COURT FILE NO.: 482/09

DATE: 20091130

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

B E T W E E N:

GERARD LAMBERT and ELSA IBBITSON

Plaintiffs/Responding Parties

• and -

GUIDANT CORPORATION, GUIDANT CANADA CORPORATION, GUIDANT SALES CORPORATION and CARDIAC PACEMAKERS INC.

Defendants/Moving Parties

James C. Orr and Megan B. McPhee, for the Plaintiffs/ Responding Parties

John A. Campion, Paul J. Martin and

Brad Moore, for the Defendants/Moving Parties

HEARD at Toronto: November 30, 2009

JANET WILSON J.: (Orally)

1This is a motion for leave to appeal from the decision of Cullity J. made September 24, 2009. He awarded partial indemnity costs in favour of the plaintiffs in the amount of $650,000.00 plus disbursements after a lengthy aggressively fought application for certification initiated pursuant to the Class Proceedings Act, 1992, S.O. 1992, c. 6.

2The motion for leave to appeal is dismissed.

3I conclude that neither rule 62.02(4)(1)(a) nor (b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 engages in the facts of this case.

The Certification Motion

4This case involves some thirty thousand class members. They are suing the defendants for damages arising out of the defendants’ negligent design, development, testing, manufacturing and licensing of certain pacemakers.

5Cullity J. granted certification under the Class Proceedings Act on May 8, 2009. Jennings J. dismissed the motion for leave to appeal from the certification order on October 20, 2009.

6The plaintiffs sought costs on a partial indemnity basis in the amount of $1,255,345.75 .

7The usual certification procedure was rendered much more time consuming, complicated and hence costly by the defendants’ determination to challenge the plaintiffs’ case on its merits, rather than in accordance with the requirements of Rule 5 of the Class Proceedings Act and the established case law. This approach chosen by the defence significantly drove up the plaintiffs’ costs.

8Cullity J. observed at pages 1-2 of his Reasons for Decision:

Here, in contrast to their approach in the earlier case [LeFrancois], defendants’ counsel had embarked on a sustained challenge to the principles that have previously been applied in certification cases in this court, and on appeal, and, for that purpose, they relied on extensive evidence that went directly and, in my opinion, inappropriately to the merits of the proceeding. I have no doubt that the attempt to make certification depend on the resolution of factual issues that were not properly to be decided on the essentially procedural motion and to which the plaintiffs could not reasonably be expected to address at that stage – had a major impact on the time required for plaintiffs’ counsel to prepare for the motion.

To a very large extent – prior to discovery – the particular facts were necessarily in the exclusive possession of the defendants and the task of assessing the accuracy of, and the weight to be attributed to, the contents of the responding affidavits – including extensive material filed after the adjournment of the motion – was inevitably difficult and enormously time consuming.

9The certification proceedings began in March 2008 and culminated in the order for certification released by Cullity J. on May 8, 2009. There was a preliminary motion, five case conferences, and several cross examinations with respect to at least three expert witnesses and the two plaintiffs. As well, the defendants provided volumes of material, including information with respect to all potential members of the class. The certification proceeding proceeded over a seven day period, in two stages, with an adjournment requested by the defence to file further material.

10The plaintiffs were required to walk a fine line. Counsel had to discredit the defence expert evidence filed without succumbing or descending into the merits of the facts of the case at this early stage. As counsel for the plaintiffs confirmed, they had no choice but to meticulously and adequately prepare to discredit the facts presented as best they could, in case the law was in counsel’s words, “changing beneath our feet”.

11The defendants, as observed by the certification judge, not only inundated the plaintiffs with documents and complex material but fought aggressively “every inch of the way”. This, the defence is entitled to do. Such an approach, however, inevitably escalates costs significantly.

12The motions court judge observed the approach of the defence required very significant preparation by the plaintiffs out of all proportion to the seven day certification hearing.

Applicable Principles

13Leave to appeal from costs awards should be granted sparingly as costs are very fact specific and are at the heart of a trial judge’s discretion. This is particularly so in the context of a class proceeding: see Bellissimo Excavating Ltd. v. Ding (2004), 193 O.A.C. 145 (Div. Ct.) at para. 4.

14Costs awards are inevitably very important to the parties but rarely engage matters of public importance justifying leave to appeal to the Divisional Court: see Gale v. Gale (2006), 151 A.C.W.S. (3d) 992 (Div. Ct.) at para. 21.

15The Divisional Court in Anderson v. St. Jude Medical Inc. (2006), 264 D.L.R. (4th) 557 (Div. Ct.) recently confirmed the principles applicable to costs awards in a class proceeding. There is no public interest in having these issues revisited.

Arguments Raised

16The defence makes several arguments. Counsel suggests that the motions court judge did not consider other like cases in making the costs award, did not adequately consider the requirement of Rule 57.01 of the Rules of Civil Procedure as to the reasonable expectation of the losing party, and failed to conduct a detailed analysis with respect to the reductions made to the Bill of Costs.

Consideration of Other Cases

17The motions court judge specifically considered the LeFrancois v. Guidant Corp. (2009), 72 C.P.C. (6th) 120 (S.C.) decision, which is a class proceeding involving allegedly defective defibrillators and resulted in one of the largest costs awards in a class proceeding certification matter ($400,000.00 in total costs awarded in two stages). He considered the LeFrancois decision by way of comparison to assist him in determining what costs in his view would be appropriate in the facts and circumstances of this case. The defence team and the certification judge were the same in both cases.

18The motions court judge was alive to the defence suggestion that the facts and issues and hence costs should be similar in this case as compared to LeFrancois. However he disagreed with both the defence assertion and analysis. He states at page 2 of his Reasons:

As I mentioned in the reasons for certifying the proceeding, this emphasis on the allegedly unmeritorious nature of the claims advanced on behalf of the class resulted in an inordinately lengthy hearing – one that was interrupted by a delay of two months to permit the defendants to deliver a mass of further evidence that was not a replication of evidence previously provided in LeFrancois. The evidence was provided ostensibly for the purpose of rebutting objections of plaintiffs’ counsel to inferences that defendants’ counsel had purported to draw from affidavits previously delivered by their clients. As indicated in the reasons for certification, the attempted rebuttal was anything but successful.

Although the length of the hearing is a factor that has a bearing on the quantum of reasonable costs in this case, the more important matter, in my opinion, is the time required prior to the hearing for plaintiffs’ counsel to examine and estimate the significance of the factual evidence on which defendants’ counsel relied.

19It is not necessary to comment on all of the class proceedings costs award cases in determining fair and appropriate costs in this case. Costs awards are very fact specific. The motions court judge has a wealth of experience in certification matters, including making awards for costs. There is no “acceptable” range of costs awards in certification proceedings. There is no general rule requiring the certification judge to look at costs awards granted in other cases to determine what is fair and appropriate in the facts of the case before him or her. Looking at other costs awards in other class action cases would not be particularly helpful in fixing the costs of this unique case in light of the approach adopted by the defence.

Reasonable Expectation of the Losing Party

20The learned motions court judge cites specifically Boucher v. Public Accountants Council for the province of Ontario (2004), 71 O.R. (3d) 291 (C.A.) as relevant to assessing the reasonable expectations of the losing party. He notes that the defendants, who were unsuccessful on all aspects of the certification motion, declined to produce their own time summaries, which are a very relevant consideration in assessing the reasonable expectation of the costs that the defendants may be required to pay.

21The defendants allegedly stated they saw “no basis” for complying with the plaintiffs’ request for such production. The motions court judge makes the following observation at page 3 of his Reasons with respect to the reasonable expectations of the parties, and this position of the defence:

A basis might well be found, I suggest, in the comment of Nordheimer J. in Hague v. Liberty Mutual Insurance Co., [2005] O.J. No. 1660 (S.C.J.), at para. 15 that refusals by an unsuccessful parties to reveal their own costs “may impair their ability to make any meaningful submissions” on quantum. Similar statements were made by Winkler J. in Risorto v. State Farm Insurance Co. (2005), 64 O.R. (3d) 135, at para. 10.

22The motions court judge also refers to Andersen at para. 27, where Lax J. confirms:

The recent amendments to rule 57.01(1) now require that a party seeking costs disclose the hours claimed and the actual rate charged by the lawyer, but where a party does not do this, we agree with the submission of the plaintiffs that the inference must be that the defendants devoted as much or more time and money in an attempt to defeat the motion for certification as the plaintiffs did in seeking certification.

23I note that the comments of Lax, J. at para 55 of Anderson apply squarely to the facts of this case:

A final submission advanced by the defendants is that an award of this magnitude will have a chilling effect on class proceedings. We do not find this submission compelling in circumstances where the defendants, at least initially, drove the plaintiffs into a game of high stakes poker, sparing no expense in marshalling evidence and then declined to put their own costs before the court. Having lost a very expensive and important motion, it is disingenuous for the defendants to now claim that the costs award is outside the range of what they reasonably expected. If the plaintiffs had lost the motion, it similarly would not lie in their mouths to make this submission.

Reductions to the Costs Claimed

24Although the motions court judge did not go through a detailed analysis of the Bill of Costs it is clear he considered the Bill of Costs and the submissions made by both parties in accordance with the principles expressed in the case law.

25He specifically considered the principles of duplication and over-kill in allowable preparation time enunciated in Andersen that were adopted in United States of America v. Yemec (2007), 85 O.R. (3d) 751 (Div. Ct.) at para. 54.

26He concluded that although the case was aggressively fought by the defence, the recorded preparation time by the plaintiffs’ team was excessive and as a result he required a substantial reduction for the hours recorded. He reduced the requested fee by almost half. Costs as fixed are relative, in proportion to the issues raised and the nature of the case, the amount in dispute and the various principles outlined in Rule 57 of the Rules of Civil Procedure. These issues were clearly considered by the motions court judge. It is not necessary to go through the Bill of Costs on a line-by-line basis as apparently suggested by the defence.

Conclusions

27There is no conflicting decision of another judge in Ontario or elsewhere, and it is not in my opinion desirable that leave to appeal be granted.

28Further, there is no reason in my view to doubt the correctness of the costs order made by Cullity J. On the contrary, I agree with his approach and decision. This matter does not raise issues of such importance justifying a hearing before the full panel.

29For these reasons the motion for leave to appeal is dismissed.

Costs

30As agreed between the parties, costs of this motion for leave to appeal are fixed in the amount of $7500.00 payable forthwith by the defendants to the plaintiffs .

JANET WILSON J.

Date of Reasons for Judgment: November 30, 2009

Date of Release: December 3, 2009

COURT FILE NO.: 482/09

DATE: 20091130

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT