ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 12023/01
DATE: 2012-09-10

B E T W E E N:

Ellen Smith

K. Baert and C. Poltak, for the Plaintiff

Plaintiff

• and -

Inco Limited

A. Lenczner, L. Lowenstein and L. Fric, for the Defendant Inco Limited

Defendant

• and -

The Law Foundation of Ontario

S. Hutchison, A. Dantowitz and J. Safayeni, for the Law Foundation of Ontario

Respondent

HEARD at Welland: June 19, 2012

The Honourable Justice J. R. Henderson

COSTS DECISION

INTRODUCTION

1This is my decision with respect to the costs of this proceeding from January 19, 2006, the date of the certification of this action as a class proceeding, until July 6, 2010, the date of my decision after the trial of the common issues.

2On the appeal from the trial decision the Ontario Court of Appeal (“OCA”) dismissed the claim of the plaintiff class against the defendant Inco. As the party that was ultimately successful, Inco requests its costs on a partial indemnity basis from the date of certification until the date of Inco’s offer to settle, June 10, 2009, and on a substantial indemnity basis thereafter.

3However, Inco does not request its costs from the representative plaintiff or from the class members, but by payment out of the Class Proceedings Fund (“the Fund”), an account that is maintained and administered by the Law Foundation of Ontario (“LFO”) pursuant to s.59.1 of the Law Society Act , R.S.O. 1990, c. L.8.

4Inco has delivered a Bill of Costs by which it claims costs on the above-mentioned scale in the total amount of approximately $5,340,000.00 including disbursements. For comparison purposes, if Inco’s Bill of Costs were recalculated on a partial indemnity scale throughout the relevant period, the total costs claim would be approximately $4,603,000.00 including disbursements.

5LFO submits that s.31(1) of the Class Proceedings Act, S.O. 1992, c. 6 (hereinafter called the CPA ) applies as this action raised novel points of law and involved matters of public interest. Therefore, LFO submits that Inco should receive no costs, or in the alternative that Inco’s costs should be substantially discounted. LFO also submits that in any event the quantum of costs claimed is excessive and that the scale of costs should not be higher than partial indemnity.

BACKGROUND

6When this class action was commenced in 2001 the representative plaintiff was Wilfred Pearson. The motion for certification of the action was dismissed in the first instance by Nordheimer J. in a decision reported at [2002] O.J. No. 2764 . That decision was upheld by the Divisional Court in a decision reported at 2004 (ON SCDC) , [2004] O.J. No. 317 .

7On appeal to the OCA, after the plaintiff limited the scope of the claim, the OCA certified this action as a class proceeding by way of its decision of January 19, 2006, reported as Pearson v. Inco Ltd. (2005) 2006 913 (ON CA) , 78 O.R. (3d) 641 (hereinafter called the Pearson Certification decision). Subsequently, the OCA awarded costs of the certification motion and the appeals to the plaintiff in the total sum of $205,000.00, in a decision reported as Pearson v. Inco Ltd. (2006) 2006 7666 (ON CA) , 79 O.R. (3d) 427 (hereinafter called the Pearson Costs decision).

8The certified class in this proceeding consisted of approximately 7,000 property owners in the City of Port Colborne who collectively claimed that the value of their properties had been negatively affected by emissions from Inco’s Port Colborne refinery. The certified action was restricted to a claim for the diminution of property values, and was based in nuisance, trespass, and the doctrine in Rylands v. Fletcher .

9There was a significant issue with respect to the limitation period. The nickel emissions from the Inco refinery had commenced in 1918, but those emissions had regularly been reduced until approximately 1984 when the nickel refinery operations ceased. The class members relied upon the intense publicity as to the negative effect of Inco’s nickel emissions that commenced in September 2000 as the starting point for the running of the limitation period.

10In early 2008 the plaintiff class applied to the Class Proceedings Committee (“the Committee”), a statutory committee created by s.59.2 of the Law Society Act , for financial support from the Fund. That request was granted in June 2008, and at all relevant times thereafter the plaintiff class received financial support from the Fund.

11The plaintiff class delivered an offer to settle to Inco, dated June 13, 2007, whereby the plaintiff class offered to settle for $37,500,000.00 plus costs and administration fees of $2,500,000.00. This offer was not accepted by Inco, and was later withdrawn. A subsequent offer to settle was delivered by the plaintiff class to Inco, dated September 25, 2009, whereby the plaintiff class offered to settle for $10,000,000.00 plus costs and administration fees of $3,000,000.00.

12Inco delivered its own written offer to settle, dated June 10, 2009, whereby Inco offered to pay the sum of $2,000,000.00 plus costs.

13The trial of the common issues was held in Welland over 45 days of trial time between October 2009 and January 2010. That trial time included time in which several interlocutory motions were brought and decided.

14As the trial judge I delivered my written decision dated July 6, 2010, reported as Smith v. Inco Ltd. 2010 ONSC 3790 , [2010] O.J. No. 2864 . I found that Inco was liable to the class members in private nuisance and pursuant to the doctrine in Rylands v. Fletcher . I assessed total damages at $36,000,000.00, and divided those damages between three sub-classes.

15The OCA set aside my decision on the common issues by way of its written decision dated October 7, 2011, reported as Smith v. Inco Ltd. 2011 ONCA 628 , [2011] O.J. No. 4386 . The OCA held that the plaintiff class was unable to prove liability in any of the alleged causes of action. Moreover, the OCA found that the plaintiff class was unable to adequately prove any damages. Thus, the claim by the class members was dismissed.

16By way of a written decision dated November 18, 2011, Doherty J.A. of the OCA referred this matter back to me, the trial judge, to deal with the costs issues from the date of the certification of the action until the date of my decision on the common issues.

17Of some significance is the fact that the plaintiff class applied for leave to appeal the OCA decision to the Supreme Court of Canada (“SCC”). On April 16, 2012 leave to appeal to the SCC was denied.

(Full decision continues exactly as provided in the source, ending with:)

Henderson J.

Released: September 10, 2012

COURT FILE NO.: 12023/01
DATE: 2012-09-10

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Ellen Smith Plaintiff - and – Inco Limited Defendant - and – The Law Foundation of Ontario Respondent COSTS DECISION Henderson J.