Court File and Parties

Citation: Vester v. Boston Scientific Ltd., 2017 ONSC 2498 Court File No.: CV-15-527310 CP Date: 2017-04-24

Ontario Superior Court of Justice

Between: Susan Vester and Darin Vester, Plaintiffs – and – Boston Scientific Ltd. and Boston Scientific Corporation, Defendants

Counsel: Daniel E.H. Bach, Jill McCartney and Elizabeth deBoer for the Plaintiffs David Morritt, Sonia L. Bjorkquist, and Karin Sachar for the Defendants

Heard: In writing

Reasons for Decision - Costs

Perell J.

A. Introduction

[1] The Defendants, Boston Scientific Ltd. and Boston Scientific Corporation (collectively "Boston Scientific"), designed, manufactured, and sold transvaginal mesh medical devices that were implanted into thousands of Canadian women for the treatment of Stress Urinary Incontinence or Pelvic Organ Prolapse. The Plaintiff, Susan Vester, who suffered from Stress Urinary Incontinence, had a transvaginal mesh device implanted, and she suffered painful complications. Mrs. Vester, along with her husband Darin Vester, commenced a proposed class action under the Class Proceedings Act, 1992, S.O. 1992, c. 6. They alleged that all the devices are defective and unsafe and that they can all cause immense pain, among other side effects. The Vesters sought to have their action certified as a class action. The first phase of the certification motion was heard on November 23, 2015, and I released my decision on December 17, 2015. See Vester v. Boston Scientific Ltd., 2015 ONSC 7950.

[2] For the first phase of the certification motion, I concluded that: the pleadings disclosed a cause of action for a negligent design claim and a failure to warn claim; there was an identifiable class; and Mrs. Vester and Mr. Vester might qualify as representative plaintiffs. However, there were no common issues and given the absence of them, a class proceeding was not the preferable procedure. In the result, I adjourned the certification motion to permit Mrs. Vester and Mr. Vester: (a) to provide evidence to establish some-basis-in-fact for common issues for the negligent design claim or for the failure to warn claim; (b) to establish some-basis-in-fact that a class action would be the preferable procedure for the determination of those common issues; and (c) to revise their litigation plan accordingly.

[3] In January 2017, the certification motion resumed with its second phase, and after hearing the new evidence, I certified the Vesters' action as a class proceeding. See Vester v. Boston Scientific Ltd., 2017 ONSC 1095.

[4] The Vesters now request costs of $900,000 all inclusive on a partial indemnity basis for the certification motion. Of this sum, their claim for counsel fees is $650,190.50.

[5] Boston Scientific submits that the appropriate award is no costs award or alternatively costs in the cause.

[6] For the reasons that follow, I award the Vesters $425,000 payable forthwith ($450,000 less $25,000 for an abandoned motion) and $450,000 payable to the Vesters in any event of the cause.

B. Factual Background

[7] On August 28, 2012, the Vesters commenced a proposed class action against Boston Scientific.

[8] On February 23, 2015, the Vesters served an offer to settle the certification motion on consent and without costs. The offer was not accepted. Although the Vesters are not seeking costs on a substantial indemnity basis, they submit that the refusal of this offer, along with the successful outcome of the certification motion, would justify an award on a substantial indemnity basis.

[9] On November 23 and 24, 2015, 39 months after the commencement of the action, the first phase of the certification motion was argued. For the first phase, nine affidavits were filed; four from experts: Dr. Homerville, Dr. Badylak, Dr. Douso, and Dr. Green, all but the first from Boston Scientific. Each of the experts and the proposed representative plaintiffs, Mr. and Mrs. Vester, were cross-examined in the run up to the certification motion.

[10] In my Reasons for Decision for the first phase, I concluded that the Vesters had satisfied the cause of action and the identifiable class criteria for certification as a class action, and, as noted above, I adjourned the motion to allow the Vesters to obtain additional evidence.

[11] Boston Scientific provided its costs outline for partial indemnity costs for the first phase of the certification motion, for which it claimed victory, and the outline indicates that Boston Scientific's costs for the first phase (partial indemnity and tariff, not at full rates) were $1,010,303.94.

[12] During the adjournment, additional evidence was gathered. For the second phase of the certification motion, three expert affidavits were filed by the Plaintiffs: Drs. Blume, Guelcher and Iakovlev. In response, Boston Scientific filed a further affidavit from its corporate representative, Dan Krause, and responding expert affidavits from Drs. Duoso (who filed two affidavits) and Badylak. Drs. Blume, Guelcher and Iakovlev were cross-examined. The Plaintiffs chose not to cross-examine Drs. Duoso and Badylak.

[13] Following completion of the cross-examination of Dr. Blume, Boston Scientific brought a separate motion to exclude her evidence. The Plaintiffs responded to the Defendants' motion with separate materials and the motion was heard concurrently with the return of the certification motion. I decided to admit Dr. Blume's evidence.

[14] On February 17, 2017, I released my Reasons for Decision and certified the action as a class action.

[15] The two phases of the certification motion involved over 6,000 pages of evidence with ten witnesses, each of whom were cross-examined either in phase one or phase two. The evidence establishing the commonality of the product defect was complex. The motion was hard-fought with Boston Scientific contesting each of the certification criterion.

[16] The Vesters' costs for the certification motion on a partial indemnity basis total $1,224,010.52 (at tariff rates, including tax; excluding more than $42,000 in time (largely clerk and student time)).

[17] The Vesters seek $373,256.45 for the experts (excluding USD$159,761.25 of time Dr. Blume charged). These experts were proffered to show the required "some-basis-in-fact" for certification.

[18] As noted above, the Vesters request costs of $900,000, all inclusive, on a partial indemnity basis. Of this sum, the claim for fees is $650,190.50. The actual cost to the Vesters was $1,094,747.40 in time and $433,020.41 in disbursements. The Vesters claim $140,799.61 on account of applicable taxes.

[19] Boston Scientific did not provide a costs outline for the second phase of the certification motion.

C. Discussion and Analysis

1. General Principles – Costs and Class Proceedings

[20] Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage and sanction inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements. See: Hamilton-Wentworth (Regional Municipality) v. Hamilton-Wentworth Save the Valley Committee, Inc. (1985), 1985 1957 (ON SC), 51 O.R. (2d) 23 (H.C.J.); Fellowes, McNeil v. Kansa General International Insurance Co. (1997), 1997 12208 (ON SC), 37 O.R. (3d) 464 (Gen. Div.); Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330 (C.A.); Somers v. Fournier (2002), 2002 45001 (ON CA), 60 O.R. (3d) 225 (C.A.); British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371 (S.C.C.); 1465778 Ontario Inc. v. 1122077 Ontario Ltd. (2006), 2006 35819 (ON CA), 82 O.R. (3d) 757 (C.A.); Reynolds v. Kingston (City) Police Services Board (2007), 2007 ONCA 375, 86 O.R. (3d) 43 (C.A.).

[21] The court's discretion in awarding costs arises under the authority of s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C-43 and is to be exercised by a consideration of the factors in rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. These factors include the principle of indemnification, the reasonable expectations of the parties, the complexity of the proceeding, the importance of the proceeding and the conduct of the parties in litigation. Under the scheme developed in Ontario for class proceedings, subject to the court's discretion and the directive of s. 31 of the Class Proceedings Act, 1992, discussed below, the plaintiff remains liable for costs.

[22] The most general rule about costs, not to be departed from without good reason, is that costs at a partial indemnity scale follow the event, which is to say that normally costs are ordered to be paid by the unsuccessful party to the successful party on a partial indemnity scale: Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 239 (ON CA), 17 O.R. (3d) 135 (C.A.); Pike's Tent and Awning Ltd. v. Cormdale Genetics Inc. (1998), 27 C.P.C. (4th) 352 (Ont. Gen. Div.); Hague v. Liberty Mutual Insurance Co., 2005 13782 (ON SC), [2005] O.J. No. 1660 (S.C.J.); McCracken v. Canadian National Railway, 2012 ONSC 6838. This is the "loser-pays" principle.

[23] A critical controlling principle for the awarding of costs is that the sum awarded reflect the fair and reasonable expectations of the unsuccessful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.) at para. 24; Caputo v. Imperial Tobacco Ltd. (2005), 2005 63806 (ON SC), 74 O.R. (3d) 728 (S.C.J.) at paras. 23-25; Lee v. General Motors Co. of Canada, [2004] O.J. No. 2245 (S.C.J.); McGee v. London Life Insurance Co., [2008] O.J. No. 5312 (S.C.J.) at paras. 5-8.

[24] In Boucher v. Public Accountants for the Province of Ontario, supra, after a two-day hearing of a judicial review application, the motions judge fixed costs on a partial indemnity scale at $187,682.51, all inclusive. 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.

[25] The 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. In 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.

[26] In Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.) at para. 52, Justice Epstein stated that the overriding principle in awarding costs is reasonableness. She stated:

52. As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher [Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.)], this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at para. 37, where Armstrong J.A. said: "[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice."

[27] The same approach is applied to the recovery of fees paid to an expert witness. In Pearson v. Inco Ltd., [2002] O.J. No. 3532 (S.C.J.) at para. 20, Justice Nordheimer stated:

[T]he approach to the recovery of fees paid to expert witnesses ought to be exactly the same as the approach to the fees to be recovered by counsel. The court should consider what is fair in terms of hours and rates as well as the overall amount and should then fix an amount which it is reasonable for the losing party to pay. In so doing, the court is not bound by what the client may have actually had to pay the expert.

[28] Although the unsuccessful party is not obliged to disclose what he or she expended on costs, where the unsuccessful party submits that the costs claimed by the successful party are excessive, evidence of what he or she expended is relevant to the determination of what is reasonable and of what the unsuccessful party might reasonably have expected to pay and the failure to proffer this evidence tempers and diminishes the unsuccessful party's criticism of the excessiveness of the costs claim: Hague v. Liberty Mutual Insurance Co. (2005), 2005 13782 (ON SC), 13 C.P.C. (6th) 37 (S.C.J.) at para. 15; MacDonald v. BMO Trust Co., 2012 ONSC 2654 at para. 27.

[29] An attack on the quantum of the opponent's claim for costs without disclosing one's own bill of costs is no more than an attack in the air: Risorto v. State Farm Mutual Automobile Insurance Co. (2003), 2003 43566 (ON SC), 64 O.R. (3d) 135 (S.C.J.) at para. 10, United States of America v. Yemec, 2007 65619 (ON SCDC), [2007] O.J. No. 2066 (Div. Ct.) at para. 54. The decision to not provide a costs outline undermines any argument that the opponent's time spent and rates are excessive: Chapman v. Benefit Plan Administrators Ltd., 2014 ONSC 537 at paras. 11-12.

[30] The traditional discretionary principles developed for costs awards are codified in rule 57.01 (1), which states:

Factors in Discretion

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.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(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;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party's denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

[31] The decision to award costs is discretionary, and the court has the discretion to reduce the amount of costs or to order that there be no order as to costs in a variety of circumstances including:

• the proceeding raises novel issues, the resolution of which is in the public interest, including, for example, the interpretation of a statute: Valpy v. Ontario (Commission on Election Finances), 1989 4330 (ON SC), [1989] O.J. No. 66 (Div. Ct.) at para. 22; Mahar v. Rogers Cablesystems Ltd., [1995] O.J. No. 3711 (Gen. Div.) at paras. 2, 7; Gombu v. Ontario (Assistant Information and Privacy Commissioner), [2002] O.J. No. 2570 (Div. Ct.) at paras. 3-4; College of Optometrists of Ontario v. SHS Optical Ltd., [2003] O.J. No. 3499 (S.C.J.) at paras. 3-4; Re Canada 3000 Inc., 2005 18858 (ON SC), [2004] O.J. No. 1962 (C.A.); Sutcliffe v. Ontario (Minister of the Environment), 2004 34994 (ON CA), [2004] O.J. No. 4494 (C.A.) at para. 1; Dam Investments Inc. v. Ontario (Minister of Finance), 2007 ONCA 527, [2007] O.J. No. 2674 (C.A.) at para. 20; Seetal v. Quiroz, [2009] O.J. No. 3124 (S.C.J.); O'Dea v. Real Estate Council of Ontario, [2011] O.J. No. 247 (S.C.J.) at paras. 9-11; Kelly v. Ontario, [2014] O.J. No. 3373 (S.C.J.) at paras. 49-51;
• the proceeding is a test case: Dickason v. University of Alberta, 1992 30 (SCC), [1992] S.C.J. No. 76 at para. 56;
• the state of the law is uncertain or under development or underdeveloped and it is in the public interest that the question be resolved: Woodhouse v. Woodhouse, 1996 902 (ON CA), [1996] O.J. No. 1975 (C.A.) at para. 57; Guelph (City) v. Wellington-Dufferin-Guelph Health Unit, 2011 ONSC 7523, [2011] O.J. No. 6009 (S.C.J.) at paras. 1, 4, 46;
• the unsuccessful party qualified as a public interest litigant: Incredible Electronics Inc. v. Canada (Attorney General), 2006 17939 (ON SC), [2006] O.J. No. 2155 (S.C.J.);
• the unsuccessful party is a government or public authority or regulator acting in the public interest: College of Optometrists of Ontario v. SHS Optical Ltd., [2003] O.J. No. 3499 (S.C.J.); Re Canada 3000 Inc., 2005 18858 (ON SC), [2004] O.J. No. 1962 (C.A.) at paras. 8-9, 12-13, 15; Guelph (City) v. Wellington-Dufferin-Guelph Health Unit, supra.

[32] Another important factor in awarding costs in class actions is the principle that the court should have regard to the underlying goals of the Class Proceedings Act, 1992; namely: (1) access to justice; (2) behaviour modification; and (3) judicial economy: McNaughton Automotive Ltd. v. Co-operators General Insurance Co., 2007 12709 (ON SCDC), [2007] O.J. No. 1453 (Div. Ct.); KRP Enterprises Inc. v. Haldimand (County), [2008] O.J. No. 3021 (S.C.J.); Ruffolo v. Sun Life Assurance Co. of Canada, 2009 ONCA 274, at para. 37; Smith v. Inco Ltd., 2012 ONSC 5094 at paras. 74-109; Brown v. Canada (Attorney General), 2013 ONCA 18 at para. 37; Green v. Canadian Imperial Bank of Commerce, 2016 ONSC 3829.

[33] Generally speaking, costs awarded against unsuccessful plaintiffs in certification motions have typically been more modest, relative to the actual costs incurred by the successful defendants, reflecting the concern that costs awards not be inconsistent with the objective of access to justice: 2038724 Ontario Ltd. v. Quizno's Canada Restaurant Corp., [2007] O.J. No. 1136 (S.C.J.) at para. 49, leave to appeal ref'd [2007] O.J. No. 2404 (S.C.J.); DeFazio v. Ontario (Ministry of Labour), [2007] O.J. No. 1975 (S.C.J.) at para. 49.

[34] With respect to access to justice, defendants, just as much as plaintiffs, are entitled to access to justice, and the court in exercising its discretion must be aware of the access to justice implications of its award to both plaintiffs and defendants: 2038724 Ontario Limited v. Quizno's Canada Restaurant Corporation, 2010 ONSC 5390 at para. 17, leave to appeal to Div. Ct. denied 2011 ONSC 859 (Div. Ct.); Fresco v. Canadian Imperial Bank of Commerce, 2010 ONSC 1036 at para. 18.

[35] In Pearson v. Inco Ltd., (2006), 2006 7666 (ON CA), 79 O.R. (3d) 427 (C.A.) at para. 13, the Court of Appeal identified the following principles for fixing costs on a certification motion: (1) Ontario, unlike other class proceedings jurisdictions such as British Columbia, has not sought to interfere with the normal rule that costs will ordinarily follow the event; (2) the costs must reflect what is fair and reasonable; (3) the costs should, if possible, reflect costs awards made in closely comparable cases, recognizing that comparisons will rarely provide firm guidance; (4) 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; (5) the costs expectations of the parties can be determined by the amount of costs that an unsuccessful party could reasonably expect to pay; (6) the complexity of the issues; (7) whether the case raises an issue of public importance; and (8) a fundamental object of the Class Proceedings Act, 1992 is to provide enhanced access to justice.

[36] In class actions, distributive costs awards, in which the major issues are identified and the successful party on each issue is awarded costs, are to be avoided: Lau v. Bayview Landmark Inc., [1999] O.J. No. 4385 (S.C.J.) at paras. 2-4; Pearson v. Inco Ltd., supra, at para. 5.

[37] Where a successful plaintiff substantially recasts his or her case for certification, the defendant's liability for costs may be reduced to compensate the defendant for the prejudice it suffered in wasting time responding to a case that was improperly formulated at the certification motion: Keatley Surveying Ltd. v. Teranet Inc., 2014 ONSC 3690; Good v. Toronto Police Services Board, 2016 ONCA 250, leave to appeal to the S.C.C. refused [2016] S.C.C.A. No. 255.

[38] In exercising its discretion with respect to costs in class proceedings, the court may consider such factors as: (a) conduct or poor judgment that unduly prolonged the preparation or argument of the motion for certification; (b) failure to follow the schedule; (c) improper case-splitting; (d) delays in abandoning causes of action and issues that were ultimately dropped; (e) failing to communicate the revised list of common issues; and (f) refusing to acknowledge the significance of submissions and concessions: Lau v. Bayview Landmark Inc., supra, at para. 4; Pollack v. Advanced Medical Optics, Inc., 2012 ONSC 1850; Good v. Toronto Police Services Board, supra.

[39] A class proceeding should not become a means for either defendants or plaintiffs to overspend on legal expenses simply because the economies of scale of a class proceeding makes it worthwhile to enlarge the investment in the defence or prosecution of the case: 2038724 Ontario Ltd. v. Quizno's Canada Restaurant Corp., supra, at para. 19.

[40] In anticipating costs, a defendant should rein in any tendency to commit more resources than are necessary to fairly test and challenge the propriety of certifying the class proceeding: Lavier v. MyTravel Canada Holidays Inc., 2008 44697 (ON SC), [2008] O.J. No. 3377 (S.C.J.) at paras. 31 and 32; Singer v. Schering-Plough Canada Inc., 2010 ONSC 1737, [2010] O.J. No. 1243 (S.C.J.).

[41] A costs award must be fair to the defendants and should reflect their reasonable and effective efforts and concessions to limit the scope of the motion and the defendants should not reasonably be expected to pay for the inefficiencies of the plaintiff: Pollack v. Advanced Medical Optics, Inc., supra.

[42] On a certification motion, an unsuccessful defendant should not be expected to finance the plaintiff's litigation expense in attempting to prove the merits of the case against them at trial; a defendant should not have to pay for legal services tacked on to the certification and leave motion that should more properly be paid for if the plaintiff is successful in the litigation; Labourers' Pension Fund of Central and Eastern Canada (Trustees of) v. Sino-Forest Corp., 2015 ONSC 6354 at para. 138.

[43] In appropriate cases, costs in the cause is a way of taking into account a parties' limited success on a motion, and it leaves it open for the party to be indemnified if he or she ultimately succeeds on the merits. See: 2038724 Ontario Ltd. v. Quizno's Canada Restaurant Corp., supra, at para. 31; Kang v. Sun Life Assurance Company of Canada, 2013 ONSC 4800. In some cases, it may be appropriate to make a hybrid award with some costs payable forthwith and the balance payable in the cause. See 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2011 ONSC 3475.

[44] An important factor in awarding costs in class actions is s. 31 of the Class Proceedings Act, 1992, which provides that:

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.

[45] Under s. 31 of the Act, in class proceedings, the approach to fixing costs is the same as in ordinary actions, but the court should give special weight to whether the class proceeding was a test case, raised a novel point of law, or involved a matter of public interest: Garland v. Consumers' Gas Co. (1995), 1995 7179 (ON SC), 22 O.R. (3d) 767 (Gen. Div.), aff'd (1996), 1996 1022 (ON CA), 30 O.R. (3d) 414 (C.A.); Fehringer v. Sun Media Corp., [2002] O.J. No. 5514 (S.C.J.); Joanisse v. Barker, [2003] O.J. No. 4081 (S.C.J.); Caputo v. Imperial Tobacco Ltd. (2005), 2005 63806 (ON SC), 74 O.R. (3d) 728 (S.C.J.) at para. 32; Sutherland v. Hudson's Bay Co., [2008] O.J. No. 602 (S.C.J.) at para. 11.

[46] Under the Class Proceedings Act, 1992, the effect of s. 31(1) is to encourage the court to recognize that class actions tend toward being test cases, the determination of a novel point of law, or the adjudication of matters of public interest and courts, therefore, should be alert to and respond to these tendencies when making decisions about costs: Ruffolo v. Sun Life Assurance Co. of Canada, 2009 ONCA 274.

[47] In Holley v. Northern Trust Company, 2014 ONSC 3057, I noted that s. 31 is essentially precatory. I stated at paras. 22 and 23:

22. For good or for ill, the Legislature gave very little to plaintiffs in class actions with the enactment of s. 31 of the Class Proceedings Act, 1992. Regardless of the existence of s. 31, when a court exercises 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. Section 31 is essentially precatory and simply reminds the court of a discretion that the court already has when awarding costs. As noted above, this discretion is exercised from time to time, but is not inevitably exercised so as to create an asymmetrical costs regime.

23. There is no doubt that the risk of having to pay costs is a deterrent to plaintiffs (and their lawyers) bringing class actions, but there is no doubt that undertaking that risk brings the potential award of significant costs, which would have been available to Ms. Holley in the case at bar. An adverse costs system is what the Legislature intended; it did not intend a costs regime that removes the risk. And it did not impose a public interest burden on defendants, who are also entitled to access to justice, by imposing an asymmetrical system of costs.

[48] Public interest litigation and whether a matter is of public interest are difficult and uncertain concepts. See Incredible Electronics Inc. v Canada (Attorney General) (2006), 2006 17939 (ON SC), 80 O.R. (3d) 723 (S.C.J.); C. Tollefson, "Costs in Public Interest Litigation Revisited" (2011), 39 Adv. Q. 197; and C. Tollefson, "Costs in Public Interest Litigation: Recent Developments and Future Directions" (2009) 35 Advocates' Q. 181. A matter of public interest is something more than a matter that might interest the public, and it may not be possible for a court to provide a precise and comprehensive definition of the concept: Vennell v. Barnado's (2004), 2004 33357 (ON SC), 73 O.R. (3d) 13 (S.C.J.) at paras. 28-29; McLaine v. London Life Insurance Co., [2008] O.J. No. 2360 (Div. Ct.) at paras. 14-17.

[49] To be a "matter of public interest," the class action must have some specific, special significance for, or interest to, the community at large beyond the members of the proposed class: Williams v. Mutual Life Assurance Co. of Canada, 2001 62796 (ON SC), [2001] O.J. No. 445 (S.C.J.) at paras. 24-26; Gariepy v. Shell Oil Co., [2002] O.J. No. 3495 (S.C.J.); Caputo v. Imperial Tobacco Ltd. (2005), 2005 63806 (ON SC), 74 O.R. (3d) 728 (S.C.J.) at para. 36; Pearson v. Inco Ltd., supra; Smith v. Inco Ltd., supra.

[50] For an issue to be novel in the legally significant way that would justify the court in ordering no costs against the party who unsuccessfully advanced the issue, it is not enough that the issue is unprecedented or that the issue has not been decided before: McCracken v. Canadian National Railway Co., 2012 ONSC 6838. The legally significant novelty of a legal issue is found in the circumstance that the existing case law is inadequate to resolve the issue and there would be no proper reason for the party advancing the issue to expect to fail: Baldwin v. Daubney, 2006 33317 (ON SC), [2006] O.J. No. 3919 (S.C.J.) at paras. 19-22; Fisher v. IG Investment Management Ltd., [2010] O.J. No. 2036 (S.C.J.); Mancinelli v. Royal Bank of Canada, 2017 ONSC 1196; Quality Rugs of Canada Ltd. v. Sedona Development Group (Lorne Park) Inc., 2017 ONSC 1353.

2. Comparable Awards

(a) Awards for Plaintiffs

• In 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2011 ONSC 3475, the plaintiff was awarded $125,000 for a certification motion.
• In Seed v. Ontario, 2012 ONSC 4588, the plaintiffs were awarded $125,542 for a certification motion.
• In Pollack v. Advanced Medical Optics, Inc., supra, the plaintiffs were awarded to award the plaintiffs the costs of the certification motion fixed at $135,000 for a certification motion.
• In Chapman v. Benefit Plan Administrators Ltd., 2014 ONSC 537, the plaintiffs were awarded $175,000 for a certification motion.
• In MacDonald v. BMO Trust Co., 2012 ONSC 2654, the plaintiffs were awarded $221,717 for a certification motion.
• In Peter v. Medtronic Inc., [2008] O.J. No. 1700 (S.C.J.), the plaintiffs were awarded $245,000 for a certification motion.
• In Dine v. Biomet Inc., 2016 ONSC 857, the plaintiffs were awarded $200,000 payable forthwith and a further $65,000 payable to the plaintiff in the cause for a certification motion.
• In Lipson v. Cassels, Brock & Blackwell, 2013 ONSC 6450, the plaintiff was awarded $148,582 payable forthwith and $150,000 payable to the plaintiff in the cause for a certification motion.
• In Hague v. Liberty Mutual Insurance Co., 2005 13782 (ON SC), [2005] O.J. No. 1660 (S.C.J.) and in Parker v. Pfizer Canada Inc., 2012 ONSC 4643, the plaintiffs were respectively awarded $300,000 for a certification motion.
• In Good v. Toronto Police Services Board, supra, the plaintiffs were awarded $315,000 for a certification motion.
• In Toronto Community Housing Corp. v. Thyssenkrupp Elevator (Canada) Ltd., 2011 ONSC 7588, the plaintiff was awarded $434,763 for a certification motion.
• In Dugal v. Manulife Financial Corp., 2013 ONSC 6354, a securities class action, the plaintiffs were awarded $467,234 payable forthwith and a further $100,000 payable to the plaintiffs in the cause for a certification motion.
• In Lambert v. Guidant Corp., 2009 68460 (ON SCDC), [2009] O.J. No. 5264 (Div. Ct.), the plaintiffs were awarded costs of $600,000 following certification of the action as a class proceeding.
• In Andersen v. St. Jude Medical, Inc. (2006), 2006 85158 (ON SCDC), 264 D.L.R. (4th) 557 (Ont. Div. Ct.) the plaintiffs were awarded $610,700 following certification of the action as a class proceeding.
• In Labourers' Pension Fund of Central and Eastern Canada (Trustees of) v. Sino-Forest Corp., 2015 ONSC 6354, the plaintiffs were awarded $673,399 following certification of the action and leave to commence a claim under the Ontario Securities Act, R.S.O. 1990, c. S.5.
• In Cannon v. Funds for Canada Foundation, 2012 ONSC 3009, the plaintiffs were awarded costs of $800,000 following certification of the action as a class proceeding and dismissal of the defendants' summary judgment motions.
• In Green v. Canadian Imperial Bank of Commerce, 2016 ONSC 3829, the plaintiff was awarded $2,679,277 for certification and for leave to commence an action under the Ontario Securities Act, R.S.O. 1990, c. S.5.
• In Trillium Motor World v. General Motors Canada Limited, 2016 ONSC 1725, the plaintiff was awarded $5,478,005 following a 41-day common issues trial.

(b) Awards for Defendants

• In Williams v. Canon Canada Inc., 2012 ONSC 1856, affd. 2012 ONSC 3692 (Div. Ct.), the defendants were awarded $200,000 for a certification motion.
• In Cavanaugh v. Grenville Christian College, 2011 ONSC 4786, together the two defendants were awarded $300,825 for a certification motion.
• In Singer v Schering-Plough Canada Inc., 2010 ONSC 1737, together the two defendants were awarded $400,000 for a certification motion.
• In Fresco v. Canadian Imperial Bank of Commerce, 2010 ONSC 1036, reversed on other grounds, 2012 ONCA 444, the defendants were awarded $525,000 for a certification motion.
• In Martin v. AstraZeneca Pharmaceuticals PLC, 2012 ONSC 4666, affd. 2013 ONSC 1169 (Div. Ct.), the defendants were awarded $655,407 for a certification motion.
• In Fehr v. Sun Life Assurance Company of Canada, 2017 ONSC 2218, the defendants were awarded $1,000,000 for a certification motion.
• In 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2016 ONSC 5496, the defendant was awarded $1,506,883 plus taxes following a common issues summary judgment.
• In Smith v. Inco Ltd., supra, the defendant was awarded $1,766,000 from the date of certification through the trial of common issues.
• In Fairview Donut Inc. v. TDL Group Corp., 2014 ONSC 776, the defendants were awarded $1,850,000 where the action would have satisfied the criterion for certification but where the plaintiffs' claim failed on the defendant's summary judgment motion.
• There are cases where no costs have been awarded to successful defendants in class actions, including: Abdool v. Anaheim Management Ltd., 1993 5430 (ON SC), [1993] O.J. No. 1820 (Gen. Div.); Mahar v. Rogers Cablesystems Ltd. (1995), 1995 7129 (ON SC), 25 O.R. (3d) 690 and [1995] O.J. No. 3711 (Gen. Div.); Elliott v. Canadian Broadcasting Corp., 1995 244 (ON CA), [1995] O.J. No. 1710 (C.A.); Cianna v. York University, [2000] O.J. No. 3482 (C.A.); Moyes v. Fortune Financial Corp., [2002] O.J. No. 1820 (S.C.J.); McNaughton Automobile Ltd. v. Co-operators Insurance Company (2001), 2000 22409 (ON SC), 50 O.R. (3d) 300 (S.C.J.); Williams v. Mutual Life Assurance Co. of Canada, 2001 62796 (ON SC), [2001] O.J. No. 445 (S.C.J.); M.C.C. v. Canada (Attorney General), [2002] O.J. No. 687 (S.C.J.); Joanisse v. Barker, [2003] O.J. No. 4081 (S.C.J.); Caputo v. Imperial Tobacco Ltd., 2005 63806 (ON SC), [2005] O.J. No. 842 (S.C.J.); Ragoonan v. Imperial Tobacco Canada Ltd. (endorsement Justice Cullity, March 10, 2006).
• There are cases where very modest costs have awarded to successful defendants in class actions, including: Taub v. Manufacturers Life Insurance Co. (1998), 1998 14853 (ON SC), 40 O.R. (3d) 379 (Gen. Div.), aff'd (1999), 1999 19922 (ON SC), 42 O.R. (3d) 576 (Div. Ct.); Hollick v. Metropolitan Toronto (Municipality) (1998), 168 D.L.R. (3d) 379 (Ont. Gen. Div.), aff'd (1999), 42 O.R. (3d) 576 (Div. Ct.); Controltech Engineering Inc. v. Ontario Hydro, [1998] O.J. No. 5350 (Gen. Div.); Huras v. Com. Dev. Ltd., [2000] O.J. No. 2124 (S.C.J.).

3. Discussion and Analysis

(a) The Parties' Submissions

[51] The Vesters submit that the most general rule about costs is that the successful party is entitled to its costs and since they were the successful party in a hotly-contested certification motion, they are entitled to their costs on a partial indemnity scale. They say that there is no basis to depart from the general rule. They argue that since representative plaintiffs are subject to adverse costs awards when unsuccessful, they must have some comfort that they will receive favourable costs awards when successful. Further, the Vesters submit that the costs awarded should be substantial to reflect the extraordinarily high risk of this class action, which raised similar issues to O'Brien v. Bard, 2015 ONCA 2470, where the class action was not certified. The Vesters note that there was a voluminous certification record and the case was medically and scientifically complex and procedurally unique given the adjournment and they submit that the high costs of the battle of the experts would have been anticipated and expected by Boston Scientific. The Vesters submit that notwithstanding the complexity of the action, Class Counsel was efficient and economical and, for example, decided not to further cross-examine Boston Scientific's experts for the resumed hearing. The Vesters say that in contrast, Boston Scientific vigorously and excessively challenged each of the certification criterion and needlessly challenged Mrs. Vester's qualifications to be a Representative Plaintiff. The Vesters submit that there was no divided success and they were ultimately successful on all of the certification criterion and that no issues will be re-litigated at the common issues trial and so costs should be payable forthwith.

[52] Treating the adjournment of the first phase of the certification motion as, practically speaking, a dismissal of the first phase with a second chance for the Plaintiffs, Boston Scientific submits that since success was divided on the two certification motions there should be no award of costs. Boston Scientific says that its partial indemnity costs for the first certification motion are higher than those incurred by the Plaintiffs in respect of the second certification motion, on which Boston Scientific contends that the Plaintiffs achieved only partial success. In the alternative, Boston Scientific submits that any costs award should be determined in the cause.

[53] Further, Boston Scientific submits that the Plaintiffs' request for reimbursement of $307,517.72 with respect to Dr. Blume's expert fees is excessive. Boston Scientific submitted that this amount was greater than their combined expert fees for all five expert reports and cannot be justified in light of the fact that the Court concluded her evidence was not helpful. Further, it submits that the Plaintiffs should not recover expert fees related to Dr. Pommerville's evidence, as it did not contribute in any way to the result of the second certification motion and was essentially identical to a report he authored previously in other transvaginal mesh litigation.

[54] Finally, Boston Scientific claims costs for a motion brought by the Plaintiffs before the first certification motion. In that motion, the Plaintiffs sought to strike out all or part of the affidavits of Dr. Green, Dr. Badylak, and Daniel Krause. The motion did not proceed, and the parties agreed to reserve the issue of costs of the abandoned motion pending the outcome of the first certification motion, following which the parties agreed to reserve all costs issues until the outcome of the adjournment. Boston Scientific claims costs of $61,043.26 for the motion that did not proceed.

(b) Analysis

[55] In my opinion, the Vesters were the successful party on the certification motion that proceeded in two phases, and as the successful party, they are entitled to costs on a partial indemnity basis. There is no basis or reason to conclude that there was divided success or that there should be the judicially frowned upon distributive costs award. However, it does not follow that the Vesters should be awarded $900,000, all inclusive, on a partial indemnity basis. Several major principles in the exercise of the court's discretion lead me to the conclusion that the appropriate award is $425,000 ($450,000 less $25,000 for the abandoned motion) payable forthwith and $450,000 payable to the Plaintiffs in any event of the cause.

[56] The major principles that I rely on are: (a) the purposes of modern costs rules; (b) the principle that the sum awarded reflect the fair and reasonable expectations of the unsuccessful litigant; (c) the principle that assessment of reasonableness is discretionary and very much dependent upon the circumstances of each case; (d) the traditional discretionary factors as codified in rule 57.01; (e) the principle that in exercising its discretion with respect to costs in the context of a class proceeding, the court should have regard to the underlying goals of the Class Proceedings Act, 1992; (f) the principle that the court in exercising its discretion must be aware of the access to justice implications of its award to both plaintiffs and defendants; (g) the principle that where a successful plaintiff substantially recasts his or her case for certification, the defendant's liability for costs may be reduced to compensate the defendant for the prejudice it suffered in wasting time responding to a case that was improperly formulated at the certification motion: (h) the principle that in exercising its discretion with respect to costs in class proceedings, the court may consider poor judgment that unduly prolonged the preparation or argument of the motion for certification; (i) the principle that on a certification motion, an unsuccessful defendant should not be expected to finance the plaintiff's litigation expense in attempting to prove the merits of the case against them at trial; (j) the principle that a defendant should not have to pay for legal services tacked on to the certification and leave motion that should more properly be paid for if the plaintiff is successful in the litigation; and (k) the principle that costs should, if possible, reflect costs awards made in closely comparable cases, recognizing that comparisons will rarely provide firm guidance.

[57] When I adjourned the certification motion to permit the Vesters to obtain further evidence, they were not being granted an indulgence. However, it was not a given that they would find the scientific evidence and return to court to show some-basis-in-fact for a class proceeding. It was conceivable that they might never return save to request a discontinuance or that if they returned that they would still have a battle on their hands to prove commonality.

[58] The first phase of the certification motion gave the Vesters an education of what they needed to demonstrate not only for certification but also on the merits of their claim and in my opinion it is not reasonable and fair to require the defendant to pay for the plaintiff's education unless it turns out that the defendant is culpable, which in the immediate case remains to be determined.

[59] In the immediate case, it was highly foreseeable that showing some-basis-in-fact for commonality was going to be a very serious challenge for the Vesters and while Class Counsel ultimately met the challenge, it was necessary for them to substantially recast or substantiate the Vesters' case from the formulation of scientific and other evidence that proved inadequate for the first phase of the certification motion.

[60] In these circumstances, in my opinion, the fair and reasonable award in the immediate case is to award the Vesters the costs of $900,000 that they seek but to order half of the costs paid forthwith and to order the other half payable to them in any event of the cause.

D. Conclusions

[61] For the above reasons, I award the Plaintiffs $425,000 payable forthwith and $450,000 payable to the Plaintiffs in any event of the cause.

Released: April 24, 2017 Perell, J.