SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 13-480848-CP
DATE: 20151215

RE: John Mask / Plaintiff / Moving Party

AND:

Silvercorp Metals Inc., Rui Feng and Meng Tang / Defendants / Responding Parties

BEFORE: Justice Edward P. Belobaba

COUNSEL:
Joseph Groia, Kevin Richard and Matthew Stroh for the Plaintiff

Dana Peebles and Miranda Lam for the Defendants

HEARD: August 26, 27 and 28, 2015

Proceeding under the Class Proceedings Act, 1992

COSTS AWARD

[1] This endorsement makes clear that the costs awarded on a leave motion will almost always be higher than the costs awarded on a certification motion and that the amount awarded could well be substantial.

[2] This was a proposed securities class action. On October 22, 2015 I dismissed the plaintiff’s motion for leave under s. 138.8 of the Ontario Securities Act[^1] and for certification under the Class Proceedings Act.[^2] Having dismissed the statutory claim, I further concluded that “nothing meaningful remained for certification.”[^3]

[3] I have now reviewed the parties’ costs submissions.

[4] The successful defendants ask for a total amount of $892,096 (claiming 60 per cent of actual fees plus $221,679 in disbursements plus taxes) and, in the alternative, a Grid-based amount of $730,740 ($434,860 in fees plus $221,679 in disbursements plus taxes). The plaintiff argues that the costs award should be much lower, in the range of $150,000 to $200,000. The plaintiff invokes the goal of access to justice and submits that the “cost protocol” that I developed for certification motions[^4] should also apply to leave motions.

[5] Several points should be made clear at the outset. First, I do not agree with the plaintiff’s submission that a costs award on a leave motion should be akin to a costs award on a certification motion. The “cost protocol” that I continue to apply in certification motions^5 has no application on leave motions. The reason is obvious. The costs of the modern certification motion must be constrained as much as possible to make good on the access to justice objective and because the certification requirements under s. 5(1) of the CPA are modest at best.[^6] The costs awarded on certification motions should reflect this reality.^7 An OSA leave motion, on the other hand, is intended to be a “robust” screening mechanism that requires the court to undertake “a reasoned consideration of the evidence to ensure that the action has some merit.”[^8]

[6] It follows that there is little that can be constrained on OSA leave motions. Defendants will often mount a full-blown defence and file an enormous volume of evidence in an effort to win the preliminary merits test and stop the proposed class action at the threshold. And the costs award should reflect this reality. As I noted in Goldsmith[^9]:

This was not a certification motion where the statutory hurdles are low and reduced litigation costs are judicially encouraged. This was a leave motion with a preliminary merits test that was fought hard by the defendant as it had every right to do. The point is this: the costs on a leave motion can be substantial.[^10]

[7] Second, I do not accept the defendants’ submission that the time has come to update the Grid and allow recovery of 60 per cent of actual fees. I know that some judges have suggested that the $350 maximum set out in the Grid, indeed the entire Grid, is out of date.[^11] For my part, I do not agree. But even if this were so, this should be a matter for the careful review of the Civil Rules Committee rather than ad hoc judicial comment. As I noted in Goldsmith:

[T]he objective of the costs award is to fix an amount that is “fair and reasonable” to the unsuccessful party “rather than an amount fixed by the actual costs incurred by the successful litigant.” Actual legal costs incurred are irrelevant and all the more so in an era where the legal profession continues to enjoy protection from market forces and where access to justice for most litigants remains illusory mainly because of the high hourly rates charged by lawyers. The Grid coupled with the judicial admonition in Boucher may be the only way to signal to the legal profession and its self-regulator what “reasonable” legal fees should look like.[^12]

[8] In Inter-Leasing Inc. v. Ontario,[^13] a panel of the Court of Appeal recently noted that the Grid rates were out of date and suggested that 55 to 60 per cent of “a reasonable actual rate”[^14] might more appropriately reflect partial indemnity. In my view, as I said in Goldsmith, this was a sensible suggestion: 60 per cent of a “reasonable actual rate.” I continued:

But what is a reasonable actual hourly rate for a senior Toronto litigator. It is certainly not $900 or $1000 per hour. This is obviously not market-pricing. What about $500 to $600? Is this more reasonable? No doubt - but if so, the Grid rates are actually up to date (i.e. the $350 maximum is pretty much in line with the Court of Appeal’s suggested 60 per cent measure.)[^15]

[9] All of this is a long way of saying to the successful defendants herein that their suggestion that 60 per cent of actual hourly rates (which in Toronto BigLaw firms are now in the range of $800 to $1000 for a senior litigator) is a reasonable partial indemnity rate is completely unacceptable. I will stick with the Grid.

[10] My third point is this. The best way for an unsuccessful party to convince this judge that the successful party’s costs request is unreasonable is to file a certified copy of its own costs outline.[^16] Otherwise, the complaints about excessive fees or disbursements will not be persuasive.

[11] Turning, then, to the costs submissions in this case.

[12] I accept the defendants’ alternate “Grid-based” amount of $730,740 ($434,860 in fees plus $221,679 in disbursements plus taxes) as a plausible starting point. The plaintiff’s suggestion that the appropriate costs award should be no more than $200,000 is ridiculous. Even under my “costs protocol” for certification motions, the average historical award for defendants on certification motions is $341,000.[^17] Here the motion was for both leave and certification but the bulk of the motion, more than 80 per cent, related to the leave component which means that the final amount will be considerably higher than the $341.00 average for certification. The defendants went into full-battle mode on the leave motion (as they had every right to do) and their legal costs were also necessarily elevated by the numerous changes in the plaintiff’s claim.

[13] I do agree with the plaintiff, however, that the $86,596 in disbursements expended on U.S. counsel in a New York motion cannot be teleported to Toronto and laid at the feet of the plaintiff on this motion. The $221,679 in disbursements is therefore reduced to $135,083.

[14] The working total is thus $569,943 ($434,860 in fees and $135,083 in disbursements). I find that the defendants’ hourly rates comply with the Grid, the time spent by senior counsel is reasonable, as are the experts’ fees. There are no obvious excesses. The plaintiff complains that both the fees and disbursements amounts are excessive but he has not filed a copy of his own costs outline. Therefore I do not put much stock in his submission that the defendants’ costs amounts are unreasonable.

[15] In my view, applying the factors set out in Rule 57.01(1) and taking into account that about 20 per cent of the motion related to certification, it is fair and reasonable to fix overall costs at an even $500,000 all-inclusive.

[16] Costs are fixed at $500,000 payable by the plaintiff to the defendants within 30 days.

Belobaba J.

Date: December 15, 2015

[^1]: Securities Act, R.S.O. 1990, c. S.5 (“OSA”).

[^2]: Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”).

[^3]: Mask v. Silvercorp Metals Inc., 2015 ONSC 5348, at para. 67.

[^4]: See, for example, Rosen v BMO Nesbitt Burns 2013 ONSC 6356.

[^6]: Baroch v Canada Cartage, 2015 ONSC 1147, at para. 14.

[^8]: Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, at para. 38; and Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, at para. 122.

[^9]: Goldsmith v. National Bank of Canada, 2015 ONSC 4581. Also see Coffin v Atlantic Power Corp., 2015 ONSC 3686 at para. 157.

[^10]: Goldsmith, supra, note 9, at para. 14.

[^11]: For example, in Stetson Oil & Gas Ltd., v. Stifel Nicolaus Canada Inc., 2013 ONSC 5213 at paras. 22 and 25, Newbould J. commented that the Grid rates were “completely outdated” and found it appropriate to award 60 per cent of time charged on a partial indemnity scale and 90 per cent of time charged on a substantial indemnity scale.

[^12]: Goldsmith, supra, note 9, at para. 8.

[^13]: Inter-Leasing Inc. v. Ontario (Revenue), 2014 ONCA 683.

[^14]: Ibid., at para. 5.

[^15]: Goldsmith, supra, note 9, at para. 9.

[^16]: Ibid., at para. 13.

[^17]: Rosen, supra, note 4, at para. 5.