Brown v. Canada (Attorney General) 2013 ONSC 6887
COURT FILE NO.: CV-09-372025-CP
DATE: 20131113
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Marcia Brown and Robert Commanda / Plaintiffs
AND:
The Attorney General of Canada / Defendant
Proceeding under the Class Proceedings Act, 1992
BEFORE: Justice Edward Belobaba
COUNSEL: Jeffery Wilson and Morris Cooper for the Plaintiffs
Owen Young, Paul Evraire and Michael Bader for the Defendant
HEARD: July 15 and 16, 2013
Re-Hearing of the ‘Sixties’ Scoop’ Certification Motion
COSTS AWARD
[1] After Justice Perell’s “conditional certification” of the ‘Sixties Scoop’ proposed class action was set aside on appeal, I was assigned the task of re-hearing this motion. At the conclusion of the hearing I advised counsel that the plaintiffs’ motion for certification would be granted (unconditionally) and the Federal Crown’s motion to strike would be dismissed. I released my written reasons on September 27, 2013.[1]
[2] Generally speaking, I agreed with the analysis of Justice Perell. I differed with Perell J. in two respects, both of which stemmed from the fact that it was the 1965 Agreement, as the plaintiffs explained, that “gave rise to these claims.” I therefore narrowed the class definition and re-worded the common issue to reflect this fact.
[3] This certification motion was, in many respects, a re-hearing of the motion before Justice Perell. It follows from this that the plaintiffs are entitled to claim in their costs award not only the costs incurred in the 2013 attendance before me but also the costs incurred in the 2010 attendance before Perell J. that related to legal work that was needed and used again in the attendance before me. The Federal Crown’s suggestion to the contrary simply does not make sense.
[4] As I noted in my reasons, rather than appealing Perell J.’s decision on the merits, the Federal Crown seized on the “conditional certification” aspect and, as it turned out, prevailed on this point on appeal. The merits were not addressed by either the Divisional Court or the Court of Appeal. But the merits, as presented and addressed in the re-hearing before me, necessarily relied on legal work that was done for the original 2010 hearing and again for the re-hearing before me. Hence, the plaintiffs are entitled to claim costs not only for the re-hearing but also for the legal work leading up to the 2010 hearing that was used again at the 2013 hearing. I have reviewed the plaintiff’s cost outline and I accept that the allocations are correct and do not involve any duplication or over-reaching.
[5] The plaintiff asks for $180,493 on a substantial indemnity basis. This is a non-starter. I agree with the Federal Crown that substantial indemnity costs are only awarded in cases where there has been “reprehensible, scandalous or outrageous conduct on the part of one of the parties.”[2] This is not that case and the plaintiff has not suggested that it is. The appropriate scale is partial indemnity. (Counsel are reminded that substantial indemnity is calculated by multiplying the partial indemnity amount by 1.5 – see the definition of “substantial indemnity” in s. 1.03(1) of the Rules of Civil Procedure.)
[6] Applying the “costs grid” as set out in the Rules Committee’s Notice to the Profession, the fees relating to the original hearing (on a partial indemnity basis) total about $70,372[3] and, those relating to the hearing before me, about $32,219.[4] The disbursements for both total about $15,731.[5] In sum, the total claim for fees and disbursements (not including taxes) is $118,322. I will round this up to $120,000.
[7] In my view, this is a remarkably reasonable costs request. I have attached in the Appendix an overview of my costs approach in class action certification motions. As counsel will see from the narrative and in particular from the “historical averages” chart, the costs being sought by the successful plaintiff herein, on what was a relatively complex certification motion, is at the lowest end of the range. I commend counsel on both sides for achieving a certification result without the usual excesses.
[8] I do not have to consider all of the factors set out in the Appendix because of the circumstances herein – a rehearing of an earlier hearing and the refreshingly modest costs request. I will, however, conclude with this.
[9] Final review. Standing back and considering the factors under Rule 57.01(1) (especially the relative complexity of the proceeding), the admonitions of the Court of Appeal about making sure that the costs award is fair and reasonable to the losing party, and the current and historical comparisons as set out above, I find it fair and reasonable to fix the costs at $130,000 to cover all taxes.
[10] Order to go fixing costs at $130,000 all-inclusive payable forthwith by the Federal Crown to the plaintiff. Class counsel will understand that all costs awards paid to counsel must be taken into account in the final calculation and approval of any legal fees.
Date: November 13, 2013
Belobaba J.
Appendix
Over the past several months, I have released five decisions, certifying proceedings as class actions, that now require costs awards.[6] Normally, costs awards are routine and can be easily adjudicated. Not so in the world of certification motions. Here, excess appears to be the norm in every aspect of the proceeding – in the time spent by legal counsel, the volume of material filed with the court, the number of days scheduled for the oral hearing and the over-litigation of most issues. No wonder, then, that the costs that are typically sought by the successful party are in the hundreds of thousands of dollars. No wonder, also, that the number of class actions on an annual basis is declining. Access to justice, even in the very area that was specifically designed to achieve this goal, is becoming too expensive.
Most members of the class action bar, whether acting for plaintiffs or defendants, agree that a “no costs” rule would be much more sensible. Like them, I also wish that the recommendations on costs as set out in the Ontario Law Reform Commission’s Report on Class Actions[7] had been accepted. Instead, the provincial legislature decided to adopt the views of the Attorney-General’s Advisory Committee[8] and continue the “costs follow the event” convention for the very different world of class actions as well. I was a member of that Advisory Committee. I now realize that I was wrong and that the OLRC was right. I understand that the provincial Law Commission is undertaking a review of the Class Proceedings Act,[9] including the costs provisions. Hopefully, our mistake will be corrected.
In the meantime, costs will continue to be awarded to the successful party on a certification motion and judges will continue to explain or try to explain their decision. Given the large costs claims and the subjectivity of the required analysis – recall the Rule 57.01(1) factors and the admonition of the Court of Appeal that costs awards should reflect what would be fair and reasonable to the losing party –many of the cost award decisions, although wordy, use unreliable metrics and are analytically unclear. In my view, more transparency is needed.
For my part, I want to make clear how I will approach and determine costs awards in certification motions, now and in the future. I will, of course, continue to consider and apply the factors set out in Rule 57.01(1) and the various (and obviously binding) directions of the Court of Appeal. But the Rule 57.01(1) factors and the Court of Appeal directions can only take you so far. Consider, for example, the directions of the Court of Appeal that were provided in Pearson v Inco.[10] I have taken the liberty of juxtaposing these directions with my commentary, added in italics.
(i) A motion for certification is a vital step in the proceeding and the parties expect to devote substantial resources to prosecuting and defending the motion.
I understand this direction. Class actions often involve claims in the many millions of dollars and will therefore be rigorously prosecuted and defended. It follows from this that the costs awards (even on a partial indemnity basis) will be substantial.
(ii) The costs must reflect what is fair and reasonable; and the costs expectations of the parties can be determined by the amount of costs that an unsuccessful party could reasonably expect to pay.
I understand this as well. My difficulty on certification motions, where the amounts being sought by the successful party are so large, is deciding what the unsuccessful party should reasonably expect to pay. It would be of some assistance to know what losing parties have been required to pay on average over the last five or ten years. It would also be of some assistance to know the average percentage that these awards reflect, expressed as the amount awarded divided by the amount sought. In this way, I would be better able to decide what the unsuccessful party could reasonably expect to pay.
(iii) The costs should, if possible, reflect costs awards made in closely comparable cases, recognizing that comparisons will rarely provide firm guidance.
Here again, a sensible direction, at least on its face. The difficulty stems from the fact that the metrics involved in assessing “closely comparable cases” are not always reliable. For example, in comparing costs awards, some judges assume that a certification motion that required three or four days of hearing must have been more complicated and necessarily justified a higher costs award than one that was completed in just one or two days. The reality, however, is that a growing number of judges (myself included) spend many hours in advance of the scheduled hearing date, carefully reviewing the material and the (lengthy) written submissions and therefore require only a day or two in court. Same complicated motion: very different use of court time. Thus, the “days in court” metric can be completely unreliable. Add to this, the Court of Appeal’s caution (above) that comparisons with closely comparable cases “will rarely provide firm guidance” and the third direction loses much of its value. In my view, there would be more value in knowing the average costs awards and average percentages awarded. This kind of information, as I have already noted, would be of assistance in helping me decide what amount the losing party should reasonably be expected to pay.
(iv) A fundamental object of the Class Proceedings Act is to provide enhanced access to justice.[11]
This direction contains a very important reminder. If class actions are to survive and provide enhanced access to justice, the costs awards on certification motions should not work to undermine this fundamental objective. They should not price the class proceeding out of existence. That is why it is important, in addition to the s. 57.01(1) factors, to consider the costs awards made to date and the proportionality between amounts sought and amounts awarded. This historical information would provide some measure of predictability (and constraint) and thus help ensure the continued viability of class proceedings.
In an effort to further the ‘access to justice’ objective and make my own decision-making process more transparent and predictable, I will adopt the following procedure in deciding costs awards in conventional certification motions – that is, in certification motions that do not fall within s. 31 of the CPA (i.e. test cases, novel points of law or matters of public interest):
➢ I will generally be content with costs outlines certified by counsel. I will not require either side to submit actual dockets. If they wish to do so, that is up to them.
➢ I will (briefly) review the certified costs outlines to ensure that the hourly rates being charged by counsel fall within the range set out by the Rules Committee in its Information to the Profession.
➢ I will also review the costs outline for any obvious excesses in fees or disbursements.[12] Apart from any obvious excesses, I will accept the costs outline as is. I will not drill down into any of the detail.
➢ If the unsuccessful party wants to argue unreasonableness (beyond hourly-rate compliance or obvious excesses) it should submit its own certified costs outline showing what it actually spent (on a partial indemnity scale) on the certification motion. If a parallel costs outline is not submitted by the unsuccessful party (and none is required) I will probably conclude that the amount being requested by the successful party is not unreasonable.
➢ I will consider seriously historical costs awards in similar cases. Such comparisons can never be determinative but, as I have already noted, they provide useful guideline as to what amounts or percentages have been awarded in the past. As it happens, I have reviewed the costs awards in certification motions over the last six years[13] and I will make use of the following information:
Costs Awards Over the Last Six Years
I. Where the costs sought were under $500,000
Average Award
(including fees and disbursements)
Percentage
amount awarded / amount sought
For Plaintiff
$169,250
63%
For Defendant
$148,870
50%
Overall
$163,000
59%
II. Where the costs sought were over $500,000
Average Award
(including fees and disbursements)
Percentage
amount awarded / amount sought
For Plaintiff
$496,118
62%
For Defendant
$341,000
39%
Overall
$388,728
46%
➢ For example, where the costs sought were less than $500,000, the average all-inclusive award for the successful defendant was $148,870; and where the costs sought were more than $500,000 it was $341,000. Would this information be of some assistance in deciding what the losing defendant should reasonably be expected to pay? I think it would be.
➢ As I conclude my costs review, I will stand back and reassess the amount that is before me (after the reductions or removals of any excesses.) I will again review the factors set out in Rule 57.01(1), the admonitions of the Court of Appeal, and the historical costs awards data as set out above, and come to a final amount that, in my view, is fair and reasonable to both sides, always remembering that the fundamental objective of the Class Proceedings Act is access to justice.
➢ In cases where the final fees or disbursement amount is dramatically above the norm, I will consider making a costs award in two parts: a portion that is payable immediately and a further portion that is payable in the cause.[14]
I don’t know how this approach will play out. It will likely result in lower than expected costs awards. But if it also results in leaner and more focused certification motions, a greater measure of predictability for the participants, and in the overall, the continuing viability of the class action vehicle, that is all to the good.
[1] Brown v Canada (Attorney-General) 2013 ONSC 5637.
[2] Hamilton v Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303 at para. 26.
[3] My calculation is based on the following: lawyers’ fees $62,735 (Wilson and Cooper $350, not $550 or $600; Hooper $175, not $240; Kinch $160, not $175; Lind $80, not $165 and Dutka $80, not $130); plus $7637 for “senior research counsel” for a total of $70,372.
[4] My calculation is based on the following: lawyers’ fees (Wilson and Cooper $350, not $600; Lovinsky $225, not $305; Doris, $140, not $250; Withanage $80, not $165) plus $675 for “senior research counsel” for a total of $32,219.
[5] In addition to moving the senior legal research lawyer’s fees out of disbursements and into fees, I also deleted the computer charges for legal research (Lexis Nexis) – a total of $2134. As I have noted in other costs awards, lawyers (who are already billing very high, monopoly-based, hourly rates for their legal knowledge) should not be charging for “legal research.” Customers should not have to pay anyone who charges by the hour, whether lawyers or plumbers, to learn on the job. Legal research is obviously essential, but it should not be a chargeable disbursement.
[6] Dugal v Manulife Financial, 2013 ONSC 4083; Rosen v BMO Nesbitt Burns, 2013 ONSC 2144; Crisante v DePuy Orthopaedics, 2013 ONSC 5186; Brown v. Canada (Attorney General) 2013 ONSC 5637; and Sankar v Bell Mobility, 2013 ONSC 5916.
[7] Ontario Law Reform Commission, Report on Class Actions, (Toronto: Ministry of the Attorney General, 1982).
[8] Report of the Attorney General’s Advisory Committee on Class Action Reform, (Toronto: Ministry of the Attorney General, 1990).
[9] S.O. 1992, c. 6.
[10] Pearson v Inco Ltd., 2006 7666 (ON CA), [2006] O.J. No. 991 (C.A.)
[11] Ibid., at para. 13.
[12] An obvious fees-related excess: too many counsel at the cross-examinations or at the hearing. An obvious disbursement excess: charging for “legal research.” In my view, lawyers (who are already billing very high, monopoly-based, hourly rates for their legal knowledge) should not be charging for “legal research.” Customers should not have to pay anyone who charges by the hour, whether lawyers or plumbers, to learn on the job. Legal research is obviously essential, but it should not be a chargeable disbursement.
[13] I acknowledge the work of counsel for DePuy in Crisante v DePuy, supra, note 1, who provided me with a a very useful costs chart showing amounts sought and amounts awarded in certification motions since May, 2007. I edited this down to 36 contested costs awards - 20 awarding costs to the plaintiffs and 16 awarding costs to the defendants. I divided the awards into two categories based on the amounts sought (fees plus disbursements): Category One – amounts sought under $500,000 (23 awards, 16 for the plaintiffs and 7 for the defendants) and Category Two – amounts sought over $500,000 (13 awards, 4 for the plaintiff and 9 for the defendant.) I then calculated the average award and average percentage (amount awarded divided by amount sought) in the two categories, for plaintiffs, defendants and overall. The results are set out above. (I remind the reader that the amounts include fees and disbursements.) I acknowledge the statistical deficiencies, but I nonetheless find the information to be of some assistance.
[14] See, for example, Lipson v Cassels, Brock & Blackwell, 2013 ONSC 6450 at para. 29. Justice Perell awarded the plaintiff $298,582 in costs - $148,582 payable forthwith and $150,000 payable to him in the cause.