Justice Strathy, now the Chief Justice of Ontario, recently awarded plaintiffs more than $2.679 million in costs for their motion for certification and leave under section 138.8 of the Ontario Securities Act. While the plaintiffs likely consider the award a big win, the decision has the potential to increase costs awards in the future for defendants and plaintiffs alike.
In Green v. CIBC, Justice Strathy sat as a judge ex officio of the Superior Court of Justice as he had heard some of the earlier proceedings before he was elevated to the Court of Appeal.
The Certification and Leave Motion
To recap, Justice Strathy heard the plaintiffs’ motion in 2012 and dismissed it as time-barred because leave to commence an action had not been obtained prior to the expiry of the limitation period. The Court of Appeal reversed this decision, and held that the statutory cause of action could be certified. That decision was recently affirmed by the Supreme Court of Canada. The costs of the certification and leave motion were sent back to Justice Strathy for determination.
Plaintiffs Awarded Entire Amount Sought
The amount sought by the plaintiffs was comprised of fees of $1,505,418.72 and disbursements of $932,123.14 – Justice Strathy awarded them the entire amount sought. A significant portion of the disbursements was the cost of expert reports. The plaintiffs said that they had discounted their fees by 10% in recognition of the fact that they would have the ongoing benefit of some of the work on the certification motion in the common issues trial.
Costs Principles in Class Proceedings
Justice Strathy placed significant weight on access to justice considerations. His rationale was that class counsel would not accept the risk of significant costs if they could not recoup such costs if successful. He stated that “[t]he efficacy of the statutory remedy depends on incentivizing class counsel to take these formidable risks”.
The decision also reviews the relevant principles in determining costs in a class proceeding, namely (1) costs should reflect the fair and reasonable expectations of the unsuccessful party; (2) to the extent possible, the award should be consistent with those made in comparable cases, recognizing that comparisons will rarely provide clear guidance; and (3) the cost award must give effect to the principles underlying the Class Proceedings Act, 1992.
Justice Strathy also made the following holdings in response to the defendant’s arguments: (a) costs on a certification motion should not be payable in the cause; (b) expert reports were necessary and reasonable and there was no basis to find or assume that they would have ongoing utility in the common issues trial; (c) success was not divided as the plaintiffs obtained certification and leave; (d) the case was more demanding and significant than Fairview Donut, in which Justice Strathy previously awarded $1.85 million to the successful defendant and described as “off the chart” in complexity, the amount at issue and the work required of counsel; and (e) 10% was a reasonable discount for the ongoing value of the work.
In refuting the defendant’s position that this significant cost award went against reasonable expectations, Justice Strathy stated that “there is absolutely no doubt that the defendants would be seeking costs at least as substantial to those claimed by the plaintiffs and probably more substantial”. Moreover, Justice Strathy posited that “had the defendants been successful the litigation would be over and they would normally have expected to recover all their cost of the proceeding”.
Notably however, the costs payable by defendants are routinely discounted on certification motions on the basis of, among other things, the principles underlying the CPA and the plaintiffs’ reasonable expectations. One wonders if the playing field might be levelling out in view of these comments?
While the decision represents a significant costs award in the context of a certification motion, it may not just be a win for the plaintiffs. Arguably, the award has the potential to change the “reasonable expectations” on costs of certification motions for all litigants. Justice Strathy found that the defendants would have sought the same amount, if not more, and would have expected to recover it if successful. Perhaps this is a signal on what can now be considered reasonable expectations on costs in the case of high dollar value, hotly contested certification motions.