HEPATITIS C CLASS ACTION SETTLEMENT YEAR 9 REPORT OF THE JOINT COMMITTEE

Transcription

1 HEPATITIS C CLASS ACTION SETTLEMENT YEAR 9 REPORT OF THE JOINT COMMITTEE FOR THE PERIOD ENDING DECEMBER 31, 2008

2 Hepatitis C Class Action Settlement Year 9 Report INDEX 1 Re port of the Joi nt Com m ittee A Audited Financial Statements of the Hepatitis C Fund for year ending December 31, 2008 B Invoice from Deloitte & Touche dated April 22, 2009 C RBC Dexia, Trustee and Custodian Hepatitis C Trust Fund Information Brief - Februa ry 2009 D TD Asset Management Inc. - Quarterly Certificate of Compliance for 2008 E TD Asset lvia nagement Inc. - Report F Report of Eckler Ltd. Activities G Hepatitis C Settlement Trust Fund Investment Summary - Eckler Ltd. H Accounting Summary - Eckler Ltd. dated December 30,2008 Annual Report of the Administrator J Crawford Administration Proposal for Years 8 to 10 K Crawford Year 9 Reconciliation L Invoice of PriceWaterhouseCoopers dated April 24, 2009 M Canadian Blood Services 2008 Litigation Notification Program Reconciliation N Canadian Blood Services Cost Recovery Budget for Year 10 o Re port of Fu nd Cou nsel P Q Summary of Joint Committee Work Fees of Joint Committee R Re port and Fees of Refe rees and Arb itrators fo r Yea r end ed December 31,

3 Hepatitis C Class Action Settlement Hepatitis C Class Action Settlement Year 9 Report OVERVIEW AND SUMMARY,- 1. The Hepatitis C Fund (the "Trust Fund") completed its ninth year of operation on December 31,2008 ("Year 9"). 2. In Year 9, the Centre received 461 new claims as follows: Primary Infected Transfused 7 Primary Infected Hemophiliac HCV Personal Representative Claims where deceased died on or after January 1, o Secondary Infected HCV Personal Representative Claims where deceased died before January 1, Family Member/dependent claims The Centre paid out approximately $46 million to all claimants (prior and new) in Year 9. Since its inception, the Centre has paid out a total of approximately $600 million in benefits in response to approximately 12,140 claims. 1 The 56 HCV Personal Representative Claims include new claims in 2008 (12) and 44 primary claims that became estate claims in

4 Hepatitis C Class Action Settlement Year 9 Report 3. The Investment Summary of Eckler Ltd. 2 attached at Schedule G indicates a value of $866,082 million held by the Trustee as at December 31, The total unpaid liability of the provincial governments is approximately $205,153 million for a total available to satisfy the claims of class members of approximately $1,071,235 billion as at December 31, The following chart summarizes the budget versus actual expenses for the service providers in the year ended December 31,2008. Auditor [Audit Only] 67, , , See paragraph 18 Deloitte & Touche below Auditor [Financial 10, , Statements] Deloitte & Touche Auditor [Special Projects] 5, Not Requested by Deloitte & Touche Joint Committee Trustee 125, (21,334.10) RBC Dexia Investor Services Trust (RBC Dexia) Investment Manager 200, , ( ) TD Asset Management Inc. Actuarial Services & 60, , ( ) Investment Review Eckler Ltd. Canadian Blood Services 57, , (2,410.80) 2 Eckler Ltd. is the new name of Eckler Partners Ltd. effective January 1, Accordingly. documents originating from Eckler Ltd. that precede January 1, 2007 bear the name "Eckler Partners Ltd." and documents subsequent to this date bear the new name. All references to Eckler Ltd. in this Annual Report. also refer to Eckler Partners Ltd. where appropri::jte. 4

5 Hepatitis C Class Action Settlement Year 9 Report PriceWaterhouseCoopers 15, , (1,576.59) LLP Navigant 20, (20,000.00) Joint Committee [total 550, , (308,243.87) fees & disbursements] General 5. The total net underbudget of all service providers combined is $380, This does not include the Administrator whose payment is now subject to a variable fixed fee budget discussed below at paragraphs 39 to The chart below summarizes the proposed budgets for service providers in Year 10. Auditor [Audit Only] 70, , Deloitte & Touche Auditor [Financial Statements] 11, Deloitte & Touche Auditor [Special Projects] 5, Deloitte & Touche Trustee 125, up to 10, RBC Dexia Investment Manager 200, up to 16, TD Asset Management Inc. Actuarial Services & Investment Review 60, , Eckler Ltd. Crawford 1,020, , Canadian Blood Services 58, up to 4, PriceWaterhouseCoopers LLP 15, Navigant 20, Joint Committee Fees 550, payments will be subject to court order 5

6 Hepatitis C Class Action Settlement Year 9 Report 7. Fund Counsel incurred fees in the year ending December 31,2008 of approximately $136,287 (exclusive of taxes and disbursements). No amounts are paid to Fund Counsel without a specific court order. 8. The Joint Committee had a general budget of $500,000 in respect of fees and $50,000 in respect of disbursements in Year 9. The Joint Committee also proposed a $300,000 budget for sufficiency related matters. Total Joint Committee fees incurred in the year ending December 31, 2008 (exclusive of taxes and disbursements) were $222,080 in respect of general work and $177,994 in respect of sufficiency related work for a total of $400, of fees. Disbursements totalled $27, A detailed breakdown of the global Joint Committee fees for Year 9 is provided in Schedule Q. No amounts are paid to the Joint Committee without a specific court order. 9. The Courts approved a budget for Crawford for the period of April 1, 2006 to December 31, 2010 on the basis of a fixed price subject to increase or decrease if certain measurable activities increased or decreased by more than 10%. The total adjustment for 2008, as is discussed below in paragraphs 39 to 46 is a credit to the fund of $20, including $8, of flow through expenditures. GENERAL 10. This is the ninth 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 Hemophiliac HCV Plan and Transfused HCV Plan (collectively the "Plans"). 6

7 Hepatitis C Class Action Settlement Year 9 Report 11. 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 was appointed by the 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. 12. In the year ending December 31, 2008, approximately $46 million was paid to claimants. Since the inception of the Plans, a total of approximately $600 million has been paid to claimants. 13. The budget and expenses of each of the service providers are discussed in detail below. 14. The Joint Committee recommends that the budgets of the service providers include payment through to April 1, 2010 in order to provide for a reasonable period of time from December 31,2009 until April 1, 2010 for the audit and accounting review of the expenses in preparation for a report to the Courts in April DELOITrE & TOUCHE 15. Deloitte & Touche was appointed auditor of the Trust Fund pursuant to Orders of the Courts. The Joint Committee recommends the continuation of this appointment. 7

8 Hepatitis C Class Action Settlement Year 9 Report 16. In addition to the audit of the Trust Fund, the Joint Committee requested the following services from Deloitte & Touche: i) The preparation of annual financial statements. Attached as Schedule A is a copy of financial statements prepared and audited by Deloitte & Touche The chart set out below summarizes the work done by Deloitte & Touche in Year 9 in comparison to the Year 9 budget, and the proposed budget for Year , , , Audit + administration + administration and + administration and and travel costs travel costs travel costs 10, Financial Statements + administration 10, , and travel costs 5, , Special Projects + administration Not requested. + administration and travel costs and travel costs 18. The cost of the audit and preparation of the financial statements is slightly ahead of budget ($2,800) due to additional time incurred by Deloitte as a result of personnel changes by the Administrator at the Ottawa Centre. 19. The Deloitte & Touche budget numbers are exclusive of travel costs, administration charges and GST. Variances from budget in the final invoices are a result of the addition of travel and administration charges. The costs incurred for the Audit and the Financial 3 The "medical and other expenses" in note 6 is overstated by $17, due to errors discovered at the last minute which had resulted in a slight overstatement of the Crawford and PWC expenses. The "medical and other expenses" were increased by $17, to correct for the error without having to incur the cost of redoing the entire financial statement. The error is not material. 8

9 Hepatitis C Class Action Settlement Year 9 Report Statements are $80,000 exclusive of an administrative charge of $4,800 and travel expenses of $455 for a total of $85, A copy of the invoice for the work of Deloitte & Touche in Year 9 is attached as Schedule B. Deloitte & Touche received payment throughout the year of $82,200. The Joint Committee recommends approval of Deloitte & Touche's outstanding charges for Year 9 and payment of the amount of $3,055, plus taxes, for a total of $3, Deloitte & Touche proposes and the Joint Committee recommends that the budget for Deloitte & Touche for the year January 1, 2009 to December 31, 2009 be $70,000 (Audit), $11,000 (Financial Statements) and $5,000 (Special Projects). RBC DEXIA In Year 6, RBC Dexia was appointed successor Trustee of the Trust Fund pursuant to the Orders of the Courts, on the same terms and conditions under which Royal Trust was originally appointed. 23. Attached as Schedule C is a brief description from RBC Dexia of its Custodial Trustee activities in the year ended December 31, The Courts approved an annual budget for RBC Dexia for Year 9 of $125, The actual charge to the Trust Fund by RBC Dexia for the year ended December 31, 2008 was $103, No payments have been made to RBC Dexia beyond those 9

10 Hepatitis C Class Action Settlement Year 9 Report expenses actually incurred. The Joint Committee recommends approval of the charges of $103, incurred by RBC Oexia in Year RBC Oexia proposes and the Joint Committee recommends that RBC Oexia's budget for the year January 1, 2009 to December 31, 2009 be $125,000. RBC Oexia will charge monthly an amount not to exceed $10, TD ASSET MANAGEMENT INC. 27. TO Asset Management Inc. ("TO Asset Management") was appointed Investment Manager of the Trust Fund pursuant to the Orders of the Courts. The Joint Committee recommends the continuation of that appointment. Attached as Schedule D is confirmation that TO Asset Management has complied with the court approved Investment Guidelines. 28. The Courts approved an annual budget for TO Asset Management of $200,000 for the year ended December 31, Total fees charged by TO Asset Management for Year 9 were $182, No payments have been made to TO Asset Management beyond those expenses actually incurred. Attached as Schedule E is the TO Asset Management Report setting out the actual charges for the year ended December 31, The Joint Committee recommends approval of the charge of $182, incurred by TO Asset Management in Year 9. 10

11 Hepatitis C Class Action Settlement Year 9 Report 30. TD Asset Management proposes and the Joint Committee recommends that its budget for the year January 1, 2009 to December 31, 2009 be $200,000. TD Asset Management will charge an amount not to exceed $16,667 monthly. ECKLER LTD. 31. Eckler Ltd. was retained by Class Counsel and subsequently the Joint Committee to provide actuarial advice in respect of the Trust Fund. 32. Eckler Ltd. also provides advice to the Joint Committee in respect of investments on an as needed basis. 33. Attached as Schedule F is the Report of Eckler Ltd. regarding its activities during Year Attached as Schedule G is an Investment Summary provided by Eckler Ltd. 35. The Courts approved an annual budget for Eckler Ltd.'s actuarial and investment review services of $60, Eckler Ltd. incurred $47,719 (plus G.S.T.) in charges for the period from January 1, 2008 to December 31,2008. However, Eckler had a balance owing to the Fund from Year 8 in the amount of $14,938 for a net charge in Year 9 of $32,781 plus GST. Attached as Schedule H is the Accounting Summary of Eckler Ltd. The Joint Committee recommends approval of the charge of $47,719 incurred in Year 9 and the payment of the net amount of $32,781 plus GST to Eckler. 11

12 Hepatitis C Class Action Settlement Year 9 Report 37. Eckler Ltd. has proposed and the Joint Committee recommends that the total budget for both actuarial services and investment review services be $60,000 for the year ending December 31,2009 to be paid in monthly instalments. 38. In addition to its general actuarial and investment services, Eckler also provided services in respect of the 2007 Sufficiency Review. The Courts approved a budget of up to $450,000 plus GST to be paid by RBC Dexia, provided each invoice was specifically approved by the Joint Committee. A total amount of $297, (plus GST), as set out in the attached invoice as Schedule H, was incurred by Eckler and paid in accordance with the court orders. Approximately $153, (plus GST) remains in the Eckler budget in respect of the 2007 Sufficiency Study. Some of those funds may be required for Eckler to respond to any queries on the 2007 Sufficiency Study and to respond to the federal government's position once it is received. Any excess funds will be used in preparatory work relating to the 2010 Sufficiency Study which is already under discussion and will continue through The Joint Committee anticipates a special application to the courts in respect of other costs related to the 2010 Sufficiency Study. CRAWFORD 39. The Annual Report of the Administrator is attached as Schedule I. 40. By Order of the Courts in 2008, the appointment of Crawford was extended to December 31, 2010 and the budget for Crawford was approved to December 31, Attached as Schedule J is the approved budget for Crawford. The budget provides for a flat 12

13 Hepatitis C Class Action Settlement Year 9 Report fee subject to adjustment in the event that certain Measurable Activities increase or decrease by more than 10% during the year. 41. In addition to the flat fee subject to adjustments, there is a flow-through of certain out-of-pocket expenditures incurred by the Administrator relating to appeals and expert reports. 42. Schedule K is the Payment Reconciliation for It reflects the Crawford budget, plus the flow-through expenditures minus certain adjustments as a result of a decrease in Measurable Activities for a net credit to the Fund of $20, This amount will be deducted from Year 10 payments in accordance with the credit note at Schedule K. 43. The Joint Committee asks that this Court approve payments to Crawford for the year ended 2008 in the total amount of $1,261, inclusive of GST. 44. The Year 10 budget for Crawford as previously approved by the Courts is $1,020,000, subject to aqjustment for increases or decreases in Measurable Activities and subject to certain flow-through appeal charges. The monthly budget for Crawford for 2009 will be $85,000, subject to periodic adjustments. 45. The Crawford Terms of Appointment as ordered by the Courts in November of 1999 and as subsequently amended by the Courts by Order in Ontario dated March 16, 2007, British Columbia by Order dated April 5, 2007 and in Quebec by Order dated April 10,2007 provides as follows in section 9(e): 13

14 Hepatitis C Class Action Settlement Year 9 Report "Crawford shall ensure that the most senior permanent staff person of the Claims Centre is able to read, write and speak both English and French proficiently". 46. There have been personnel changes at the Centre and the current most senior permanent staff person at the Centre is not fluently bilingual. However, Crawford has assured the Joint Committee that several senior staff members are fluently bilingual and that the Centre will continue to provide full service in both English and French. The Joint Committee is satisfied that there will be no diminition in the ability of the Centre to service French-speaking class members. The Joint Committee therefore seeks an Order deleting 9(e) from the Terms of Appointment of Crawford. PRICEWATERHOUSECOOPERS LLP 47. 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 hold backs, and advice, assistance and training to the Administrator with respects to both types of software. 48. The total budget approved for PriceWaterhouseCoopers LLP for Year 9 by Court Order was $15,000 exclusive of GST. 49. Actual billings by PriceWaterhouseCoopers LLP for the year ended December 31, 2008 were $13,423.41, inclusive of taxes and disbursements. Attached as Schedule L is a copy of the outstanding invoice from PriceWaterhouseCoopers LLP. 14

15 Hepatitis C Class Action Settlement Year 9 Report 50. PriceWaterhouseCoopers LLP was under budget by $1, in Year There were no monthly billings by PriceWaterhouseCoopers LLP in Year 9. The Joint Committee asks for approval of the actual expenses of PriceWaterhouseCoopers LLP and a direction that PriceWaterhouseCoopers LLP be paid the outstanding amount of $13, by RBC Dexia. 52. The Joint Committee recommends that the budget of PriceWaterhouseCoopers LLP for the year January 1, 2009 to December 31,2009 be $15,000. NAVIGANT CONSULTING INC. 53. LECG was retained initially by the Joint Committee and subsequently by the Administrator to provide expert accounting services in respect of a number of complex selfemployment loss of income claims and appeals. The Partner responsible, Paula Frederick, who has performed all of LECG's work for the Trust Fund, has moved her practice from LECG to LAC Ltd. carrying on business as Navigant Consulting ("Navigant"). The Joint Committee recommends that the Trust Fund continue to use Ms. Frederick's services at her new firm, Navigant Consulting. 54. The Joint Committee budgeted $20,000 for the cost of Navigant's services in Year Navigant's services were not used in Year 9 and therefore no monies are owing to Navigant. 15

16 Hepatitis C Class Action Settlement Year 9 Report 56. The Joint Committee is aware that a single large loss of income appeal could result in significant expert accounting expense and accordingly, the Joint Committee recommends a budget of $20,000 for Navigant for the period of January 1, 2009 to December 31, All amounts paid or payable to Navigant in Year 10 will be subject to approval by the Courts. CANADIAN BLOOD SERVICES 57. The total budget approved for Canadian Blood Services ("CBS") for Year 9 was $57,291 exclusive of taxes. Actual expenses incurred by CBS in Year 9 were $54,880.20, which was $2, under budget. The CBS actual versus budget reconciliation is attached as Schedule M. 58. The efficiency and effective conduct of tracebacks is a crucial component of the administration of the Plans. However, in the last few years, the demand for and costs of such tracebacks has been reduced significantly. 59. Attached as Schedule N is a copy of the proposed budget for CBS for the period January 1, 2009 to December 31, The budgeted amount is $58,691 to be paid in monthly instalments not exceeding $4,890 plus GST. 60. The Joint Committee expects a motion will by brought by Canadian Blood Services in respect of the retention of the stored samples. This decision may impact the CBS budget insofar as it relates to storage costs. 16

17 Hepatitis C Class Action Settlement Year 9 Report HEMA-QUEBEC 61. There was no budget approved for Hema-Quebec for Year 9 as Hema-Quebec advised that, due to the limited number of requests, Hema-Quebec would finance the cost of any individual requests and not seek any monthly payment. 62. Hema-Quebec advised that it would report to the Court at the end of the year and only seek reimbursement if the total costs incurred are significant. 63. Hema-Quebec has advised that it will not seek any reimbursement for Year 9. FUND COUNSEL 64. Belinda Bain and John Callaghan were appointed as Fund Counsel in the Ontario Class Actions by Order of the Ontario Court of Justice for Ontario. Catherine Mandeville was appointed Fund Counsel in Quebec Class Actions by Order of the Quebec Superior Court and Bill Ferguson was appointed Fund Counsel in the B.C. Class Actions by Order of the Supreme Court of British Columbia. 65. In the year ending December 31,2008, the total Fund Counsel fees were $136,287 exclusive of taxes and disbursements. No amounts have been or will be paid to Fund Counsel without prior court approval of the fees and disbursements. 66. Fund Counsel estimates that the volume of appeal work in Year 10 will remain the same as or decrease slightly from Year 9. 17

18 Hepatitis C Class Action Settlement Year 9 Report 67. Attached as Schedule 0 is the report of Fund Counsel on their activities and their fees incurred in the nine months ending December 31,2008. JOINT COMMITIEE 68. A summary of the work of the Joint Committee in the past year is set out in Schedule P. 69. The total budget for the Joint Committee general work for the period ending December 31, 2008 was $500,000 for fees and $50,000 for disbursements. The total actual fees of the Joint Committee in Year 9 for regular work were under budget at $222, The total actual disbursements of the Joint Committee in Year 9 were also significantly under budget at $19, A breakdown of these amounts is provided in the following chart. Fees 500, , (277,919.50) Disbursements 50,000 19, (30,324.37) TOTALS 550, , (308,243.87) 70. The Joint Committee incurred an additional $177,994 in fees and $8, in disbursements relating to the 2007 sufficiency review. These fees and disbursements are subject to a separate budget of$300,000 provided to the Courts. 18

19 Hepatitis C Class Action Settlement Year 9 Report 71. A detailed summary by jurisdiction of the fees and disbursements incurred by the Joint Committee in Year 8 is also set out in Schedule Q. No amounts have been or will be paid to the Joint Committee without prior court approval of the fees and disbursements. 72. The Joint Committee proposes a budget for general fees and disbursements for the year January 1, 2009 to December 31, 2009 of $500,000 in fees and $50,000 in disbursements. The Joint Committee further proposes a budget of $200,000 in fees and $25,000 in disbursements for work to be done in Year 10 relating to the 2007 Sufficiency Review. The budget of the Joint Committee is discussed in more detail at Schedule P. REFEREES AND ARBITRATORS 73. In the year ending December 31, 2008, the total fees for the Arbitrators and Referees were approximately $54,030 exclusive of taxes and disbursements. 74. A brief summary of the work of the Referees and Arbitrators as well as the fees incurred for the period January 1, 2008 to December 31,2008 is set out in Schedule R. 75. The Joint Committee notes that the number of appeals is declining markedly and if that trend continues the fees of Fund Counsel and of the Arbitrators and Referees in Year 10 will be similar to or less than those incurred in Year 9. 19

20 Hepatitis C Class Action Settlement Year 9 Report Dated: Dated: Dated: Dated: f)~ I b I 2.0 e> 1 Bonnie A. Tough, Tough & Podrebarac LLP *Proprietary, personal and financially sensitive Information has been excluded from the publlclydisclosed copies of this report. 20

21 SCHEDULE A TO THE REPORT OF THE JOINT COMMITTEE FOR THE PERIOD ENDING DECEMBER 31, 2008

22 Financial Statements of Etats financiers du THE HEPATITIS C FUND FONDS HEPATITE C December 31, decembre 2008

23 Deloitte Deloitte & Touche LLP BOO Queen Street Ottawa, ON K1P 5TB Canada Tel: (613) Fax: (613) Auditors' Report Rapport des verificateurs To the Joint Committee of the Hepatitis C Fund We have audited the statement of financial position of the Hepatitis C Fund as at December 31, 2008 and the statement of expenses and revenue for the year then ended. These financial statements are the responsibility of the Joint Committee of the Fund. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Fund as at December 31, 2008 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Au comite mixte du Fonds Hepatite C Nous avons verifie Ie bilan du Fonds Hepatite C au 31 decembre 2008 et I'etat des resultats de I'exercice termine a cette date. La responsabilite de ces etats financiers incombe au comite mixte du Fonds. Notre responsabilite consiste a exprimer une opinion sur ces etats financiers en nous fondant sur notre verification. Notre verification a ete effectuee conformement aux normes de verification generalement reconnues du Canada. Ces normes exigent que la verification soit planifiee et executee de maniere a foumir I'assurance raisonnable que les etats financiers sont exempts d'inexactitudes importantes. La verification comprend Ie controle par sondages des elements probants a I'appui des montants et des autres elements d'information fournis dans les etats financiers. Elle comprend egalement I'evaluation des principes comptables suivis et des estimations importantes faites par la direction, ainsi qu'une appreciation de la presentation d'ensemble des etats financiers. A notre avis, ces etats financiers donnent, a tous les egards importants, une image fidele de la situation financiere du Fonds au 31 decembre 2008 ainsi que des resultats de son exploitation et de ses flux de tresorerie pour I'exercice termine a cette date selon les principes comptables generalement reconnus du Canada. J~ ')~udc. L<-I' J..o.~.L. Chartered Accountants Licensed Public Accountants March 11, mars 2009 Comptables agrees Experts-comptables autorises

24 THE HEPATITIS C FUND Financial Statements December 31,2008 FONDS HEPATITE C Etats financiers 31 decembre 2008 Statement of Financial Position Silan Statement of Expenses and Revenue 2 Etat des resultats Notes to the Financial Statements 3-10 Notes complementaires

25 THE HEPATITIS C FUND FONDS HEPATITE C Statement of Financial Position Bilan as at December 31, 2008 au 31 december 2008 (in thousands of dollars) (en milliers de dollars) ASSETS ACTIF Cash $ 53 $ 57 Encaisse Investments (note 3) 861, ,716 Placements (note 3) Contributions receivable Apports a recevoir $ 862,790 $ 896,239 LIABILITIES PASSIF Accounts payable and accrued liabilities $ 1,001 $ 421 Crediteurs et charges a payer Accrued claims in process of payment 2,499 1,471 Demandes accumulees en cours de paiement Funding held for future expenses (note 4) 859, ,347 Financement pour charges futures (note 4) $ 862,790 $ 896,239 APPROVED BY THE JOINT COMMITTEE OF AU NOM DU COMITE MIXTE DU FONDS THE HEPATITIS C FUND HEPATITE C

26 THE HEPATITIS C FUND Statement of Expenses and Revenue year ended December 31, 2008 (in thousands of dollars) FONDS HEPATITE C Etat des resultats de I'exercice tennine Ie 31 decembre 2008 (en milliers de dollars) EXPENSES Claims (note 5) Operating (note 6) $ 47,992 $ 40,693 2,920 3,485 DEPENSES Demandes (note 5) Frais d'exploitation (note 6) 50,912 44,178 REVENUE EXCESS OF REVENUE OVER EXPENSES 50,912 44,178 $ $ REVENUS EXCEDENT DES REVENUS SUR LES DEPENSES 2

27 THE HEPATITIS C FUND Notes to the Financial Statements year ended December 31, 2008 FONDS HEPATITE C Notes complementaires de "exercice tennine Ie 31 decembre DESCRIPTION OF THE FUND The Hepatitis C Fund (the "Fund") was established to hold and invest funds and administer their payment as compensation to claimants who qualify as class members, all pursuant to the terms of the January 1, July 1, 1990 Hepatitis C Settlement Agreement (the "Agreement") made as of June 15, 1999 and the JUdgments of the Supreme Court of British Columbia, Superior Court of Justice for Ontario and Superior Court of Quebec (the "Courts"). The maximum obligations to the Fund established as at January 10, 2000 were $1.203 billion, shared between the Government of Canada ( %) and the governments of the provinces and territories ( %), pius interest accruing thereafter on the unpaid obligations. The Government of Canada has made contributions to the Fund, which totally satisfy its obligation to the Fund. The provincial and territorial governments are required to contribute as and when required for payment of their share of expenses. Provinces and territories may elect to prepay their contributions. To the extent provinces and territories do not prepay their contributions, interest is calculated on their outstanding obligations at treasury bill rates applied quarterly. As at December 31, 2008 those obligations including interest are estimated to be $204,295,000 (December 31, $214,127,000). The operations of the Fund are subject to various reviews and approvals by the Courts. The Fund is a trust that is exempt from income tax under the Income Tax Act. 1. DESCRIPTION DU FONDS Le Fonds Hepatite C (Ie "Fonds") a ete constitue dans Ie but de conserver et d'investir des fonds et de gerer leur versement sous forme d'indemnites aux requerants admissibles comme personnes inscrites au recours collectif, conformement aux modalites de I'entente de reglement relative a I'hepatite C pour la periode allant du 1er janvier 1986 au 1er juillet 1990 (I"'entente"), datee du 15 juin 1999, et aux decisions de la Cour supreme de la Colombie-Britannique, de la Cour superieure de justice de l'ontario et de la Cour superieure du Quebec (Ies "tribunaux"). Au 10 janvier 2000, les obligations maximales revenant au Fonds s'elevaient a 1,203 milliards de dollars, et elles etaient partagees entre Ie gouvernement du Canada (72,7273 %) et les gouvernements provinciaux et territoriaux (27,2727 %), plus les interets cumules par la suite sur les obligations impayees. Le gouvernement du Canada a verse des apports au Fonds, lesquels reglent entierement son obligation envers Ie Fonds. Les gouvernements provinciaux et territoriaux sont tenus de verser des apports pour regler leur part des charges au moment ou elles deviennent exigibles. Les provinces et les territoires peuvent choisir de verser leurs apports a I'avance. Dans la mesure ou its ne versent pas d'apports a I'avance, l'inten3t est calcule trimestriellement sur les obligations impayees aux taux des bons du Tresor. Au 31 decembre 2008, ces obligations, interets compris, sont estimees a $ (31 decembre $). Les activites du Fonds sont assujetties a divers examens et approbations des tribunaux. Le Fonds est une fiducie exoneree de I'impet sur les benefices en vertu de la Loi de I'impet sur Ie revenu. 2. SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with Canadian generally accepted accounting principles and include the following significant accounting policies: 2. PRINCIPALES CONVENTIONS COMPTABLES Les presents etats financiers ont lie dresses conformement aux principes comptables generalement reconnus du Canada et en fonction des principales conventions comptables suivantes : 3

28 THE HEPATITIS C FUND Notes to the Financial Statements year ended December 31, 2008 FONDS HEPATITE C Notes complementaires de J'exercice tennine Ie 31 decembre SIGNIFICANT ACCOUNTING POLICIES (continued) Change in accounting policy On January 1, 2008, the Fund adopted a new disclosure standard that was issued by the Canadian Institute of Chartered Accountants (CICA): Handbook Section 1535, Capital Disclosures. Section 1535 specifies the disclosure of (i) an entity's objectives, policies and procedures and process for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. The Fund did not adopt CICA Sections 3862 and 3863 Financial Instruments - Disclosures and Presentation this year as the adoption of these sections became optional in late 2008 for not-for-profit organizations. Financial instruments All financial assets are required to be classified as heldfor-trading, held-to-maturity, loans and receivables or as available-for-sale. All financial liabilities are required to be classified as held-for-trading or as other liabilities. The classification depends on the purpose for which the financial instruments were acquired or issued, their characteristics and the Fund's designation of said instruments at the time of initial recognition. Settlement date accounting is used and transaction costs related to investments are expensed as incurred. Classifications made by the Fund: 2. PRINCIPALES CONVENTIONS COMPTABLES (suite) Informations a fournir concernant Ie capital Le 1er janvier 2008, Ie Fonds a adopte la nouvelle norme publiee par I'lnstitut canadien des comptables agrees (ICCA) sur la presentation d'informations de la section 1535 du guide, intitulee Informations a fournir concernant Ie capital. Le chapitre 1535 etablit les informations que I'entite doit fournir : (i) les objectifs, politiques et procedures de gestion de son capital; (ii) des donnees quantitatives sur les elements relevant de sa gestion du capital; (iii) si rentite est soumise a des exigences concernant son capital; et (iv) si elle ne les a pas respectees, les consequences. Le Fonds a choisi de ne pas adopter les chapitres 3862 et 3863 Instruments financiers - Information a foumir et presentation pour I'exercice actuel etant donne que I'adoption de ces chapitres est devenue facultative a la fin de 2008 pour les organismes sans but lucratif. Instruments financiers Tous les actifs financiers doivent etre classes soit comme detenus a des fins de transaction, detenus jusqu'a leur echeance, prets et creances ou disponibles a la vente. Tous les passifs financiers doivent etre classes soit comme detenus a des fins de transaction ou autres passifs. Le c1assement des instruments financiers depend de I'objet vise lorsque les instruments financiers ont ete acquis au emis, de leurs caracteristiques et de leur designation par Ie Fonds au moment de leur comptabilisation initiale. La comptabilisation a la date de reglement est utilisee et les coots de transactions relatifs aux placements sont passes en charge lorsqu'ils sont encourus. Classements effectues par Ie Fonds: Cash Investments Accounts receivable Accounts payable and accrued liabilities Held-for-trading Held-for-trading Loans and receivables Other liabilities Encaisse Placements Debiteurs Crediteurs et frais courus Detenus a des fins de transaction Detenus a des fins de transaction Prets et creances Autres passifs Held-for-trading These financial assets are measured at fair value at the balance sheet date. Fair value fluctuations including interest eamed, interest accrued, gains and losses realized on disposal and unrealized gains and losses are included in interest income. Loans and receivables These financial assets are measured at amortized cost using the effective interest method. less any impairment. Other liabilities T.hese financial liabilities are recorded at amortized cost using the effective Interest method. Detenus ades fins de transaction Ces actifs financiers sont comptabilises a la juste valeur a la date du bilan. Les fluctuations de la juste valeur qui incluent les interets gagnes, les interets courus, les gains et les pertes realises sur cession et les gains et pertes non realises sont inclus dans les revenus d'interets. Prets et creances Les actifs financiers sont comptabilises au coot amorti selon la methode du taux d'interet effectif, mains toute devaluijtion. Autres passifs L.es passifs financiers sont comptabilises au coot amorti selon la methode du taux d'interet effectif. 4

29 THE HEPATITIS C FUND Notes to the Financial Statements year ended December 31, 2008 FONDS HEPATITE C Notes compll!mentaires de "exercice termine Ie 31 decembre SIGNIFICANT ACCOUNTING POLICIES (continued) Investment eamings Realized and unrealized gains (losses) together with interest and dividend revenue constitute the investment earnings of the Fund, and are deferred, pending their allocation to pay expenses. Liabilities and funding for future payments These financial statements do not present liabilities for payments to be made to class members in future years nor the related future funding requirements of provincial and territorial governments. Revenue recognition The Fund follows the deferral method of accounting for contributions. Revenue is recognized as expenses are incurred and shares of such expenses are allocated to governments, as set out in the Agreement. To the extent that contributions are paid to the Fund in advance of expenses being incurred and allocated, the contributions and the investment earnings thereon are deferred and recorded as funding held for future expenses. Accordingly, the funding held for future expenses includes: a) Funding contributed in payment of the Government of Canada obligation; b) Contributions prepaid by provinces and territories, if any; and c) Investment earnings for the period. As expenses are incurred and allocated, amounts are deducted from the balance of the funding held for future expenses and are recognized as revenue. Where provincial and territorial governments have not prepaid contributions and expenses are allocated to them, such amounts are requisitioned by the Fund and are recognized directly as revenue of the Fund. Claims A claim is recognized as an expense in the period in which the claim approval process has been completed. Operating expenses Operating expenses are recorded in the period in which they are incurred Operating expenses are subject to approval by the Courts. 2. PRINCIPALES CONVENTIONS COMPTABLES (suite) Revenus de placements Les gains et les pertes realises et non realises ainsi que les interehs et les revenus de dividendes forment Ie revenu de placement du Fonds et sont reportes, jusqu'a ce qu'ils soient affectes au paiement des charges. Obligations et financement pour paiements futurs Ces etats financiers ne presentent aucune obligation pour des paiements futurs devant etre faits aux personnes inscrites aux recours collectifs, ni aucune exigence connexe future en matiere de financement des gouvernements provinciaux et territoriaux. Constatation des revenus Le Fonds comptabilise les apports selon la methode du report. Les revenus sont comptabilises a mesure que les charges sont engagees, et une tranche de ces charges est attribuee aux gouvernements, comme Ie prevoit I'entente. Lorsque les apports sont verses au Fonds avant que les charges ne soient engagees et reparties, les apports et Ie revenu de placement en decoulant sont reportes et constates a titre de financement pour charges futures. Par consequent, Ie financement pour charges futures comprend ce qui suit: a) Apport sous forme de paiement de I'obligation du gouvernement du Canada; b) Apports verses a I'avance par les gouvernements provinciaux et territoriaux, Ie cas echeant; c) Revenus de placement de la periode. A mesure que les charges sont engagees et reparties, les montants sont deduits du solde du flnancement pour charges futures et comptabilisees dans les revenus. Lorsque les apports ne sont pas verses a I'avance par les gouvernements provinciaux et territoriaux et que des charges leur sont attribuees, ces montants leur sont demandes par Ie Fonds puis comptabilises directement dans les revenus. Demandes Les demandes sont constatees a titre de charges dans la periode au cours de laquelle Ie processus d'approbation des demandes a ete mene a terme. Frais d'exploitation Les frais d'exploitation sont constates dans la periode au cours de laquelle ils sont engages. lis sont assujettis a I approbation des tribunaux. 5

30 THE HEPATITIS C FUND Notes to the Financial Statements year ended December 31, 2008 FONDS HEPATITE C Notes comph!mentaires de I'exercice termine Ie 31 decembre SIGNIFICANT ACCOUNTING POLICIES (continued) Use ofestimates The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include the fair value of investments and accrued liabilities. Actual results could differ from these estimates. Foreign currency Transactions denominated in foreign currencies are translated into Canadian dollars at the rates of exchange prevailing at the dates of the transactions. Investments and cash balances denominated in foreign currencies are translated at the rates in effect at year-end. Resulting gains or losses from changes in these rates are included in investment eamings. Future accounting policy In September 2008, the (CICA) issued amendments to several of the existing sections in the 4400 series Financial Statements by Not-For-Profit Organizations. Changes apply to annual financial statements relating to fiscal years beginning on or after January 1, Accordingly, the Fund will have to adopt the amended standards for its fiscal year beginning January 1, The amendments include: a) additional guidance in the applicability of Section 1100, Generally Accepted Accounting Principles; b) removal of the requirement to report separately net assets invested in capital assets; c) requirement to disclose revenues and expenses in accordance with EIC 123, Reporting Revenue Gross as a Principal Versus Net as an Agent, d) requirement to include a statement of cash flows in accordance with Section 1540, Cash Flow Statements; e) requirement to apply Section 1751, Interim Financial Statements, when preparing interim financial statements in accordance with GAAP; f) requirement for non-for-profit organizations that recognize capital assets to depreciate and assess these capital assets for impairment in the same manner as other entities reporting on a GAAP basis; g) requirement to disclose related party transactions in accordance with Section 3840, Related Party Transactions; and h) new disclosure requirements regarding the allocation of fund raising and general support costs. The Fund is currently evaluating the impact of the adoption of these new standards on its financial statements. The Fund does not expect that the adoption of these new Sections will have a material impact on its financial statements PRINCIPALES CONVENTIONS COMPTABLES (suite) Utilisation d'estimations Dans Ie cadre de la preparation des etats financiers, conformement aux principes comptables generalement reconnus du Canada, la direction doit etablir des estimations et des hypotheses qui ont une incidence sur les montants des actifs et des passifs presentes et sur la presentation des actifs et des passifs eventuels a la date des etats financiers, ainsi que sur les montants des produits d'exploitation et des charges constates au cours de la periode visee par les etats financiers. Les estimations importantes comprennent la juste valeur des placements et des charges a payer. Les resultats reels pourraient varier par rapport a ces estimations. Devises etrangeres Les operations libellees en devises etrangeres sont converties en dollars canadiens aux taux de change en vigueur aux dates auxquelles les operations sont effectuees. Les placements et I'encaisse Iibelles en devises sont convertis aux taux en vigueur a la fin de I'exercice. Les gains ou les pertes de change decoulant de la variation de ces taux sont inclus dans Ie revenu de placement Modifications comptables futures En septembre 2008, I'ICCA a publie les changements a plusieurs chapitres dans la serie 4400, intitulee Presentation des etats financiers des organismes sans but lucratif Ces changements s'appliquent aux etats financiers des exercices ouverts a partir du 1 er janvier Par consequent, Ie Fonds devra adopter les changements aux normes au cours de son exercice debutant Ie 1 er janvier Les changements comprennent : a) les lignes directrices fournies dans I'application du chapitre 1100; intitule Principes comptables generalement reconnus; b) Ie retrait de I'exigence de presenter separement I'actif net investi en immobilisations; c) I'exigence de foumir les revenus et les depenses en vertu du CPN-123, intitule Presentation du montant bmt ou du montant net des produits selon que /'entite agit Rour son propre compte ou a titre d'intermediaire; d) I'exigence de foumir un etat des flux de tresorerie conformement au chapitre 1540, intitule Etats des flux de tresorerie; e) I'exigence d'appliquer Ie chapitre 1751, intitule Etats financiers intennediaires lors de la preparation des etats financiers intermediaires selon les PCGR; f) I'exigence des organismes sans but lucratif de comptabiliser les actifs nets afin d'amortir et de determiner la depreciation de ces actifs nets de la meme maniere que d'autres entites comptabilisees conformement aux PCGR; g) I'exigence de presenter les operations entre apparentes conformement au chapitre 3840, intitule Operations entre apparentes; h) nouvelles exigences de divulgation en ce qui concerne les couts alloues au financement et au soutien general. Le Fonds evalue presentement I'incidence de I'adoption de ces nouvelles normes sur ses etats financiers. Le Fonds ne prevoit pas que I'adoption de ces nouveaux chapitres aura une incidence importante sur ses etats financiers.

31 THE HEPATITIS C FUND Notes to the Financial Statements year ended December 31, 2008 FONDS HEPATITE C Notes comph~mentaires de "exercice termine Ie 31 decembre INVESTMENTS Investments are summarized as follows: 3. PLACEMENTS Les placements se resument ainsi : 2008 (in thousands of dollars) (en milliers de dollars) 2007 Fair Value Cost Fair Value Cost Juste valeur CoOt Juste valeur CoOt Cash $ 106 $ 106 Investment earnings receivable 2,454 2,454 Fixed income 795, ,758 Equities 63, ,522 Determination offair value $ 861,790 $ 690,840 Fixed income includes debt obligations of governments and corporate bodies paying interest at rates appropriate to the market at the date of their purchase. Bonds are recorded at prices based upon published bid prices. The fixed income portfolio's sensitivity to a change in market rates is represented by the duration of the. portfolio. As at December 31, 2008, the average duration of the bonds and debentures in the portfolio, weighted on fair value, was years (December 31, years). Pooled fund units are valued at prices based on the market value of the underlying securities held by the pooled funds. Investment risk Investment in financial instruments renders the Fund subject to investment risks. These include the risks arising from changes in interest rates, in rates of exchange for foreign currency, and in equity markets both domestic and foreign. They also include the risks arising from the failure of a counterparty to a financial instrument to discharge an obligation when it is due. The Fund has adopted investment policies, standards and procedures to control the amount of risk to which it is exposed. The investment practices of the Fund are designed to avoid undue risk of loss and impairment of assets and to provide a reasonable expectation of fair return given the nature of the investments. The maximum investment risk to the Fund is represented by the fair value of the investments. $ 164 $ 164 Encaisse Revenus de placement 2,331 2,331 a recevoir 796, ,723 Titres a revenu fixe 96, ,521 Actions $ 895,716 $ 679,739 Determination de la juste valeur Les titres a revenu fixe proviennent de litres de creance de gouvernements et de societes qui versent des interets a des taux conformes a ceux du marche a la date d'achat. Les obligations sont comptabilisees a des prix offerts publies. La sensibilite du portefeuille de titresa revenu fixe aux variations des taux d'interet du marche correspond a la duree du portefeuille. Au 31 decembre 2008, la duree moyenne des obligations et des debentures du portefeuille, ponderee selon la juste valeur, etait de 14,77 ans (31 decembre ,69 ans) Les fonds communs sont evalues selon la valeur marchande des titres sous-jacents detenus par les fonds communs. Risque de placement Les placements dans des instruments financiers pia cent Ie Fonds face a des risques lies aux placements. Ceux-ci incluent les risques provenant des variations dans les taux d'interets ainsi que ceux provenant du danger eventuel qu'une des parties engagees par rapport a un instrument financier ne puisse faire face a ses obligations. Le Fonds a adopte des politiques, des normes et des methodes pour contr61er Ie niveau de risque auquel il s'expose. Les habitudes du Fonds en ce qui concerne les placements ont pour but d'eviter tout risque inutile de perle et d'insuffisance d'actif et de fournir une esperance raisonnable quant a leur juste rendement, etant donne la nature des placements. Le maximum de risque auquel s'expose Ie Fonds se trouve dans la juste valeur des placements. 7