Imperial Tobacco: the variance limit, and the 138% question

The plans were sanctioned in March 2025 and implemented that August. What is left is the machinery — and on September 9, 2026, before Justice Kimmel in Toronto and the Quebec Superior Court sitting jointly by videoconference, the machinery cost $19,958,210 a quarter and three sets of parties could not agree on whether that was a lot.

What the amendment takes out

The claims administrator order of August 27, 2025 built in an automatic tripwire. Before Epiq Class Action Services Canada Inc.'s aggregate costs could exceed the first annual global claims administration costs budget by more than 10%, it had to go back for approval — to the plan administrators, to the Ontario court, and to the Quebec Superior Court. The amended and restated order deletes that limit. It also drops the requirement that Epiq file its weekly and monthly reports with the court, though the reports continue to the plan administrators, the tobacco companies, the mediator, the administrative coordinator, both sets of class counsel and, newly, the provincial-territorial liaison committee.

What replaces the tripwire is a calendar. Instead of one annual budget, Epiq must produce a budget every three months — one for the pan-Canadian claims administration and one for the Quebec administration plan — in the framework's format, including its legal advisers' fees and taxes, informed by claim volumes, and file them with both courts for joint approval within forty-five days, per the Amended and Restated Claims Administrator Order, Sept. 9, 2026, paras. 16–18. The plan administrators put the logic in one sentence: "As the Amended and Restated Claims Administrator Order will provide stakeholders opportunities on three-month intervals to review the actual and projected Costs of the Claims Administration, the Variance Limits are no longer required," per the Joint Factum of the Monitors and CCAA Plan Administrators, Sept. 4, 2026, para. 13.

A note on the record: the blackline filed with the motion is a comparison between two late drafts of the September order, and it records eight changes — a plural, a comma, the addition of the liaison committee, and some struck cross-references, per the Blackline of the Amended and Restated Claims Administrator Order, Sept. 8, 2026. The removals that everyone is arguing about are not marked in it; they sit as settled text in both drafts, and are described instead in the joint factum and in the plan administrators' reports.

Quebec's arithmetic

The Attorney General of Quebec has a direct interest and states it plainly: it wants enough money left to pay every eligible Quebec claimant, and it holds the residual, so "each dollar spent on the administration of the QCAP Claims Fund is effectively paid either by the QCAP claimants, or from Quebec's residual," per the Aide Memoire of the Attorney General of Quebec, Sept. 4, 2026, para. 2.

Its case is that the amendment would ratify departures rather than tighten oversight. On the materials, it says, Epiq appears to have failed to file its weekly and monthly reports with the court as paragraph 14 required, and to have failed to seek approval of a variance as paragraph 18 required — and "it would appear that Epiq is now seeking to have those breaches built into an amended claims order which will undermine the protections provided to Quebec, and the other Provinces, in the Original Claims Order," per the Aide Memoire of the Attorney General of Quebec, Sept. 4, 2026, paras. 3–4.

Then it does the division. The first quarterly budget projects $19,958,210 for three months. The first annual framework projected $33,494,485 for the whole of year two — $8,373,621 a quarter. "The current three-month projection of $19,958,210 represents a variance of approximately 138% above that quarterly benchmark," per the Aide Memoire of the Attorney General of Quebec, Sept. 4, 2026, paras. 17–18.

And it sets that against the workload. Epiq has received 81,860 claims. The framework was built on an estimated 144,371. "Despite receiving significantly fewer claims than projected, there appears to be a substantial, and largely unexplained, cost overrun," per the Aide Memoire of the Attorney General of Quebec, Sept. 4, 2026, para. 21. Quebec asks that the variance limit be kept — it "is an automatic, real-time safeguard" and a forward-looking quarterly estimate "does not provide any information regarding the actual costs to date" — that the budget motion be adjourned until Epiq discloses what it has actually spent, and that Epiq's request to have its own activities ratified with personal liability protection be refused.

The answer: there was never a budget to exceed

Epiq's answer, and Quebec class counsel's, is that the denominator does not exist. The August 2025 order approved a Global Claims Administration Costs Framework, not a budget. "The Framework was not an approved budget," the class plaintiffs say, and it "did not include third-party costs, such as Epiq's legal counsel costs, or sales taxes. The Framework was intended to be a rough estimate and to provide a template." Quebec, they say, "incorrectly conflates the Framework with a Court-approved annual budget and then tries to suggest that the non-existent budget was exceeded," per the Aide Memoire of the Quebec Class Action Plaintiffs, Sept. 8, 2026, paras. 4–5. Epiq's factum says the same in a footnote: no such annual budget exists, and the framework's amounts were never subject to court approval, per the Factum of Epiq Class Action Services Canada Inc., Sept. 7, 2026, n. 21.