SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: CV-08-362807-00 CP
DATE: 20140718
RE: Michael Cannon / Plaintiff
AND:
Funds for Canada Foundation et al, including ParkLane Financial Group Limited, Trafalgar Associates Limited, Trafalgar Trading Limited, Appleby Services (Bermuda) Ltd. as trustee for the Bermuda Longtail Trust / Defendants
AND:
Numerous Third Party Defendants
Proceeding under the Class Proceedings Act, 1992
BEFORE: Justice Edward P. Belobaba
COUNSEL:
Margaret Waddell and Samuel Marr for the Plaintiff
John Brown and Junior Sirivar for Defendants ParkLane Financial, Trafalgar Associates and Trafalgar Trading (“the ParkLane Defendants”)
Andrea Laing and Daniel Stern for Defendant Appleby Services
Robert Brush and Bruce O’Toole / Peter Jervis and Remissa Hirji / Daniel Murdoch / Christopher Goldson for certain Third Party Defendants
HEARD: Oct. 17, 2013; Jan. 30 and Feb. 14, 2014; and written submissions.
request for fees by Gacich distributors
[1] Following several court attendances, many written submissions and weeks of out-of-court effort, counsel for the parties came close to finalizing an agreement amending the certified common issues and staying the Parklane Defendant’s third party claim against the distributors. Two versions were presented to the court.
[2] In a decision released on February 18, 2014, I explained why I preferred the plaintiff’s version, supported by two groups of third party distributors, over Parklane’s. Following a final adjustment to accommodate a valid concern raised by defendant Appleby Services, I approved the plaintiff’s proposed Draft Order, amended the certified common issues accordingly and stayed the Parklane Defendants’ third party claim against the distributors.[1]
[3] It was obvious that all counsel had done a significant amount of legal work getting to the goal that was achieved. It was also obvious that a costs assessment, if one had to be undertaken, would be difficult because of the multi-sided nature of both the issues that were before me and the positions taken by the parties. I was frankly hoping that all counsel would agree that costs should be deferred in the cause. I therefore added this paragraph to my reasons for decision:
Deciding the costs of this motion may well prove to be a complicated and counter-productive exercise. The most sensible thing may be to award costs in the cause. Nonetheless, if any party is determined to seek costs on this motion, it should forward its initial submission (maximum five pages) within one month from the date that the Order herein is finally signed, with responding submissions (same page limit) to follow within one month thereafter.[2]
[4] Only one group came forward asking for costs, the Gacich Distributors, a sub-class of the donor-distributors and third party distributors. This group boldly submitted a costs outline seeking $ 286,738 for fees on a full indemnity basis and disbursements and asked that this amount be paid forthwith not by the defendants but by the Class Proceedings Fund.
[5] Counsel for the Gacich Distributors argue that they are entitled to all of their legal costs in representing the interests of this particular sub-class of third party defendants. They say that class counsel had a conflict of interest in a key area and thus this legal work was not only necessary but was instrumental in helping the parties, and eventually the court, reach a reasonable and workable result.
[6] I do not deny that counsel for the Gacich Distributors added value to the court hearings and out-of court negotiations that ultimately resulted in the Draft Order noted above. But so did the other counsel, and in some cases even more so. In any event, having reviewed the Gacich costs submissions, I am even more convinced that my initial instinct was correct: deciding the costs of this motion would indeed be a complicated and counter-productive exercise and the most sensible decision is to award costs in the cause. Parsing the parties’ numerous interactions dealing with the opt-out period extensions and the common issue revisions and determining an appropriate costs award would be almost an impossible task. It is far more reasonable to let the costs lie where they have fallen and allow recovery at the conclusion of the third party action.
[7] The plaintiff and the Class Proceedings Fund in a joint responding submission have provided a number of additional reasons why they say the Gacich costs request should be dismissed:
▪ There is absolutely no justification for a costs award on a full indemnity basis. Counsel for the Gacich Distributors are not class counsel. Nor is there any basis for costs on a substantial indemnity scale. There is no evidence of reprehensible litigation conduct and none has been suggested. If costs are awarded, it can only be on a partial indemnity basis.
▪ The costs request even on a partial indemnity basis is misguided. The issues relating to the ‘extended opt-out dates’ were resolved repeatedly on a negotiated basis and with any costs being awarded. As for the motion to stay the third party action, the Gacich Distributors were not the successful party. It was the plaintiff who took the initiative to refine the common issues and stay the third party claim – this motion was neither spear-headed nor won by the Gacich Distributors. Indeed, says the plaintiff, the costs of the motion were increased by the latter’s dilatory and unhelpful conduct. The Gacich Distributors chose to ride on the plaintiff’s coattails rather than bringing their own motion to stay, thereby sheltering themselves from an adverse costs award if the motion was lost.
▪ The costs request should be directed at a party in the litigation and not the Class Proceedings Fund. The court must first make an award against the plaintiff. The court cannot make an order for costs “payable by the Class Proceedings Fund forthwith.”
▪ It would have made more sense for the Gacich Distributors to claim costs against the Parklane Defendants because it was Parklane who commenced and served the third party claim which required the Gacich Distributors to retain counsel.
▪ The Gacich Distributors’ costs should decided at the conclusion of the third party action when the court will be in a better position to decide whether the Gacich Distributors should bear their own costs or claim against the Parklane Defendants who brought them into this proceeding in the first place.
[8] The Gacich Distributors replied with a four-page letter setting out in some detail their response to these submissions. In reading this reply, I was again reminded why my initial instincts were right. Given the polycentric nature of the “who did what, when and why” debate, no judge could make enough sense of the submissions to fairly and reasonably determine the claimant’s costs, at least not at this stage of the proceeding. That is why I return, again, to what I suggested at the outset – costs in the cause.
[9] The costs request of the Gacich Distributors is dismissed but may be resubmitted (using a partial indemnity scale) for the court’s consideration at the conclusion of the third party action.
Belobaba J.
Date: July 18, 2014
[^1]: Cannon v. Funds for Canada Foundation, 2014 ONSC 1056.
[^2]: Ibid., at para. 14.