the Report of the Cost Review of
CBS conducted by Deloitte & Touche and the Report
of the Cost Review of Héma-Quebec conducted by
Deloitte & Touche;
- A cost review (but not an audit) of the expenses
charged by the Administrator to the Trust Fund. Attached
hereto and marked as Schedule
“F” is a copy of the Cost Review of
the Administrator.
- The preparation of the annual financial statements.
Attached hereto and marked as Schedule
“B” is a copy of the financial statements
prepared and audited by Deloitte & Touche;
- The chart set out below summarizes the work done by Deloitte
& Touche in Year 3 in comparison to budget and the proposed
budget for Year 4.
|
Work
|
Year 3 Budget
|
Year 3 Actual
|
Year 4 Budget
|
|
Audit
|
$48,000.00
|
$66,233.00
|
$61,000.00
|
|
Financial Statements
|
Up to $10,000.00
|
$9,010.00
|
$8,000.00 to $10,000.00
|
|
6 Month Disbursement Audit
|
Up to $8,000.00
|
$15,900.00
|
[Not to be done in Year 4]
|
|
CBS Cost Review
|
Up to $8,000.00
to $10,000.00
|
$6,890.00
|
$6,000.00 to $8,000.00
|
|
Hema-Quebec Cost Review
|
Up to $8,000.00
to $10,000.00
|
$10,070.00
|
$7,000.00 to $10,000.00
|
|
Crawford Cost Review
|
Up to $9,000.00 |
$7,420.00
|
$6,000.00 to $9,000.00
|
- A copy of the invoices for the work of Deloitte &
Touche in Year 3 are attached as Schedule
“G”. The invoices also include $2,915.00
for carry over work involving the Year 2 audit and financial
statements. The Joint Committee requests payment of all
those invoices plus GST, less the $48,000.00 already paid
to Deloitte & Touche for a total payable excluding GST
of $70,438.00.
- Deloitte & Touche has requested a budget for Year
4 as set out in Schedule “H“.
The Joint Committee is uncertain if it will be necessary
to have Deloitte & Touche review the costs of CBS and
Hema Quebec in light of their reduced budgets. Further,
the Joint Committee does not, at this time, anticipate a
6 month audit of disbursements in Year 4. Should this work
be required, a proposed budget is set out in
Schedule “H”.
- Deloitte & Touche proposes and the Joint Committee
recommends that its audit budget for the year April 1, 2003
to March 31, 2004 be $61,000.00, exclusive of taxes.
ROYAL TRUST
- Royal Trust was appointed Trustee of the Fund pursuant
to Orders of the Courts. The Joint Committee recommends
the continuation of this appointment.
- Attached hereto and marked as Schedule
“I” is a brief description from Royal Trust
of its Custodial Trustee activities in the year ended March
31, 2003.
- The Courts approved an annual budget for Royal Trust of
$166,870.00 for the year ended March 31, 2003.
- The actual charge to the Trust Fund by Royal Trust for
the year ended March 31, 2003 was $120,000.00. No payments
have been made to Royal Trust beyond those expenses actually
incurred.
- Royal Trust proposes and the Joint Committee recommends
that Royal Trust’s budget for the year April 1, 2003
to March 31, 2004 be $130,000.00. Royal Trust will charge
monthly an amount not to exceed $10,833.33.
TD ASSET MANAGEMENT INC.
- TD Asset Management Inc. (“TD Asset Management”)
was appointed Investment Manager of the Trust Fund pursuant
to Orders of the Courts. The Joint Committee recommends
the continuation of that appointment. Attached as Schedule
“J“ is confirmation that TD Asset Management
has complied with the court approved Investment Guidelines.
- The Courts approved an annual budget for TD Asset Management
of $263,004.00 for the year ended March 31, 2003.
- Total fees charged by TD Asset Management for the year
ended March 31, 2003 were $183,074.42. No payments have
been made to TD Asset Management beyond those expenses actually
incurred. Attached as Schedule
“K” is the TD Asset Management Report setting
out the actual charges for the year ended March 31, 2003
by quarter.
- TD Asset Management proposes and the Joint Committee recommends
that its budget for the year April 1, 2003 to March 31,
2004 be reduced to $225,000.00. TD Asset Management will
charge monthly an amount not to exceed $18,750.00.
ECKLER PARTNERS LIMITED
- Eckler Partners Limited (“Eckler Partners”)
was retained by Class Counsel and subsequently the Joint
Committee to provide actuarial advice in respect of the
Trust Fund.
- Eckler Partners also provides advice to the Joint Committee
in respect of investments on an as needed basis.
- Attached as Schedule “L”
is the Report of Eckler Partners regarding their activities
during the year ended March 31, 2003.
- Attached as Schedule “M“
is an Investment Summary provided by Eckler Partners.
- The Courts approved an annual budget for Eckler Partners’
actuarial services of $40,000.00 for the year ended March
31, 2003 to be paid in monthly instalments of $3,333.33.
- The Courts also approved an annual budget for the provision
of investment review services by Eckler Partners in the
amount of $20,000.00 for the year ended March 31, 2003 to
be paid in monthly instalments of $1,666.67. The total actuarial
and investment services amounted to monthly payments of
$5,000.00. In fact, Eckler Partners drew from the fund only
$35,000.00 from this budget.
- Eckler Partners incurred $28,194.00 in charges for the
period from July 1, 2002 to March 31, 2003. A balance owing
to the fund of $6,806.00 will be offset by charges in Year
4.
- In addition to its annual work, Eckler Partners was also
retained by the Joint Committee to prepare the 3 year actuarial
valuation for June of 2002. Special payments in the amount
of $277,210.00 were authorized and paid pursuant to court
orders in Year 3. Attached as Schedule
“N” is the account summary for Eckler Partners
for Year 3.
- Eckler Partners has proposed and the Joint Committee
recommends that the total budget for both actuarial services
and investment review services continue in the amount of
$60,000.00 for the year ending March 31, 2004 to be paid
in monthly payments of $5,000.00. Attached as Schedule
“O” is the proposed Eckler Partners budget
for year 4.
PRICEWATERHOUSECOOPERS LLP
- PriceWaterhouseCoopers LLP provides annual updates for
tax calculations on software used to calculate income loss,
software maintenance for the software used to calculate
loss of income claims and separate software used to calculate
and track loss of income payment caps and holdbacks, and
advice, assistance and training to the Administrator of
the Trust Fund with respect to both types of software.
- The total budget approved for PriceWaterhouseCoopers
LLP in the period between April 1, 2002 to March 31, 2003,
under the various court Orders was $35,675.00, exclusive
of G.S.T.
- Actual billings by PriceWaterhouseCoopers LLP for services
between April 1, 2002 and March 31, 2003 were $33,264.00,
exclusive of GST. This results in an overage to PriceWaterhouseCoopers
LLP of $2,411.00. However, as per the Year 2 Annual Report
this overage was intended to make up a short fall in Year
2 which has now been made up. PriceWaterhouseCoopers LLP
has abandoned a small remaining difference.
- PriceWaterhouseCoopers LLP has proposed and the Joint
Committee recommends a budget in the amount of $22,500.00
for the year ending March 31, 2004 to be paid in monthly
instalments of $1,875.00. The budget prepared by PriceWaterhouseCoopers
LLP is attached as Schedule
"P".
CANADIAN BLOOD SERVICES
- Actual expenses incurred by CBS in Year 3 were $303,300.82.
As at March 31, 2003, Royal Trust has made payments to CBS
in the amount of $303,300.82 exclusive of GST. CBS actual
versus budget reconciliation is attached as Schedule
"Q".
- As described in paragraph 17 above, the Joint Committee
requested that Deloitte & Touche review the expenses
incurred by CBS to March 31, 2003. The Report of the Cost
Review of the expenses of CBS is attached as Schedule
“D".
- The efficient and effective conduct of tracebacks is
a key component of the administration of the Plans. The
Joint Committee anticipates that there will be less demand
for tracebacks in Year 3 and that therefore CBS will require
a lower budget.
- Attached hereto and marked as Schedule
“R” is a copy of the proposed budget for
CBS for the period April 1, 2003 to March 31, 2004. The
budgeted amount is $269,579.48, to be paid in monthly instalments
not exceeding $22,464.96, plus GST.
CRAWFORD
- Crawford Adjusters Canada Incorporated/Expertises Crawford
Canada Incorporée and The Garden City Group Inc.
(“Crawford”) was appointed by the Courts as
Administrator of the Plans for a 5-year term.
- The Courts approved a budget for Crawford for Year 3,
which provided for an annual payment to Crawford of $3,874,054.00
to be paid on a monthly basis at the rate of $322,837.83
per month, exclusive of GST.
- The total expenses of Crawford in the year ended March
31, 2003, were $3,938,174.00 for an over budget of $64,121.00.
As is discussed in paragraph 18 above, Deloitte & Touche
was asked to review the expenses of Crawford and the Report
on the Cost Review of the Expenses of Crawford is attached
as Schedule “F”.
- Additionally, Deloitte & Touche was asked to conduct
an audit as at September 30, 2002 of the disbursements to
Class Members by Crawford that audit is attached as Schedule
“C”.
- Attached as Schedule “S”
is a brief description from Crawford of its activities in
the period ending March 31, 2003.
- Crawford proposes and the Joint Committee recommends
a budget for the year commencing April 1, 2003 of $3,133,099.00
plus GST. Attached hereto as Schedule
“T” is a detailed budget proposal prepared
by Crawford. The proposed budget is somewhat less than the
previous year due to reduced staffing and operational costs
as well as compensation.
- As part of the Year 4 budget and as set out in a separate
motion to the courts, it is proposed that Crawford handle
the HIV Secondarily-Infected Settlement (“EAP2”).
Crawford proposes and the Joint Committee recommends the
allocation of $45,827.00 from the total budget.
- The Joint Committee therefore recommends that Crawford
be paid in monthly instalments of $261,091.67 plus GST.
FUND COUNSEL
- Carolyn Horkins and John Callaghan were appointed as
Trust Fund Counsel in the Ontario Class Actions by Order
of the Ontario Court of Justice for Ontario. Mason Poplaw
was appointed Trust Fund Counsel in the Quebec Class Actions
by Order of the Quebec Superior Court and Bill Ferguson
was appointed Trust Fund Counsel in the B.C. Class Actions
by Order of the B.C. Supreme Court.
- In the 12-month period ending March 31, 2003, the total
Trust Fund Counsel fees and disbursements were $715,563.59
exclusive of taxes. No amounts have been or will be paid
to Trust Fund Counsel without prior court approval of the
fees and disbursements.
- The Joint Committee and Trust Fund Counsel estimate that
the fees for the year April 1, 2003 to March 31, 2004 will
be in the same range as the past fees. The volume and complexity
of appeal work is anticipated to be substantially the same
as in Year 3.
- Attached hereto and marked as Schedule
“U” is a report of Trust Fund Counsel on
their activities and their fees incurred in the 12 months
ending March 31, 2003.
JOINT COMMITTEE
- A brief summary of the work of the Joint Committee in
the past 12 months is set out in Schedule
“V”.
- In the 12-month period ending March 31, 2003, the total
Joint Committee fees were approximately $1,102,595.00 exclusive
of taxes on fees. A summary of fees incurred by the Joint
Committee is set out in Schedule
"W". No amounts have been or will be paid
to the Joint Committee without prior court approval of the
fees and disbursements.
- The Joint Committee estimates that the fees for the year
April 1, 2003 to March 31, 2004 will be lower than in Year
3 because the Joint Committee will not be engaged in full
scale fund sufficiency hearings this year nor does the Joint
Committee anticipate another time consuming issue such as
the DB9 issue.
REFEREES AND ARBITRATORS
- In the 12-month period ending March 31, 2003, the total
fees and disbursements of the Arbitrators and Referees were
approximately $190,000.00 exclusive of taxes on fees.
- A brief summary of the work of the Referees and Arbitrators
as well as the fees incurred for the period April 1, 2002
to March 31, 2003 is set out in Schedule
"X".
- Except in Quebec where these costs may increase due to
a transition period as a result of the appointment of the
former arbitrator to the Court of Quebec, the Joint Committee
estimates that the fees of the Arbitrators and Referees
will be similar for the year April 1, 2003 to March 31,
2004 and recommends a budget equal to that actually incurred
in Year 3.
Dated: June 27, 2003
J. J. Camp,
Camp Fiorante Matthews
Dated: June 27, 2003
Harvey Strosberg,
Sutts Strosberg LLP
Dated: June 27, 2003
Michel Savonitto,
Marchand Magnan Melançon Forget
Dated: June 27, 2003
Bonnie A. Tough,
Hodgson Tough Shields DesBrisay
O’Donnell LLP
* - proprietary, personal and financially sensitive information
has been excluded from the publicly
disclosed copies of this report
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