SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: CV-06-3257-00
DATE: 2012 07 09
Parties
RE: MARVIN NEIL SILVER and CLIFF COHEN
Plaintiffs
- and -
IMAX CORPORATION, RICHARD L. GELFOND,
BRADLEY J. WECHSLER, FRANCIS T. JOYCE, NEIL S. BRAUN,
KENNETH G. COPLAND, GARTH M. GIRVAN, DAVID W. LEEBRON and KATHRYN A. GAMBLE
Defendants
Proceeding under the Class Proceedings Act, 1992
BEFORE: K. van Rensburg J.
COUNSEL:
D. Lascaris, D. Bach and M. Robb, for the Plaintiffs
J. Leon and E. Hoaken, for The Merger Fund
D. Peebles, for the Defendants
Endorsement re: Costs of Notice and Participation Motions
[ 1 ] This is my decision with respect to the costs of two motions that were argued for two days in September 2011 and a third day in January 2012. My decision was released March 28, 2012. The main motion was for approval of the form and content and timing of the notice of certification of this action as a class proceeding. There was also a motion by The Merger Fund (“TMF”) for leave to participate in that motion.
[ 2 ] The result of the motions was that TMF was granted leave to participate under s. 14 of the Class Proceedings Act (“CPA”), and, with respect to the notice motion, that the notice would not be delayed and would refer to the U.S. Proceedings.
[ 3 ] TMF was successful in its motion to participate, which was opposed by the plaintiffs.
[ 4 ] There were two key issues in the notice motion. The first issue was the timing of the notice. Initially TMF’s position was that no notice should issue until the U.S. Proceedings “caught up” with these proceedings, and later that any notice should await the outcome of a motion to amend the class, to be issued with notice of a settlement in the U.S. Proceedings. The plaintiffs, who argued for notice to be issued immediately, were successful on this issue.
[ 5 ] The second issue was the content of the notice. TMF and the defendants argued for detailed information about the U.S. Proceedings to be included in the notice of certification, while the plaintiffs submitted that there should be no reference at all to the U.S. Proceedings. My decision on this point was affected by the fact that, between the September and January hearing dates, there was a proposed settlement of the U.S. Proceedings. Ultimately I approved a form of notice that referred to the U.S. Proceedings, provided contact information for recipients to obtain more information about such proceedings and specifically advised that it was unnecessary for a class member to opt out of the Ontario proceedings in order to participate in the U.S. Proceedings. No one was entirely successful on the issue of the content of the notice.
[ 6 ] In their written submissions, the plaintiffs seek costs against TMF for the following reasons:
TMF failed to achieve either of its overarching objectives – to delay dissemination of the certification notice until the adjudication of the certification motion in the U.S. Proceedings, or until the finality of the U.S. settlement was determined;
Although TMF was technically successful on the intervention motion, very little of the expert evidence or submissions were directed to this motion;
TMF caused over ten months of delay in the issuance of notice, resulting in significant costs to the class; and
TMF is a $5 billion fund and it is capable of paying a costs award.
[ 7 ] TMF resists the claim for costs, arguing that s. 31(2) of the CPA would preclude a costs award against a class member other than the representative party, that class counsel were not in fact “successful” in the motion, and that in any event its participation was essential in addressing important and novel issues.
[ 8 ] No costs were sought by or against the defendants, who ultimately supported the position of TMF in the main motion.
[ 9 ] For the reasons that follow, I have decided that there will be no costs of the motions.
[ 10 ] First, with respect to the interplay of sections 32(1) and 14(2) of the CPA, I conclude that s. 32(1) is not an absolute bar to costs awards against class members. This section insulates class members from costs awards where they do not actively participate in the proceedings. Section 14(2) provides discretion to the court to award costs against or in favour of a class member who is granted leave to participate at any time in a class proceeding.
[ 11 ] In Dabbs v. Sun Life Assurance Co. of Canada , [1998] O.J. No. 1598 (S.C.J.) Sharpe J. refused to make an order insulating from a costs award, class members who sought standing to object to court approval of a settlement. At para. 28 he observed:
…Section 32(1) of the Act, which provides that class members are not liable for costs except with respect to the determination of their own claims, does not apply. That provision contemplates the usual situation where a class member takes no active step in the proceedings. The objectors are subject to the discretion conferred by s. 14(2), which expressly preserves the right of the court to impose appropriate terms as to costs.
[ 12 ] I agree with this reasoning. Having sought leave to participate under s. 14(2) of the CPA, TMF became potentially liable for costs, notwithstanding that it did not seek costs in its own notice of motion to participate or materials responding to the notice issue. TMF was permitted to participate because it brought a useful and necessary perspective to the question of notice. The fact that it met this requirement for participation does not immunize TMF from a costs award. A class member who seeks to become involved in a motion, or other aspect of a class proceeding, is vulnerable to a costs award, if unsuccessful on the substantive issues in which that member participates.
[ 13 ] While I have the discretion to make a costs award against TMF, I decline to do so.
[ 14 ] In determining costs in class proceedings, courts apply the normal rules under s. 131 of the Courts of Justice Act and rule 57. In general, costs follow the event, and the amount of costs should be proportionate to the issues and complexity of the matter determined, and consistent with the reasonable expectations of the parties. Section 31(1) of the CPA introduces other factors for consideration, providing that 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.
[ 15 ] The most important factor in this case is the novelty of the questions that were before the court. The certified class is global and includes persons who are “overlapping” class members, who are included in the proposed class in proceedings pending in the United States. In my certification decision I adverted to the fact that the litigation plan initially proposed lacked detail with respect to the form, substance and distribution of notice to non-resident class members. The form of notice that was acceptable to the defendants and proposed for court approval before TMF became involved did not address the global nature of the class. Ultimately, the court was invited to address the content of the notice so as to increase the likelihood that any disposition of these proceedings would be recognized in the U.S. and binding on non-resident class members. This issue, at the notice of certification stage, had not been previously considered by an Ontario court.
[ 16 ] While TMF was unsuccessful in its “overarching objective” to delay the notice, the plaintiffs were unsuccessful in their contention that the notice should make no reference at all to the U.S. Proceedings.
[ 17 ] At the time the motion was brought a certification motion was pending in the U.S. Proceedings. In the months that followed however, a proposed settlement was reached in the U.S. Proceedings. This development led to a very real concern about potential confusion for overlapping class members, and the need to ensure that the notice in these proceedings would preserve their litigation autonomy. In all of the circumstances, including the developments that occurred in the U.S. Proceedings, which impacted on the question of notice in this jurisdiction, it would not be appropriate to award costs in favour of any party.
[ 18 ] There is no question that TMF’s involvement resulted in considerable delay in the approval and issuance of notice of certification. Without TMF’s intervention, the notice would have been issued a year earlier, well before the proposed settlement of the U.S. Proceedings. While the intervention had the effect of delaying notice in these proceedings, I cannot conclude that this was TMF’s intention at the time this party sought leave to participate. This argument was not pressed before me during the notice motion, and I did not make a finding in that regard in my decision respecting notice. Had I concluded that there was an improper purpose in the participation of this class member in the notice issues in these proceedings, I would have had no hesitation in awarding costs against TMF.
K. van Rensburg J.
DATE: July 9, 2012
COURT FILE NO.: CV-06-3257-00
DATE: 2012 07 XX
SUPERIOR COURT OF JUSTICE - ONTARIO RE: MARVIN NEIL SILVER and CLIFF COHEN Plaintiffs - and - IMAX CORPORATION, RICHARD L. GELFOND, BRADLEY J. WECHSLER, FRANCIS T. JOYCE, NEIL S. BRAUN, KENNETH G. COPLAND, GARTH M. GIRVAN, DAVID W. LEEBRON and KATHRYN A. GAMBLE Defendants Proceeding under the Class Proceedings Act, 1992 BEFORE: K. van Rensburg J. COUNSEL: D. Lascaris, D. Bach and M. Robb, for the Plaintiffs J. Leon and E. Hoaken, for The Merger Fund D. Peebles, for the Defendants Endorsement re: Costs of Notice and Participation Motions K. van Rensburg J.
DATE: July 9, 2012