SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 02-CV-241587CP
DATE: 20120911

RE: R. Charles Allen , Plaintiff, Respondent

WeirFoulds LLP , Defendant, Moving Party

BEFORE: G.R. Strathy J.

COUNSEL:
Paul Bates & Jonathan Foreman , for the Plaintiff/Respondent

William E. Pepall & Lucas E. Lung , for the Defendant/Moving Party,
WeirFoulds LLP

DATE HEARD: By written submissions

E N D O R S E M E N T: C O S T S O F S U M M A R Y J U D G M E N T M O T I O N

[ 1 ] This endorsement deals with the costs of the summary judgment motion brought by WeirFoulds LLP. That motion was dismissed: see Allen v. Aspen Group Resources Corp. , 2012 ONSC 3498 , [2012] O.J. No. 2924.

[ 2 ] The plaintiff claims the all-inclusive sum of $150,000. He says that this is a fraction of his actual costs, which were approximately $235,000.

[ 3 ] My objective is to make an award that is fair and reasonable in the circumstances, having regard to the reasonable expectations of the parties and that gives effect to the factors articulated in Rule 57 of the Rules of Civil Procedure , R.R.O 1990, reg. 194, section 31(1) of the Class Proceedings Act 1992 , S.O. 1992 c. 6 ( C.P.A. ). I am also guided by the jurisprudence of this court dealing with costs in class proceedings: see, for example, Silver v. Imax Corp. , 2012 ONSC 4064 , [2012] O.J. No. 3150 at para 14 ; Cannon v. Funds for Canada Foundation, 2012 ONSC 3009 , [2012] O.J. NO. 2611 at paras. 3 and 4 .

[ 4 ] The plaintiff points to the following factors in support of his claim for costs:

(a) He was successful on the motion.

(b) He was required to put a factual record before the court, particularly on the issue of whether the activities of Mr. Egan, a partner in WeirFoulds, were in the ordinary course of business of the law firm.

(c) The motion was for summary judgment – the motion was therefore important and, if it had been successful, would have terminated the action as against WeirFoulds.

(d) The motion delayed the progress of the litigation for over a year.

(e) The costs claimed are reasonable and consistent with other awards made by the court in similar cases.

[ 5 ] WeirFoulds submits that:

(a) Costs should be fixed and made payable to the plaintiff in the cause. The issues were novel and important and will ultimately be determined by a trial judge on a full evidentiary record. It points to Dupont Heating & Air Conditioning Limited v. Bank of Montreal, [2009] O.J. No. 1239 , 2009 13031 in which I concluded that the plaintiff, who had successfully resisted the defendant’s summary judgment motion, should have its costs on a partial indemnity basis, in the cause.

(b) Costs should be fixed on a partial indemnity basis and there are no special circumstances that would justify an enhanced level of costs.

(c) The costs claimed are excessive and unreasonable – there were 450 hours of lawyer time spent in responding to the motion. The plaintiff served a 12 page affidavit and factum. There were three half day cross-examinations; the motion lasted one day. WeirFoulds says that its counsel’s time was about 229 hours and fees were about $79,000 before taxes. In comparison, the costs awarded on the certification motion were $140,000.

[ 6 ] I regard the following factors as particularly significant in this case:

(a) The outcome of the proceeding (rule 57.01(1)): The plaintiff was successful in resisting the motion for summary judgment – the issue is whether the plaintiff should receive costs forthwith, in accordance with the principle expressed in rule 57.03(1)(a), or whether the costs should be in the cause, to fall to be determined by the outcome of the proceeding.

(b) The principle of indemnity (rule 57.01(1)(0.a)): A review of the plaintiff’s costs outline indicates that the hourly rates claimed are higher than would normally be allowed on a partial indemnity basis. As well, there appears to be some duplication of work - four lawyers were involved in the motion, three of whom spent more than 100 hours and the fourth spent 70 hours. It would be reasonable to discount the amount claimed to reflect these factors.

(c) The reasonable expectations of the unsuccessful party (rule 57.01(1)(0.b)): I have no doubt that each party could reasonably have expected that, in the event they lost this important summary judgment motion, the other party’s partial indemnity costs could have been in the range of $100,000.00.

(d) The amount claimed in the proceeding (rule 57.01(1)(a)): This is high-stakes securities class action litigation. While I have no basis on which to predict the amount ultimately at issue, it is reasonable to expect that the potential damages are in the millions of dollars.

(e) The complexity of the proceeding (rule 57.01(1)(c)): The motion involved issues of some complexity.

(f) The importance of the issues (rule 57.01(1)(d)): The motion was a very important one – if successful, it would have ended the litigation against WeirFoulds.

(g) The principle of proportionality : The costs awarded on the certification motion were $140,000. That motion took more time and involved many more issues than this motion.

[ 7 ] There are no exceptional circumstances in this case than would justify an award of anything more than partial indemnity costs.

[ 8 ] I have also considered my decision on the summary judgment motion. There were two issues on the motion. First, whether WeirFoulds owed a duty of care to class members; second, whether WeirFoulds was vicariously liable for Egan’s statutory liability, if any. On the first issue, I concluded at para. 40:

… determining whether there is a duty of care in this case, and, if so, whether it is negatived by policy considerations, is a complex, nuanced and important question that should be decided on a full record. I am not satisfied that I can obtain a full appreciation of the evidence or fairly resolve the issue without a trial.

[ 9 ] On the second issue, I dismissed the motion for summary judgment without prejudice to the right of WeirFoulds to raise the issue at trial. I observed, at para. 104:

As the action will proceed to trial under the common law duty of care issue in any event, the issue of WeirFoulds' liability under s. 131(1)(a) should also be left to a trial judge. The issue is one of first impression; neither the Court of Appeal nor the Supreme Court of Canada has directly addressed the issue in Majrowski. The issue is important to the business world and to the legal profession. It should be decided on a full factual record.

[ 10 ] In the result, the issues will be re-visited and will ultimately be addressed at trial.

[ 11 ] In the circumstances, since the summary judgment motion did not resolve the merits of the underlying issue, I have decided that the fair and just result is to fix the costs now, but to make them payable to the plaintiff in the cause, as between the plaintiff and WeirFoulds. I fix the plaintiff’s costs at $100,000.00, all inclusive.

G.R. Strathy J.

DATE: September 11, 2012