In 2015, the Saskatchewan legislature amended the province’s Class Actions Act (CAA) to allow for the award of costs in class proceedings. Prior to then, applicants for certification in Saskatchewan had been immune from costs in most circumstances.
In moving to a costs regime, Saskatchewan’s legislation generally aligned with that in such provinces as Alberta and Ontario. Among the western provinces, Manitoba and British Columbia remain “no costs” regimes.
The new costs rules in Saskatchewan have given rise to a number of important issues:
- Notwithstanding this feature, plaintiffs have argued that it would be unfair to saddle them with costs awards when they commenced the litigation under the previous no-costs regimes;
- Other plaintiffs continue to argue that the courts should encourage class litigation and should therefore generally refuse to order costs in class proceeding; and
- Finally, a somewhat unusual feature of the Saskatchewan amendment was that it was expressly stated to apply retroactively, to existing class actions, giving rise to interesting transition issues.
A recent judgment from the Saskatchewan Court of Queen’s Bench should give some pause to plaintiffs, and their counsel, who prosecute class actions of dubious merit.
Schneider v McMillan LLP et al., 2017 SQKB 21 involved a class action against the professional advisors to a failed investment. The case against a law firm was dismissed following the conclusion of one of the few common issues trials to have occurred in the province (2016 SKQB 380). What may be more significant in this case is the judgment pertaining to costs.
After the case on the merits had been dismissed, the issue became whether the Court could order costs against the plaintiffs. The case against the lawyers was dismissed on the merits following a trial that occurred some 15 months after the new costs regime came into force. Still, the plaintiffs argued that it would be unfair to order costs because the action was commenced and certified under the no-costs regime.
Justice Brian J. Scherman concluded that the legislature meant what it said when it passed the costs amendment. He held that there was an express legislative intention that the amendment “was to have retroactive effect and apply retrospectively to proceedings commenced before – and costs incurred by steps taken in such proceedings before – the section came into effect.”
Justice Sherman distinguished two previous decisions of the Court of Appeal that had declined to award costs, on the basis that those cases had proceeded through the certification hearing before the costs amendment came into force.
In the result, the decision reaffirms a general approach that costs are appropriately ordered in class proceedings, including in the context of cases commenced under the previous no-costs regime.
As a final postscript to the decision, Justice Scherman made clear that he was making no determination on issues of quantification. Issues that go to the quantification of the costs in the case returned to court in June. As of the date of this note, judgment on the quantification of costs is under reserve.
The judgment in Schneider v McMillan LLP should give some comfort to defendants facing unmeritorious claims. In the words of the Supreme Court of Canada, the exposure to costs can make class actions litigation the “sport of kings in the sense that only kings or equivalent can afford it” (Kerr v Danier Leather Inc., 2007 SCC 44 at para 63) and can be a major deterrent against class actions in some situations.
While there are similarities in class proceedings legislation in the various provinces, it is important that defendants understand the differences.