Court File and Parties

CITATION: The Trustees of The Labourers' Pension Fund of Central And Eastern Canada v. Sino-Forest Corporation, 2016 ONSC 878

DIVISIONAL COURT FILE NO.: 583/15

DATE: 20160203

SUPERIOR COURT OF JUSTICE – ONTARIO (DIVISIONAL COURT)

RE: THE TRUSTEES OF THE LABOURERS' PENSION FUND OF CENTRAL AND EASTERN CANADA, THE TRUSTEES OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 793 PENSION PLAN FOR OPERATING ENGINEERS IN ONTARIO, SJUNDE AP-FONDEN, DAVID GRANT and ROBERT WONG, Plaintiffs

AND:

SINO-FOREST CORPORATION, ERNST & YOUNG LLP, BDO LIMITED (formerly known as BDO MCCABE LO LIMITED), ALLEN T.Y. CHAN, W. JUDSON MARTIN, KAI KIT POON, DAVID J. HORSLEY, WILLIAM E. ARDELL, JAMES P. BOWLAND, JAMES M.E. HYDE, EDMUND MAK, SIMON MURRAY, PETER WANG, GARRY J. WEST, POYRY (BEIJING) CONSULTING COMPANY LIMITED, CREDIT SUISSE SECURITIES (CANADA), INC., TD SECURITIES INC., DUNDEE SECURITIES CORPORATION, RBC DOMINION SECURITIES INC., SCOTIA CAPITAL INC., CIBC WORLD MARKETS INC., MERRILL LYNCH CANADA INC., CANACCORD FINANCIAL LTD., MAISON PLACEMENTS CANADA INC., CREDIT SUISSE SECURITIES (USA) LLC and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (successor by merger to Banc of America Securities LLC), Defendants

BEFORE: C. Horkins J.

COUNSEL: A. Dimitri Lascaris, Daniel E. H. Bach, S. Sajjad Nematollahi, Kirk M. Baert and Jonathan Ptak, for the Plaintiffs and the Class Peter R. Greene and Kenneth A. Dekker, for the Defendant BDO Limited

HEARD at Toronto: In writing

Endorsement

[1] The plaintiffs seek leave to appeal the interlocutory costs order of Justice Paul Perell dated October 15, 2015. In that order, the motion judge ordered the defendant BDO Limited (“BDO”) to pay the plaintiffs costs for their leave and certification motions in a securities misrepresentation class action involving alleged misrepresentations by Sino-Forest Corporation (“SFC”) and several former directors and members of its management.

[2] The order directed that BDO pay the plaintiffs costs of $297,865.53 forthwith and a further $297,865.53 was payable by BDO in the cause. The plaintiffs’ claim for disbursements was disallowed in its entirety.

[3] The test for granting leave to appeal under Rule 62.02(4) is well-settled. It is recognized that leave should not be easily granted and the test to be met is a very strict one. There are two possible branches upon which leave may be granted. Both branches involve a two-part test and, in each case, both aspects of the two-part test must be met before leave may be granted.

[4] Under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere (but not a lower level court) and that it is, in the opinion of the judge hearing the motion, “desirable that leave to appeal be granted.” A “conflicting decision” must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts: Comtrade Petroleum Inc. v. 490300 Ontario Ltd. (1992), 7 O.R. (3d) 542 (Div. Ct.).

[5] Under Rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong – that aspect of the test is satisfied if the judge granting leave finds that the correctness of the order is open to “very serious debate”: Nazari v. OTIP/RAEO Insurance Co., [2003] O.J. No. 3442 (S.C.J.); Ash v. Lloyd’s Corp. (1992), 8 O.R. (3d) 282 (Gen. Div.). In addition, the moving party must demonstrate matters of importance that go beyond the interests of the immediate parties and involve questions of general or public importance relevant to the development of the law and administration of justice: see Rankin v. McLeod, Young, Weir Ltd. (1986), 57 O.R. (2d) 569 (H.C.J.); Greslik v. Ontario Legal Aid Plan (1988), 65 O.R. (2d) 110 (Div. Ct.).

[6] In the case of a costs order, leave to appeal should be granted sparingly and only where there are strong grounds to believe that the lower court erred. The awarding and fixing of costs is highly discretionary and is afforded significant deference: See McNaughton Automotive Ltd. v. Co-Operators General Insurance Co., 2008 ONCA 597, (2008), 95 O.R. (3d) 365, at paras. 23-27; Feinstein v. Freedman, 2014 ONCA 205 at para. 52.

Analysis

[7] The plaintiffs rely on Rule 62.02(4)(a) and (b).

[8] As the Court of Appeal explained in McNaughton Automotive Ltd. v. Co-Operators General Insurance Co., 2008 ONCA 597, [2008] O.J. No. 5040 (C.A.) at para. 27, a costs award is a discretionary order and the judge of first instance is in the best position to determine the entitlement, scale, and quantum of any such award.

[9] An even greater measure of deference on costs is warranted where, as here, the costs decision has been made in a class proceeding by an experienced judge who has been case managing the action for almost four years. As expressed by the Divisional Court in a previous appeal on costs in a class action"[th]e motion judge not only develops familiarity with the particular proceeding, but also acquires unique expertise in a relatively new, different and complex area of law. This should be recognized and respected by appellate courts." (Anderson v. St. Jude Medical, Inc., [2006] O.J. No. 508 at para. 21)

[10] The costs decision was based on the facts before the motion judge. He declined to order payment of disbursements because the plaintiffs had already received payment for the same disbursements from other defendants who had previously settled with the plaintiffs. Further, the motion judge made a factual determination that part of the fees were incurred for work that went beyond the certification and leave motions. This led to his decision to order that 50% of the costs be payable by BDO in the cause. The motion judge noted that the certification and leave motions were not test cases, did not raise a novel point of law or a matter of public interest.

[11] In these circumstances, it is not desirable that leave be granted. The plaintiffs have not satisfied the second part of the test under Rule 62.02(4)(a). As a result, it is not necessary to consider the first part of the test. Leave to appeal under Rule 62.02(4)(a) is denied.

[12] Turning to Rule 62.02(4)(b), I find that the plaintiffs have not satisfied the second part of the test. This appeal does not involve "matters of such importance that leave to appeal should be granted." The issues raised do not go beyond the interests of the litigants and involve questions of general or public importance relevant to the development of the law and administration of justice. There are no issues in this dispute that transcend the private interests of the parties. As the motion judge stated, this was not a test case, it did not raise a novel point of law or a matter of public interest. The costs decision was based on the facts specific to this case. Since the second part of the test under Rule 62.02(4)(b) has not been satisfied, it is not necessary to address the first part of the test.

[13] In summary, the applicant's motion for leave to appeal under Rule 62.02(4)(a) or (b) is dismissed.

[14] The parties have agreed on the costs of this leave to appeal motion. The plaintiffs shall pay BDO costs, fixed at $6,500 all-inclusive, payable in 30 days.

C. Horkins J.

Date: February 3, 2016