Court File and Parties
DIVISIONAL COURT FILE NO.: 537/14
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: DENNIS FISCHER, SHEILA SNYDER, LAWRENCE DYKUN, RAY SHUGAR AND WAYNE DZEOBA, Plaintiffs (Moving Parties)
AND:
IG INVESTMENTS MANAGEMENT LTD., CI MUTUAL FUNDS INC., FRANKLIN TEMPLETON INVESTMENTS CORP., AGF FUNDS INC. AND AIC LIMITED, Defendants/Respondents
BEFORE: Harvison Young J.
COUNSEL: Joel P. Rochon, Peter Jervis and Remissa Hirji, for the Plaintiffs David DiPaolo and Margot Finley, for the Defendant, AIC Limited Jessica Kimmel, for the Defendant, CI Mutual Funds Inc.
HEARD at Toronto: April 8, 2015
ENDORSEMENT
Background
1The plaintiffs seek leave to appeal from a costs decision of Perell J. dated October 27, 2014 (“the costs decision”) in which he determined that, in light of the novelty of the issues pursuant to s. 31(1) of the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”), each party should bear their own costs of the certification motion.
2October 27, 2014 was the second time that the motion judge considered the issue of costs of the certification motion. The motion judge had denied certification on January 12, 2010. In reasons released May 14, 2010, he concluded that each party should bear their own costs in light of the novelty of the issues relating to preferable procedure (the “original costs order”). The plaintiffs appealed the denial of certification but not the costs award and were successful at all appellate courts, and at obtaining costs awards at each subsequent step. After the Supreme Court of Canada dismissed the appeal, the plaintiffs asked Perell J. to revisit his original costs order in light of their success subsequent to the original proceedings before the motions judge. He declined to do so.
3The plaintiffs seek leave to appeal. As they acknowledged at the outset of the motion for leave, costs decisions are highly discretionary and will not be interfered with absent an error in principle. They also recognize the deference owed to class action judges given their expertise in these matters.
4At the heart of the plaintiffs’ position is the argument that there is serious reason to doubt the correctness of the motion judge’s interpretation of s. 31(1) of the CPA and in particular, his rejection of their argument that it was intended to operate asymmetrically in favour of plaintiffs. Section 31(1) reads as follows:
- (1) In exercising its discretion with respect to costs under subsection 131 (1) of the Courts of Justice Act, the court may consider whether the class proceeding was a test case, raised a novel point of law or involved a matter of public interest.
5The plaintiffs submit that it is not open to a court, relying on s. 31(1) of the CPA, to reduce or deny a costs award to a successful plaintiff. It also argues that this is not open to the courts under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (CJA) on the basis of the novelty principle. For the reasons that follow, I disagree that there is sufficient support for the proposition advanced by the plaintiffs to constitute reason to doubt the correctness of the decision pursuant to Rule 62.02(4)(b) of the Rules of Civil Procedure.
Analysis
6Although the plaintiffs seek leave to appeal pursuant to both limbs of Rule 62.02(4), their arguments focus on Rule 62.02(4)(b). At the outset, I do not agree that there are conflicting cases such that leave should be granted pursuant to Rule 62.02(4)(a). Costs decisions are highly discretionary. The fact that they are so reflects the reality of the myriad of factual and legal considerations that converge in any given case. With respect to Rule 62.02(4)(a), the fact that there is no other decision which, as the ratio of the case, applies s. 31(1) symmetrically against plaintiffs does not make the present case a conflicting decision. As this court wrote in Comtrade Petroleum Inc. v. 490300 Ontario Ltd (1992), 7 O.R. (3d) 542 (Div. Ct), at para. 7:
An exercise of discretion which has led to a different result because of different circumstances does not meet the requirement for a “conflicting decision”. It is necessary to demonstrate a difference in the principles chosen as a guide in the exercise of such a discretion.
7The plaintiffs have not directed the court to any decisions which articulate a rule that s. 31(1) of the CPA be applied asymmetrically or that requires that successful plaintiffs must always be awarded their costs of a certification motion. The costs decisions referred to are not decisions that reflect conflicting principles or legal interpretations but rather different exercises of discretion in different factual circumstances.
8There are, in my view, no conflicting decisions on the issue within the meaning of Rule 62.02(4)(a).
Rule 62.02(4)(b)
9Turning now to Rule 62.02(4)(b), the plaintiffs assert that s. 31(1) has never, before this case, been used as a “shield” for unsuccessful defendants from a costs award as support for their proposition that the motion judge’s “symmetrical” application of the provision gives rise to a serious reason to doubt the correctness (or “very serious debate” as to the correctness, as the parties agree is the test).
10It is important to note that novelty in itself does not raise a serious debate as to the correctness of a decision within the meaning of Rule 62.02(4)(b). As stated by Eberhard J. in J.C. v. Ansell, [1994] O.J. No. 2436, at para. 8:
Rule 62.02(4) does not contemplate leave to appeal an issue on the basis that it is a novel point. The interest of the wider community in the question does not justify putting the respondents to the delay and expense of appeal proceedings where, as here, there is neither apparent error nor a conflicting decision on point. Leave to appeal is therefore denied. (Emphasis added)
11In order to succeed pursuant to Rule 62.02(4)(b), the plaintiffs must establish support for the existence of a rule which requires that costs awards pursuant to s. 31(1) (or s. 131 of the CJA) be applied asymmetrically. Put another way, the plaintiffs argue, a costs order in light of a novel issue may favour only the plaintiff and never the defendant.
12Having reviewed the extensive materials submitted, I find no support for the argument that s. 31(1) of the CPA was intended to provide protection only to plaintiffs and not defendants. The plaintiffs cited portions of the Report of the Attorney General’s Committee on Class Action Reform (February 1990) (the “Attorney General Report”) in support of their position.
13The discretion under s. 31(1) is clearly tied to the general discretion arising under s. 131 of the CJA. There is nothing to suggest that the s. 31(1) discretion is to be limited where a plaintiff is unsuccessful and is exposed to an adverse costs award. As the defendants, CI Mutual Funds Inc. (CI) and AIC Limited (AIC) note, the protection of plaintiffs from adverse costs awards may well be a reason for the inclusion of these factors in the CPA, but it does not follow that it was the only reason and that the provision may only benefit plaintiffs. The Attorney General Report stated at pp. 59-60:
The Committee noted the terms of reference established by the Attorney General and in particular the wish to develop a procedure that was balanced and did not give special treatment to either the plaintiff or the defendant. These conclusions with respect to costs are consistent with that mandate.
14Similarly, the plaintiffs’ reliance on the Ontario Law Reform Commission Report on Class Actions (1982) does not assist them. While the Commission noted a concern that the risks inherent in the costs regime at the time operated to discourage potential representative plaintiffs from commencing meritorious class actions, it rejected a “one-way” regime on the basis that “whatever costs rules are to be implemented should be fair to all participants in class litigation” (pp. 706-707). It ultimately recommended a “no costs” regime. The legislature rejected this in favour of a scheme that adopts the ordinary costs rules, which govern individual actions and thus exposes plaintiffs to adverse costs awards. These rules are adjusted in two important respects: express consideration of the three factors identified in s. 31(1) of the CPA and the availability of the Class Proceedings Fund to cover adverse costs awards against representative plaintiffs.
15Moreover, the plaintiffs have not pointed to any case law that supports the proposition, essential to their success on this motion, that s. 31(1) must operate asymmetrically in favour of plaintiffs. The case of Garland v. Consumers’ Gas Co. (1995), 22 O.R. (3d) 451 (OCJ), which they rely on in support of their position, falls far short of this position. That was a case in which Winkler J. exercised his discretion and declined to award costs to the successful defendant in light of the s. 31(1) factors. However, it is clear from the reasons that Winkler J. did not see this as an invariable rule:
The case law reflects the Court’s inclination to refrain from awarding costs against unsuccessful plaintiffs in class proceedings where some or all of the criteria in s. 31(1) are present. […] In Smith v. Canadian Tire Acceptance Ltd. (Gen.Div.), released February 15, 1995, interpreting s. 31(1), I stated that in a case of a novel nature and absent any circumstances which would militate to the contrary, the court may exercise its discretion and decline to award costs to the successful party. (Garland, para. 32)
16In my view, “inclination” is a far cry from an invariable rule.
17In short, I see no support, either in the wording or legislative history of s. 31(1), or in the case law, for the proposition that the discretion may only be applied asymmetrically in favour of plaintiffs. It may well be rare, as Garland suggests, that the exercise of the discretion will favour defendants. That does not amount to a rule against it and thus does not assist the plaintiffs in this case.
Section 131 of the Courts of Justice Act
18In the alternative, the plaintiffs also argue that, even in applying the usual costs principles flowing from s. 131 of the CJA, there is a “logical asymmetry” inherent in the provision, which precludes a costs order in novel cases from shielding unsuccessful defendants. In reply, the plaintiffs seem to have suggested that the motion judge erred in this respect because he ignored such asymmetry and failed to adequately consider access to justice. I do not agree that there is any such asymmetry inherent in s. 131.
19I note that the trial judge was alive to this issue and to the access to justice argument. It was argued before him. He clearly rejected the argument. While he considered the costs issue de novo, he referred to his earlier decision which considered novelty and the principles that underlie deviating from the usual costs rule in such cases. He quoted extensively from Spence J.’s decision in Baldwin v. Daubney, [2006] O.J. No. 3919 (S.C.J.), which discussed reasonable expectations of the parties. In his earlier costs award, the motion judge then concluded, at para. 19, that:
In the case at bar, in my opinion, after the Defendants made their preferable procedure argument, it was not unreasonable for the Plaintiffs to persist and advance their otherwise viable motion for certification. The preferable procedure point was novel, and it was an open issue where although the case law provided guidance, that guidance was not adequate. The extent of time that I spent on the issue in my Reasons for Decision reflects the openness of the issue.
20Earlier in the 2010 reasons, at para. 16, the motion judge referred to the “significant novelty” of the preferable procedure issue and his statement that:
This was not a novel issue of the Plaintiff’s making; this was a novel legal issue and an important one that was raised by the Defendants. But for this invention of the Defendants, the Plaintiffs would have succeeded on their certification motion. For obvious reasons, the Defendants now diminish the importance and the implications of their innovative argument.
21Having reviewed his earlier decision, he reiterated the novelty of the issue and stated as follows, at para. 35 of his Reasons:
Thus, the novelty of the facts and the uncertainty of the law made it reasonable for both the Plaintiffs and the Defendants to have their day in court to debate the preferable procedure criterion. Underlying the principle that it may be appropriate to order no costs in novel cases is the notion that where the law is uncertain, it is appropriate to attenuate the litigation chill associated with possible adverse costs consequences. In these circumstances, in my opinion, it is appropriate that each party should bear their own costs regardless of the outcome.
22The plaintiffs argue that it was illogical for the motion judge, having noted that the novelty of the issue was the “invention” of the defendants, to subsequently suggest that it was reasonable for both parties to expect some relief from the ordinary cost consequences if unsuccessful. I do not agree.
23The motion judge concluded at para. 36:
The normal principles about the exercise of the court’s discretion with respect to costs apply to certification motions and there is no asymmetry favouring plaintiffs. The Plaintiffs are wrong if they believe that costs awards for achieving certification have the designed purpose of financing the class action to provide access to justice.
24In my view, it does not follow that uncertainty in the law that constitutes novelty within the meaning of s. 31(1) cannot operate to protect both parties. The fact that the preferable procedure argument was the defendant’s “invention” originally does not necessarily make it any less reasonable for the defendant to have defended on that basis than for the plaintiff to have pursued the action in the face of it. I see nothing either contrary to his earlier decision or wrong in principle in the motion judge’s statement that the novelty argument was “a strong argument, perhaps even a stronger one than was the case for the Plaintiffs who had no choice but to bring forward their certification motion”. (Reasons, para. 31)
Access to Justice
25The plaintiffs also argue that the principle of access to justice, central to the class action itself, demands that costs arising from novelty must be asymmetrically applied. This argument must fail. There is no doubt that access to justice is important and is a factor to be considered in costs decisions: see Robertson v. Thomson Corp. (1999), 43 O.R. (3d) 389. It is one of the three fundamental goals of the CPA and there is no question that courts should bear the objective in mind when exercising their discretion with respect to costs: 2038724 Ontario Ltd. v. Quizno’s Canada Restaurant Corp., 2010 ONSC 5390, leave to appeal refused, [2010] S.C.C.A. No. 348.
26However, access to justice is a principle that operates in favour of both plaintiffs and defendants: see McCracken v. Canadian National Railway Co., 2012 ONSC 6838, at para. 82. Courts should not assume that class proceedings invariably engage access to justice concerns for plaintiffs or that access to justice is the only or paramount consideration in awarding costs: see Kerr v. Danier Leather Inc., 2007 SCC 44 at para. 69. Rather, courts must assess each particular case to determine how to exercise its discretion with respect to costs.
27While there certainly are cases in which plaintiffs’ access to justice has been considered and has played a role in the award, there is not support, in my view, for the proposition that access to justice concerns must always entitle plaintiffs to their costs of successful certification motions. Again, access to justice concerns are factors to be considered among others to which a judge must be alive to in the course of exercising his or her discretion with respect to costs. The motion judge’s reasons, at para. 36, make it clear he was alive to the access to justice consideration and there is no basis for doubting the correctness of his refusal to apply a rule of asymmetry as the plaintiffs submit.
Conclusion
28In short, the application for leave to appeal must fail. The plaintiffs have not met the test set out in either limb of Rule 62.02(4). In particular, they have not satisfied the court that there is a requirement that courts apply s. 31(1) of the CPA asymmetrically in favour of plaintiffs only. Nor have they satisfied the court that there is any conflicting decision that meets the test set out in Rule 62.02(4)(a).
Costs
29The plaintiffs\applicants shall pay the costs of this motion to the defendants in the amount of $30,000 inclusive of disbursements and GST.
Harvison Young J.
Date: May 11, 2015