ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 08-CV-367410CP

DATE: 20140211

BETWEEN:

SERGIO PASIAN and GAVIN PATTULO, on behalf of themselves and all others similarly situated

Plaintiffs

– and –

ACADEMIC CLINICIANS' MANAGEMENT SERVICES

Defendant

J. Gardner Hodder, for the Plaintiff

Eric R. Hoaken and Ian C. Matthews, for the Defendant

Proceeding under the Class Proceedings Act, 1992

HEARD: In Writing

PERELL, J.

REASONS FOR DECISION - COSTS

1The Plaintiffs Sergio Pasian and Gavin Pattulo commenced a proposed class action against the Defendant Academic Clinicians’ Management Services. The Plaintiffs moved to have the action certified under the Class Proceedings Act, 1992, S.O. 1992, c. 6. The Defendant brought a cross-motion for a summary judgment dismissing the action. After a two-day hearing, the Plaintiffs’ motion failed and the Defendant’s motion succeeded. See Pasian v. Academic Clinicians’ Management Services, 2013 ONSC 7787.

2The Defendant seeks costs on a partial indemnity basis of $321,567.52, all inclusive, for the action. The Plaintiffs submit that the appropriate award is $80,000.

3The Plaintiffs submit that the amount claimed by the Defendant for costs is disproportionate for what was in substance a claim for around $900,000, although pleaded as a claim for $5 million. They submit that the Defendant’s lawyers overworked the file beyond the reasonable expectations of the losing party. They submit that the Defendant’s claim for costs is excessive because its lawyers’ hourly rates do not accord with the rates set out in the Civil Rules Committees’ Information to the Profession. They submit that some of the work performed by the Defendant’s lawyers was external or tangential to the steps in the proceeding. They submit that if one analyzes the crucial issues for the motion and not just the outcome, success on the motions was divided.

4As an example of an over-priced, excessive, tangential item for which the Defendant seeks an indemnity, the Plaintiffs point to the Defendant’s claim of 143.8 hours for the preparation of a tax opinion about the Defendant’s obligations as an employer to make deductions at source, which was an important issue in the litigation. As another example of allegedly exorbitant costs being claimed, the Plaintiffs point to the preparation of the Statement of Defence, where the Defendant’s lawyers expended 53.5 hours (at a docketed expense of $35,998.50) and claimed costs of $21,577.

5As yet another example, the Plaintiffs point to 256.4 hours of time for preparing the motions at a claimed cost of $77,534.50. The Plaintiffs say that in contrast, their lawyers only expended 131.7 hours in preparing for the 2-day motions.

6In seeking a reduction of the Defendant’s claim for costs, the Plaintiffs also rely on s.31(1) of the Class Proceedings Act, 1992, which states:

31.(1) In exercising its discretion with respect to costs under subsection 131(1) of the Courts of Justice Act, 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.

7In relying on s. 31(1), the Plaintiffs submit that their action concerned itself with a novel point of law, namely, whether there was an implied term in a contract of remuneration such that the payor will be liable for the cost of an unexpected tax liability.

8Finally, the Plaintiffs seek an access to justice discount, relying on an observation I made in Cavanaugh v. Grenville Christian College, [2012] O.J. No. 3883 (S.C.J.) at para. 20, where I stated:

Costs awarded against unsuccessful plaintiffs in certification motions have typically been modest, relative to the actual costs incurred by the successful defendants, reflecting the concern that cost awards not being consistent with the objective of access to justice.

9In my opinion, while there were some novel aspects to the case, particularly about the nature of the relationship between the putative class members and the Defendant as the entity at the hospital that oversaw the payment of their salary as fellowship physicians, the case was certainly not brought in the public interest and was a case where the Plaintiffs were pursuing their personal financial interests. I would give little weight to the argument that the Defendant’s costs claim should be reduced because the proposed class proceeding was a test case, raised a novel point of law, or involved a matter of public interest. I would also not apply a so-called access to justice discount.

10The costs award in the case at bar should be determined in accordance with the normal principles that guide the court’s discretion in awarding costs. The successful party is normally entitled to costs on a partial indemnity scale subject to the factors set out in rule 57.01 that guide the court’s discretion.

11In this last regard, in the circumstances of the case at bar, the principle from Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 (C.A.) at paras. 24-25 is predominantly important.

12In the Boucher v. Public Accountants for the Province of Ontario case, after a 2-day hearing of a judicial review application, the motions judge fixed costs on a partial indemnity scale at $187,682.51, all inclusive. It should be noted that there were three respondents claiming costs with separate bills of $88,896.45, $60,033.96, and $38,752.10. On appeal, the Court of Appeal reduced the aggregated award to $63,000, all inclusive. At para. 24 of his judgment, Justice Armstrong stated:

24. The appellants submit that the motions judge accepted the bills of costs that were presented to her without any deductions. The bills were prepared in accordance with the calculation of hours times dollar rates provided by the costs grid. While it is appropriate to do the costs grid calculation, it is also necessary to step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable. This approach was sanctioned by this court in Zesta Engineering Ltd. v. Cloutier (2002), 2002 25577 (ON CA), 21 C.C.E.L. (3d) 161 (Ont. C.A.) at para. 4 where it said:

In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.

See also Stellarbridge Management Inc. v. Magna International (Canada) Inc., 2004 9852 (ON CA), [2004] O.J. No. 2102 (C.A.) para. 97.

13The principle from Boucher is partially captured by paragraph 57.01 (1)(0.b) of the Rules of Civil Procedure which states:

57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing, …

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

14I say that paragraph 57.01 (1)(0.b) only partially captures the principle from the Boucher case because the paragraph speaks only about what the unsuccessful party could reasonably expect to pay, while Justice Armstrong spoke generally about the court considering the costs claimed and questioning whether in all the circumstances those costs were fair and reasonable.

15This assessment of reasonableness is discretionary and very much dependent upon the circumstances of each case. In some cases, it may be reasonable for the successful party to make exhaustive efforts and to commit enormous legal resources, and in those cases, it might be said that the unsuccessful party could reasonably expect to pay those costs.

16In other cases, however, the successful party may have been well served by giving his or her lawyer instructions to make exhaustive efforts, but it might be disproportionate and unreasonable to expect the unsuccessful party to pay those costs, even if he or she would have expected or anticipated that his or her foe would have marshalled those legal resources.

17Taking a step back and considering whether, in all the circumstances, the costs claimed is fair and reasonable does not necessarily mean that the court considers whether the case has been “over-lawyered,” rather it means that the court must take a step back and consider whether in all the circumstances it is fair and reasonable for the successful party to be as amply indemnified for the legal expense it incurred in prosecuting or defending the case as it would like to be.

18In the case at bar, I thought the lawyers for both sides provided excellent service for their clients, and thus it is particularly difficult to assess whether there was genuine “over-lawyering” or “over-preparation” or (to use the phrase found in paragraph 57.01 (1)(f)) “whether any step in the proceeding was … taken through excessive caution.” My ultimate assessment was that there was no over-lawyering by the Defendant, but rather, its lawyers provided services beyond what it is reasonable for the Plaintiffs to be expected to pay.

19I think, however, the Plaintiffs’ submission that the reasonable and fair sum is $80,000 is too low. Having regard to the various factors set out in rule 57.01 (1), my conclusion is that the appropriate costs award in the circumstances of this case is $200,000, all inclusive.

20Order accordingly.

Perell, J.

Released: February 11, 2014

COURT FILE NO.: 08-CV-367410CP

DATE: 20140211

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

SERGIO PASIAN and GAVIN PATTULLO, on behalf of themselves and all others similarly situated

Plaintiff

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