Baroch v. Canada Cartage, 2015 ONSC 1147

COURT FILE NO.: CV-13-492525-CP

DATE: 20150224

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Marc-Oliver Baroch

Plaintiffs

– and –

Canada Cartage Diversified GP Inc., Direct General Partner Corporation and Canada Cartage System Limited

Defendants

Eric Hoaken, Ian Matthews and Larissa Moscu for the Plaintiff/Moving Party

Sylvie Rodrigue, Linda Plumpton, Lisa Talbot and Sarah Whitmore for the Defendants/Responding Parties

HEARD: December 10, 2014

Proceedings under the Class Proceedings Act, 1992

COSTS AWARD

Belobaba J.:

[1] In a decision released on January 30, 2015 I granted the plaintiff’s motion to certify this action as a class proceeding.[1] The plaintiff now seeks costs of the certification motion in the amount of $209,690 inclusive of taxes and disbursements. The defendant says that a costs award of $90,000 would be more appropriate.

[2] There are two issues to be resolved, scale and quantum.

Scale

[3] The plaintiff asks that costs incurred after a certain date be calculated on a substantial indemnity basis because the terms of his Rule 49 offer to settle were met or exceeded by the result he ultimately achieved on the certification motion. The plaintiff would have settled for the certification of all of the proposed common issues except aggregate damages, and the payment of either $100,000 or $150,000 in costs, depending on the date the offer was accepted.

[4] As it turned out, the plaintiff was almost completely successful on the certification motion – I did not certify the ‘individual breach of contract’ issue but I did certify the ‘aggregate damages’ issue. And the costs award herein will meet or exceed the amounts that were suggested in the Rule 49 offer. I therefore agree with the plaintiff that the appropriate scale is partial indemnity up to October 29, 2014 and substantial indemnity (which is 1.5 times partial indemnity) thereafter.

Quantum

[5] My approach to costs awards on certification motions was set out in five decisions that were released in 2013.[2] I said this:

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 …

➢ 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.[^3] 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.

➢ 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.

[6] I will now apply this approach to the costs submissions herein.

[7] Review of hourly rates to ensure compliance with the Rules Committee “Grid”. The well-known Grid is based on the lawyer’s year of call and recommends that hourly rates (on a partial indemnity basis) be calculated as follows: less than ten years, maximum of $225; ten to twenty years, maximum of $300; over twenty years, maximum of $350. It is important to note that the maximum amounts are ceilings not floors. Thus, a two-year call should probably be allocated no more than $150 per hour, and a twelve-year call about $240. The senior lawyer with more than 20-years’ experience should only be awarded $350 if the legal work she performed actually required this level of experience.

[8] The hourly rates charged by the plaintiff’s four-person legal team in their costs submission do not comply with the Grid. I have therefore adjusted the hourly rates as follows: for Mr. Hoaken (a twenty-year call) $300 partial indemnity[^4] and $450 substantial indemnity; for Mr. Matthews (a six-year call) $225[^5] and $337.50; for Ms. Moscu (a two-year call) $210[^6] and $315; and for Ms. Epstein (a one-year call) $150 and $225. I know that many lawyers and even some judges believe that the Grid is “out of date” in the sense that hourly rates, at least in downtown Toronto, are now routinely in the $600 to $1200 range. But in my view these increasing (and frankly absurd) hourly rates only magnify the core problem of monopoly-pricing and reaffirm the overall reasonableness of the rates that are set out in the Grid.

[9] Having re-calculated the hourly rates for the plaintiff’s four-lawyer team, I find that the legal fees total (including the substantial indemnity component) is $128,147.

[10] The $36,000 reduction. The plaintiff points out that the partial indemnity portion of his cost submission already includes a $36,000 reduction and asks that this be taken into account if the Grid is applied with any degree of rigidity. This is a reasonable request. Counsel for the plaintiff obviously reduced their overall costs by this amount on the assumption that their suggested hourly rates would be accepted. But they weren’t. So it is only right that I review this $36,000 amount, apply the Grid numbers and add this revised tally to the partial indemnity component of the plaintiff’s legal fees. Using the hourly rates identified above, I am able to conclude that an additional $26,649 should be added to the $128,147 just noted for a total of $154,796 in legal fees.

[11] Any obvious excesses in fees or disbursements. There are no obvious excesses in the legal fees. The only disbursement that I question is $180.51 for “legal research.” I am deleting this amount for the reasons set out in footnote 3. The revised total for legal fees ($154,796) and disbursements ($11,538) is therefore $166,344.

[12] Historical costs awards in similar cases. The average costs award on certification motions for plaintiffs seeking less than $500,000 is $169,250.[^7] The amount being considered herein, when HST is added, is slightly higher than the historical range.

[13] Stand back and reassess. When HST is added, the final amount is approximately $183,000. This is on the high side, historically. I note, however, that the partial indemnity costs incurred by the defendant were just over $447,000. Therefore, an award of $180,000 (to use a round number) can hardly be described by the defendant as unreasonable. Standing back and reassessing the costs submissions, I am inclined to find in all the circumstances that an award of $175,000 all-inclusive is fair and reasonable.

[14] There are some who suggest that the trend of ever-declining cost awards for certification motions is worrisome and wrong-headed. I remind them that the certification requirements under the Class Proceedings Act[^8] are modest at best and the legal fees should reflect this reality. Again, the monetary reward for assuming the many risks of class action work will not be found in costs outlines but in generous, court-supported contingent fee agreements.[^9]

[15] Costs are fixed at $175,000 all-inclusive.

[16] The parties advise that I should deduct the $13,500 in costs that were awarded to the defendant on November 7, 2014 on the refusals motion. Order therefore to go requiring Canada Cartage to pay costs to Mr. Baroch in the amount of $161,500 forthwith.

Belobaba J.

Date: February 24, 2015

[^1]: Baroch v. Canada Cartage, 2015 ONSC 40.

[^2]: 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.

[^3]: 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.

[^4]: I know it is difficult for lawyers with 20 years of experience who bill $800 an hour or more in downtown Toronto to be content with a mere $300 allocation as based on the Grid (“10 to 20 years, maximum $300). But if the inherent unreasonableness of high hourly rates is recognized and often ridiculed in every other area of litigation, it should be no different in class action litigation. Better to be consistent and apply the Grid throughout (not because it is binding – it is not - but because it comes closest to the Boucher-based fairness criterion) than to allow an unprincipled exemption for certification motions. As the class action vehicle evolves, class counsel will not find rewards for their risk-taking in conventional cost outlines but in generous court-supported contingency fee agreements: see the discussion in Cannon v. Funds for Canada Foundation, 2013 ONSC 7686.

[^5]: Normally I would have allocated a $190 rate. However, I note that the defendant is charging $225 for a three-year call.

[^6]: If the defendant is charging $225 for a three-year call, then $210 for a two-year call is fair and reasonable.

[^7]: See the historical analysis set out in each of the cases cited supra, note 1.

[^8]: S.0. 1992, c. 6.

[^9]: Supra, note 4.