Court File and Parties

COURT FILE NO.: CV-11-423434
DATE: 20120528
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1654776 Ontario Limited, Plaintiff / Applicant

AND:

Sinclair Stewart and The Globe and Mail, Defendants / Respondents

BEFORE: Justice E. P. Belobaba

COUNSEL:
Paul Bates, Doug Worndl, Dimitri Lascaris and Robert Gain for Applicant

Peter Jacobsen, Paul LeVay, Tae Mee Park and Justin Safayeni for Respondents

HEARD: March 21, 22 and 23, 2012

costs award

[ 1 ] In a decision released on April 20, 2012 I dismissed this application for a Norwich Order that the respondent newspaper disclose its confidential sources on a high-profile business story. I concluded that the confidentiality of the newspaper’s sources should be preserved.

[ 2 ] The applicant numbered company and its principal, a University of Toronto law professor, had commenced a proposed class action to recover damages for losses sustained in trading transactions and needed the names of the confidential sources to add them a party defendants. I concluded that the unnamed sources conveyed information that was already in the public domain and was no longer new or material. I found that the level of wrong-doing was minimal to non-existent. The OSC enforcement staff had declined to investigate. There was little to no public interest in compelling disclosure.

[ 3 ] This application was important to both sides and was hard fought. The evidentiary record was extensive. The issues were complex. The factums were exceptionally long and there were additional written submissions. Each side had four lawyers at the three-day hearing, [1] including specialists in securities law. In short, the costs award will necessarily be quite large even on a partial indemnity basis.

[ 4 ] Having said this, I was still surprised by the costs request of the successful respondents. The Globe and Mail asks for $235,242 in fees and about $20,000 in disbursements. Putting aside taxes, the total costs request is around $255,000, huge by any measure.

[ 5 ] I reviewed the respondents’ costs outline for any obvious aberrations and found none. The costs outline provides a line-by-line tally that accords with the hourly rates recommended by the Rules Committee as set out in Rule 37 and contains a clear explanation of all the legal work that was done on this application. The only items that merit specific comment are these: I would not allow a disbursement charge for “electronic legal research” any more than I would allow a disbursement charge for subscribing to the O.R.’s; also, in my view, the charge for photocopying is somewhat excessive. I would reduce the latter to $3500 and the overall disbursements to about $10,000. The total costs request therefore falls to around $245,000.

[ 6 ] I note further that there were two areas of legal work that could have been eliminated without impacting the quality of the argument – the evidence of the journalism experts (arguably triggered by the other side’s use of same) and the references to analogous international case law. Neither of these areas assisted me or was mentioned in my reasons for decision. I will thus, somewhat arbitrarily, reduce the upper-limit of the costs request to about $200,000. This is still an extraordinary quantum.

[ 7 ] Let me now turn to the applicant’s position. The applicant submits that no costs should be awarded because this was a novel case that raised issues of public interest and importance. The application for a Norwich Order was brought in furtherance of a class action that on the facts herein amounted in essence, argues the applicant, to public interest litigation. Thus no costs should be awarded. If costs are awarded, the maximum should be in the range of $40,000 to $50,000.

[ 8 ] In my view, this is a case for costs. The proposed class action does have a public interest component but it is essentially a private proceeding to recover financial losses sustained in trading transactions. I would not characterize this class action as a public interest lawsuit. I am, however, mindful of the Court of Appeal’s admonition in Sharma v Timminco [2] that costs orders in class actions should take into account “to some extent” that access to justice is an important policy underpinning. I agree with this observation and I will endeavour to do so.

[ 9 ] As counsel on both sides well understand, my primary obligation in fixing costs is to consider the factors set out in rule 57.01(1) and fix an amount that is fair and reasonable to the unsuccessful party rather than an amount fixed by the actual costs incurred by the successful litigant. [3] Here, a meaningful benchmark of what would be fair and reasonable to the unsuccessful applicant can be found in the security for costs motion that was brought by the respondents. The respondents asked for security for costs because the applicant was a numbered company and its principal and sole shareholder refused to answer questions about the company’s income, assets and liabilities.

[ 10 ] The respondents sought $163,776 on a partial indemnity. As it turned out, the security for costs motion was settled when the applicant’s law firm provided an undertaking that it would satisfy any costs award. I agree with the applicant that in providing this undertaking to pay costs, it was not necessarily agreeing with the suggested quantum. However, nothing was said by the applicant’s legal counsel to indicate that the amount being sought as security for costs was unreasonable. I also note that the applicant, while insisting that anything over $50,000 would be unreasonable, has not produced its own bill of costs or disclosed the amount of time that was spent on its motion by its own lawyers.

[ 11 ] I take from all of this that an overall costs award, on a partial indemnity basis, in the range of $165,000 would not be unexpected; nor would it be unfair or unreasonable. I note that the respondents argue quite convincingly that additional, unforeseen legal tasks and related expenses actually justify a higher amount. However, I refer back to the Court of Appeal’s admonition in Timminco , supra, paragraph 8 .

[ 12 ] Costs are therefore fixed in the amount of $165,000 all-inclusive, to be paid by the applicant to the respondents within 30 days.

Belobaba J.

Date: May 28, 2012

[^1]: Actually three long mornings.
[^2]: 2012 ONCA 322 at para. 5 .
[^3]: Boucher v. Public Accountants Council of Ontario, (2004) 2004 14579 (ON CA) , 71 O.R. (3d) 291 at para. 26 .