CITATION: Das v. George Weston Limited, 2017 ONSC 5583

COURT FILE NO.: CV-15-526628CP

DATE: 20170920

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ARATI RANI DAS, REHANA KHATUN, MOHAMED ALAUDDIN, and KASHEM ALI

Plaintiffs

– and –

GEORGE WESTON LIMITED, LOBLAWS COMPANIES LIMITED, LOBLAWS INC., JOE FRESH APPAREL CANADA INC., BUREAU VERITAS – REGISTRE INTERNATIONAL DE CLASSIFICATION DE NAVIRES ET D’AERONEFS SA, BUREAU VERITAS CONSUMER PRODUCT SERVICES, INC. and BUREAU VERITAS CONSUMER PRODUCTS SERVICES (BD) LTD.

Defendants

Joel P. Rochon, for the Plaintiffs

Paul J. Pape and Shantona Chaudhury, for the Law Foundation of Ontario

Christopher D. Bredt, Markus Kremer, and Alannah Fotheringham, for the Defendants George Weston Limited, Loblaws Companies Limited, Loblaws Inc., Joe Fresh Apparel Canada Inc.

Michael A. Eizenga, Ranjan K. Agarwal, and Gannon G. Beaulne, for the Defendants Bureau Veritas – Registre International de Classification de Navires et d’Aeronefs SA, Bureau Veritas Consumer Product Services Inc. and Bureau Veritas Consumer Products Services (BD) Ltd.

Proceeding under the Class Proceedings Act, 1992

HEARD: In writing

PERELL, J.

REASONS FOR DECISION - COSTS

A. Introduction and Overview

[1] This is my costs decision following my decision in Das v. George Weston Limited, 2017 ONSC 4129, in which I dismissed the Plaintiffs’ proposed class action under the Class Proceedings Act, 1992, S.O. 1992, c. 6. The Loblaws Defendants seek costs of $1,350,000. The Bureau Veritas Defendants seek costs of $985,601.60.

[2] The Plaintiffs received financial support from the Law Foundation of Ontario’s Class Proceedings Fund. The Fund is financially responsible for costs awards against the Plaintiffs pursuant to s. 59.4 of the Law Society Act, R.S.O. 1990, c. L.8.

[3] The Fund submits that there should be no order as to costs because the action was brought in the public interest and because the action raised many novel issues and its outcome was impossible to predict. It submits that the magnitude of the public interest in this action and its significant degree of novelty, seen through the lens of behavioural modification and access to justice, lead inexorably to the conclusion that this is a case where no costs should be awarded to the Defendants, despite their success in having the proposed class action dismissed.

[4] For the reasons that follow, I grant the costs as requested by the Defendants.

B. Factual and Procedural Background and the Submissions of the Parties and the Class Proceedings Fund

[5] The factual background to the Plaintiffs’ action is set out in my Reasons for Decision, and I incorporate those facts by reference and for present purposes, I repeat or add the following factual and procedural background and the submissions of the parties and of the Class Proceedings Fund.

[6] Joe Fresh Apparel Canada Inc., a subsidiary of Loblaws, purchased clothes from a manufacturer whose factory was in the Rana Plaza, a building in Bangladesh. On April 24, 2013, the Rana Plaza collapsed. 1,130 people died, and 2,520 people were seriously injured. It was the most serious industrial accident in world history.

[7] On April 22, 2015, just before the second anniversary of the tragedy, four citizens of Bangladesh commenced a proposed class action in Ontario against Loblaws. The Plaintiffs are Mohamed Alauddin, Arati Rani Das, and Rehana Khatun, who were among the injured garment workers, and Kashem Ali, whose two sons and a daughter-in-law were garment workers that died in the collapse.

[8] After the Rana Plaza tragedy, approximately $40 million dollars was raised to provide compensation for the victims, including a $3.5 million contribution from Loblaws. In addition, Loblaws paid three months’ salary to employees of New Wave Style and contributed $1 million to Save the Children Bangladesh and the Centre for Rehabilitation of the Paralyzed.

[9] The Plaintiffs brought a proposed class action for $2 billion. The action was brought against George Weston Limited, Loblaws Companies Limited, Loblaws Inc., and Joe Fresh Apparel Canada Inc. (collectively, “Loblaws”). It is also against Bureau Veritas - Registre International de Classification de Navires et d’Aeronefs SA, Bureau Veritas Consumer Product Services Inc., and Bureau Veritas Consumer Products Services (BD) Ltd. (collectively “Bureau Veritas”). Bureau Veritas is a consulting services enterprise that Loblaws had retained to conduct what is known as a social audit of factories in Bangladesh, including one of the factories in Rana Plaza.

[10] At the time of the collapse, of the 3,650 dead or seriously injured, 1,167 people were employed by New Wave Style in the Rana Plaza. The balance of the injured and dead were the 452 employees at New Wave Bottoms, whose premises were not audited by Bureau Veritas, the 1,142 employees of other garment businesses operating out of Rana Plaza, with whom the Defendants had no relationship, and 439 persons who unfortunately just happened to be in or around the building at the time of the collapse. The Plaintiffs brought their action based on the disputable assumption that all of the putative Class Members were owed a duty of care.

[11] The Statement of Claim was amended five times. The claims challenged the morality of the Defendants.

[12] Bureau Veritas submits that if the action had been successful, they would have been ruined. Loblaws submitted that as a public corporation, it was confronted with a blistering attack on its reputation and its integrity that would cause it substantial damage.

[13] The Plaintiffs say that they brought their action in the public interest. As part of their certification motion and as an aspect of the their costs submissions, the Plaintiffs submit that the collapse of Rana Plaza was a tragedy of epic proportions and global scope that impacted not only the Bangladeshi corporations and workers directly affected but also companies and consumers worldwide, including Canada, whose citizens were confronted with their own responsibility in how Canadian corporations carry on business in other lands.

[14] The Plaintiffs’ Statement of Claim alleged that one of the largest retailers in Canada and its auditors turned a blind eye to the risks of serious bodily harm and death faced by Bangladeshi workers at Rana Plaza; a building the Defendants ought to have known was unsafe in the extreme. The Statement of Claim alleged that Canadian corporations contributed to human rights violations and a human tragedy in a country where such violations are routinely tolerated and where historically disadvantaged members of the global community are exploited by Western corporations in the pursuit of cheap labour and higher profits.

[15] The Plaintiffs submit in their costs submissions that the goal of the action was to provide access to justice to vulnerable victims and to modify Canadian corporate behaviour that contributes to unspeakable human tragedy.

[16] The Plaintiffs submit that their claim was novel and its outcome impossible to predict. They described their case as the first to ask whether a Canadian retailer owes a duty of care in negligence to the employees of its foreign suppliers and sub-suppliers and as the first negligence case in the common law world where a corporate defendant did not merely reserve, but also exercised, its right to conduct audits and inspections of its suppliers and sub-suppliers’ factories.

[17] The Plaintiffs strenuously dispute the Defendants’ submission that the case was not in the public interest. In their written costs submissions, the Plaintiffs state:

55. Simply put, the corporate social responsibility of Canadian corporations, both within Canada and outside it, is itself a matter of public interest. Canadians have an interest in the protection of human rights, not just in Canada but everywhere that is affected by Canadian conduct. It may be, as this Court ultimately concluded, that Canadian corporations have no legal liability to the people killed and injured in the Rana Plaza catastrophe. But to suggest, as the Defendants have, that there is no ‘Canadian’ public interest in this case because those whose rights were violated, who were exploited and exposed to intolerable risk, and who were ultimately killed or injured were not themselves Canadian, is simply wrong.

[18] The Statement of Claim was polemic and aggressively attacked the integrity of Loblaws and Bureau Veritas. For example, the following excerpts from the Statement of Claim are just a small part of the blistering attack that was made against Loblaws:

13. ... The failure of Loblaws to ensure appropriate audits and inspections, and monitoring of the structural safety of Rana Plaza where its products were being manufactured prior to April 2013, is reflective of Loblaws’ neglect in the implementation of its Corporate Social Responsibility Standards, or alternatively the result of an internal decision by Loblaws made in Ontario, to avoid conducting a proper, or any, structural audit of the New Wave factories at Rana Plaza and by failing to collect information about hazardous conditions at the work site that the company would have been obliged to address and correct.

14. ... The failure of Loblaws to conduct, or have conducted on its behalf, structural safety audits and inspections of the Rana Plaza building was negligent on behalf of Loblaws and demonstrated sheer incompetence, and as part of a corporate policy to present a comforting picture of workplace safety with all of its suppliers which was deliberately incomplete, misleading and inaccurate. The limited, inadequate and negligent audit and inspection which was performed by Bureau Veritas in the circumstances of Rana Plaza and which failed to inspect, monitor and audit for building structural safely amounted to nothing more than a “white wash”.

15. The Defendants have acted with a wanton disregard for, and a deliberate, wilful, callous and reckless disregard for the lives, well-being and safety of the Plaintiffs, the Surviving Class Members and the Wrongful Death and Family Class Members, entitling them to punitive, exemplary and aggravated damages. The Plaintiffs further state that the Defendants endangered Class Members’ lives and safety for commercial reasons and monetary gain.

[19] The Plaintiffs brought a motion for certification and the Defendants brought motions to have the proposed class action dismissed. The Defendants’ motions included: (a) a jurisdictional motion with respect to the court’s jurisdiction over claims brought by foreign plaintiffs with respect to injuries they suffered in their home country against domestic defendants who allegedly perpetrated wrongdoing by their domestic conduct; (b) a Rule 21 motion that had several branches focusing on the legal viability of the Plaintiffs’ claims; and (c) a pleadings motion with respect to whether the Plaintiffs’ Statement of Claim complied with the rules of pleading.

[20] On March 31, 2017, hard upon a pending interlocutory motion on the run-up to the certification motion and the Defendants’ motions, the Defendants offered that all the motions should be determined on a no costs basis.

[21] The Plaintiffs rejected the no costs offer, but the Fund submits that by making the offer, the Defendants must be taken to have conceded that the motions were in the public interest and novel.

[22] Moreover, the Plaintiffs submit that the fact that the offer was made, reveals that the Defendants were uncertain that the Plaintiffs’ claims were doomed to failure and the Defendants were just attempting to ameliorate their own exposure to costs.

[23] The Plaintiffs and the Fund submit that had the Defendants been serious about litigating this action on a without costs basis, they would and should have made this offer at the outset of the litigation, which they did not do, with the result that the Plaintiffs were compelled to seek funding and indemnification from the Class Proceedings Fund.

[24] The Plaintiffs submit that by the time the Defendants’ no costs offer was made, it was too late to accept an offer to proceed on a no costs basis. At this juncture had the Plaintiffs been successful, they would have been able to use any costs obtained in furtherance of the litigation. Given that costs belong to the parties, Class Counsel submit that they would have been hard-pressed to recommend acceptance of the Defendants’ “no costs” offer to their clients.

[25] In its original notice of motion, Loblaws sought a declaration that this court does not have jurisdiction over the putative Class Members because they were “Absent Foreign Claimants;” i.e., persons who: (a) are resident outside of Ontario; and (b) have not formally submitted or consented to the jurisdiction of the Ontario court.

[26] In its initial iteration of a jurisdictional motion, Loblaws submitted that a unilateral consent process that had been initiated in Bangladesh by the Plaintiffs’ lawyers, who went there to collect signed consents from putative Class Members, did not count as a proper attornment, and Loblaws sought a declaration that the common law’s real and substantial connection test and ss. 27(3), 28(1) and 29(3) of the Class Proceedings Act, 1992 are constitutionally inapplicable to Absent Foreign Claimants.

[27] The constitutional aspects of the motion prompted the Government of Ontario (the Attorney General of Ontario) to intervene pursuant to s. 109(4) of the Courts of Justice Act, R.S.O. 1990, c. 43. However, developments after the motion was launched; i.e., the Plaintiffs’ decision to treat the action as an opt-in as opposed to the conventional opt-out class action, made the constitutional point about Absent Foreign Claimants moot, and the only matter to decide was the manner of how and when the putative Class Members may attorn to this court’s jurisdiction. Despite the mootness of the constitutional law issues, they were fully argued at the hearing of the motions. I ultimately dismissed the constitutional law part of the motion, but the Crown makes no claim for costs.

[28] The motions were argued over nine days. The parties filed 73 volumes of evidence and compendiums. There were 21 witnesses who swore 34 affidavits, 22 of which were sworn by the expert witness.

[29] It is no overstatement to say that the issues were extraordinarily complex.

[30] My major conclusions were that the Ontario court had jurisdiction simpliciter. It was not necessary to decide whether the putative Class Members who signed consent forms had attorned to this court’s jurisdiction; they would attorn by opting-in to the action. The law of Bangladesh applied. Under the law of Bangladesh, with an exception for putative Class Members who were born on or after April 22, 1996 (hence minors at the time of the collapse of Rana Plaza), the tort claims were statute-barred under the Bangladesh Limitation Act, 1908. Under either the law of Bangladesh or under the law of Ontario, it was plain and obvious that the putative Class Members had no legally viable tort claims or breach of fiduciary duty claims against either Defendant. Since there were no legally viable claims, the Plaintiffs’ action could not be certified as a class action. But for the absence of a viable cause of action, with qualifications or adjustments, the proposed class action satisfied the criteria for certification.

[31] Had the class action been certified, then certain paragraphs in the Statement of Claim would have been struck out. I did not decide the issue of whether the class definition was overbroad, and rather I said that should an appellate court reverse my decision and conclude that there was a duty of care, then the class definition may have to be refined to accord with the scope of the duty of care.

[32] The Defendants vigorously assert that the Plaintiffs’ claims were not novel in the requisite sense that would justify no order as to costs. The Plaintiffs just as vigorously assert that the novelty of the claims was acknowledged by both the Defendants and the court in my Reasons for Decision.

[33] The Plaintiffs point out the acknowledgement of the experts on both sides that the tort claim was unpreceded. Further, the Plaintiffs point out the novelty on the issue of choice of law and in their written costs submissions they state:

64. Additionally, contrary to the Defendants’ submissions, Ontario’s choice of law rules did not point “inexorably towards the application of Bangladesh law”. The lex loci delicti (place of activity) test established in Tolofson v. Jensen has never been applied in the context of a transnational tort where corporate conduct that is alleged to have taken place primarily in Ontario resulted in harm to workers in a developing country.

65. Similarly, Bangladeshi law of limitations was not simply “set out in a statute”, as submitted by Bureau Veritas. Had the applicable limitation period been clear, there would be no need for the Defendants to file affidavits by four Bangladeshi law experts. Indeed, this Court acknowledged the uncertain state of the law regarding the applicable limitation period:

What the Appellate Division did in disposing of the leave to appeal motion was a matter of much controversy. Some things are clear. The Appellate Division outlined the factual and judicial history of the case and commented about the decisions of the District Court and of the High Court Division. Then, the significance and effect of the Appellate Division’s comments and operative directions becomes unclear and is much debated.

[34] The Plaintiffs submit that in any event: (a) the Defendants should not be entitled to costs of the jurisdiction motion, which was dismissed in its entirety; any costs awarded to the Defendants should be reduced to reflect this; and, (b) the Defendants should not receive costs for the certification motion, which failed only on the cause of action criterion; an issue that overlaps with the Defendants' Rule 21 motions.

[35] The Plaintiffs and the Law Foundation request an order that the Defendants bear their own costs of this proceeding, or at a minimum that the costs be substantially reduced to reflect the significant public interest in and novelty of the case.

C. Costs and Class Proceedings

1. Costs and Class Proceedings - General Principles

[36] 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; 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.).

[37] 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. Notwithstanding the recommendations of the Ontario Law Reform Commission in its report about costs in class proceedings, normally costs are awarded in class actions, particularly at the certification stage of a proposed class action.

[38] 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 objective of the Class Proceedings Act, 1992 is to provide enhanced access to justice.

[39] 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., [1999] O.J. No. 4385 (S.C.J.) at para. 4; Pollack v. Advanced Medical Optics, Inc., 2012 ONSC 1850; 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.

[40] 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.

[41] 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.

[42] 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.

[43] 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: Fresco v. Canadian Imperial Bank of Commerce, 2010 ONSC 1036 at para. 18; 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.).

[44] 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.

[45] Costs in the cause is a way of taking into account a party’s 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.

[46] 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. 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.).

[47] 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.

[48] 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.

[49] If a plaintiff's claim is not certified or fails on its merits but is novel, a test case, or a matter of public interest, it does not automatically follow that the defendant should receive no costs from the plaintiff: Garland v. Consumers' Gas Co., supra; DeFazio v. Ontario (Ministry of Labour), [2007] O.J. No. 1975 (S.C.J.).

[50] 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.

2. The Role of the Class Proceedings Fund

[51] A plaintiff's exposure to costs may be assumed by the Law Foundation of Ontario pursuant to the Law Society Amendment Act (Class Proceedings Funding), 1992, S.O. 1992, c. 7, which was enacted contemporaneously with the Class Proceedings Act, 1992. See also O. Reg. 771/92. The Legislature established the Class Proceedings Fund with the broad purpose of increasing access to justice: Garland v. Consumers’ Gas, supra; Martin v. Barrett, [2008] O.J. No. 3813 (S.C.J.) at paras. 6-8.

[52] A plaintiff may apply to the Class Proceedings Fund for support. In determining whether to provide support and thus shield the representative plaintiff from costs and expose itself to a corresponding liability, the Class Proceedings Committee of the Law Foundation is directed by the Law Society Act and the related regulations to have regard to: (a) the merits of the plaintiff's case; (b) whether the plaintiff has made reasonable efforts to raise funds from other sources; (c) whether the plaintiff has a clear and reasonable proposal for the use any funds awarded; (d) whether the plaintiff has appropriate financial controls to ensure that any funds awarded are spent for the purposes of the award; (e) any other matter that the Committee considers relevant; (f) the extent to which the issues in the proceeding affect the public interest; (g) the likelihood that the proceeding will be certified; and (h) the available money in the fund. See: Law Society Act, ss. 59.2-59.3; Ont. Reg. 772/92, s. 5.

[53] If the Fund accepts the application, it will pay for disbursements, excluding the plaintiff's legal fees, and, the Fund will indemnify the plaintiff for the costs he or she must pay the defendant if ordered to do so in the class proceeding. Sections 59.4(1) and (3) of the Law Society Act provide:

59.4 (1) A defendant to a proceeding may apply to the board for payment from the Class Proceedings Fund in respect of a costs award made in the proceeding in the defendant's favour against a plaintiff who has received financial support from the Class Proceedings Fund in respect of the proceeding ....

(3) A defendant who has the right to apply for payment from the Class Proceedings Fund in respect of a costs award against a plaintiff may not recover any part of the award from the plaintiff.

[54] The Fund’s assistance, however, has a price. A successful plaintiff must reimburse the fund for the disbursements and pay 10% to the Fund from any settlement or judgment proceeds.

[55] The case law establishes that while the Fund is entitled to make submissions with respect to costs, the issues of entitlement, scale, and quantum of costs must be determined without reference to whether the Fund provided support to the applicant for certification: Garland v. Consumers' Gas Co., supra; McNaughton Automotive Ltd. v. Co-operators General Insurance Co., 2007 12709 (ON SCDC), [2007] O.J. No. 1453 (Div. Ct.) at para. 8.

[56] In Garland v. Consumers' Gas Co., supra, Justice Winkler, as he then was, stated at paras. 15 and 16:

15. In particular, counsel for the Law Foundation argued that the court should consider the Fund's limited financial resources in arriving at its determination. It was stressed that it is appropriate for the court to consider the central purpose underlying the new class proceedings regime, specifically, access to justice. The Fund advances this objective by providing funding for class action lawsuits. Thus, it is argued, several adverse costs awards could seriously deplete the Fund thereby precluding future applicants from obtaining funding and, by extension, access to justice. Counsel concluded that it was, therefore, appropriate for the court to consider the impact of a costs award on the Fund.

16. In my view, the impact of a costs award on the Class Proceedings Fund is not an appropriate consideration for the court in determining whether to award costs to a worthy party in an appropriate case. Rather, the impact of such an award should be taken into consideration by the Class Proceedings Committee in deciding whether to grant funding to a particular plaintiff. ….

[57] The case law establishes that where the Law Foundation is liable to pay costs to the defendant, the possible adverse effect on the viability of the Fund is not a ground to deny costs to the defendant but rather is a matter for the Fund to consider when it determines whether to provide funding to the plaintiff: Garland v. Consumers' Gas Co., supra; Edwards v. Law Society of Upper Canada (No. 2) (2000), 48 O.R. (3d) 329 (C.A.) at para. 52.

[58] While the Class Proceedings Fund can anticipate that its risk of absorbing an adverse costs award will not arise if the class action is public interest litigation or novel in the requisite sense to justify a no costs award, the involvement of the Class Proceedings Fund is not meant to insulate the plaintiff from a possible adverse costs award, and the fund must assess the risks of an unsuccessful claim against the possible awards of sharing 10% of the plaintiff’s recovery: David Polowin Real Estate Ltd. v. Dominion of Canada General Insurance Co. (2008), 2008 ONCA 703, 93 O.R. (3d) 257 (C.A.) at para. 29; Singer v. Schering-Plough Canada Inc., 2010 ONSC 1737, [2010] O.J. No. 1243 (S.C.J.). at para. 20; McCracken v. Canadian National Railway Company, 2012 ONCA 797 at para. 11.

[59] In Edwards v. Law Society of Upper Canada (1998), 38 C.P.C. (4th) 136 (Ont. S.C.J.), Justice Sharpe remarked that any reluctance to make a high costs award against an individual bringing an action on behalf of others or for the aim of behaviour modification should also apply to the Fund; he stated at para. 14:

14. I would be reluctant to award costs against an individual having a modest personal stake who brings a proceeding, either for the benefit or a much larger group which has been similarly wronged and would otherwise receive no remedy, or where the proceeding has been launched in order to achieve behaviour modification of a wrongdoer. It seems to me that if the Fund supported such a claim, there should be a similar reluctance to award costs against the Fund.

3. Costs in Proceedings – General Principles

[60] The court's discretion in awarding costs arises under the authority of s. 31(1) 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.

[61] 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.

[62] 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.

[63] 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; Lee v. General Motors Co. of Canada, [2004] O.J. No. 2245 (S.C.J.); Caputo v. Imperial Tobacco Ltd. (2005), 2005 63806 (ON SC), 74 O.R. (3d) 728 (S.C.J.) at paras. 23-25; McGee v. London Life Insurance Co., [2008] O.J. No. 5312 (S.C.J.) at paras. 5-8.

[64] In Boucher v. Public Accountants Council 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.

[65] 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.

[66] 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."

[67] 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.

[68] 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.

[69] In the assessment of costs, there is a debate about whether the Costs Grid is an anachronism in the exercise of the court’s discretion as to costs. See: Inter-Leasing Inc. v. Ontario (Revenue), 2014 ONCA 683; Fairfield Sentry Limited v. PricewaterhouseCoopers LLP, 2015 ONSC 4961, Mask v. Silvercorp Inc., 2015 ONSC 7780; Pennyfeather v. Timminco Ltd., 2016 ONSC 4706. I regard the Costs Grid as something simply to consider when exercising the court’s discretion as to costs.

[70] Claims for disbursements, including expert’s reports, must be reviewed with careful scrutiny, and the principle that cost awards must be fair and reasonable applies to disbursements, including expert fees: Hamfler v. 1682787 Ontario Inc., 2011 ONSC 3331; Bombardier Inc. v. AS Estonian Air, 2013 ONSC 4209; Batchelor v. Looney, 2016 ONSC 1535; Mayer v. 1474479 Ontario Inc., 2014 ONSC 2622; 495793 Ontario Ltd. (c.o.b. Central Auto Parts) v. Barclay, 2015 ONSC 602.

[71] The same approach for the determination of costs 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.), Justice Nordheimer stated at para. 20:

[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.

[72] In order to assist the court in determining whether an expert’s fee is fair and reasonable, the party claiming the disbursement should provide information about the amount of time spent by the expert in preparing the report and attending at trial (including preparation time), together with the hourly rate of the expert: Hamfler v. 1682787 Ontario Inc. 2011 ONSC 3331 at paras. 24-25; 495793 Ontario Ltd. (c.o.b. Central Auto Parts) v. Barclay, 2015 ONSC 602 at para. 28; Abdula v. Canadian Solar Inc., 2015 ONSC 1421 at para. 13; Ryan v. Rayner, 2015 ONSC 3310 at para. 11; Parent v. Janandee Management Inc., 2016 ONSC 3899 at para. 28; Pyatt v. Roessle Estate, 2017 ONSC 3878 at paras. 21-22.

[73] In Hamfler v. 1682787 Ontario Inc., supra, Justice Edwards developed the following non-exhaustive criteria to assist courts in determining whether an expert’s fee is fair and reasonable or whether it is excessive: (1) Was the expert’s evidence relevant and did it make a contribution to the case? (2) Was the expert’s evidence of marginal value or was it crucial to the ultimate outcome at trial? (3) Was the cost of the expert or experts disproportionate to the economic value of the issue at risk? (4) Was the evidence of the expert duplicated by other experts called by the same party? (5) Was the report of the expert overkill or did it provide the court with the necessary tools to properly conduct its assessment of a material issue? and (6) How did the expert’s fee compare to the fees charged by the expert retained by his or her opponent?

4. Costs on a Substantial Indemnity Scale

[74] Subject to the costs consequences provisions of the offer to settle rule, only in exceptional cases are costs awarded on a substantial indemnity scale: Foulis v. Robinson (1978), 1978 1307 (ON CA), 21 O.R. (2d) 769 (C.A.). Costs on a substantial indemnity scale or full indemnity scale are reserved for rare and exceptional cases, where the conduct of the party against whom costs is ordered is reprehensible or where there are other special circumstances that justify costs on the higher scale: McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 2002 41899 (ON CA), 59 O.R. (3d) 97 (C.A.); Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.); St. Elizabeth Home Society v. Hamilton (City), 2010 ONCA 280, supp. reasons 2010 ONCA 479.

[75] Among other circumstances, costs may be awarded on a substantial indemnity basis where there is reprehensible conduct by a party either in the circumstances giving rise to the claim or during the course of the proceedings: Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3; Mortimer v. Cameron (1994), 1994 10998 (ON CA), 17 O.R. (3d) 1 (C.A.); Prinzo v. Baycrest Centre for Geriatric Care (2002), 2002 45005 (ON CA), 60 O.R. (3d) 474 (C.A.).

[76] Costs may be awarded on a substantial indemnity basis where a party pleads but fails to prove that his or her opponent perpetrated a fraud or committed a criminal act or engaged in other dishonest or reprehensible conduct or makes unfounded allegations that impugn the integrity or good reputation of his or her foes: Toronto-Dominion Bank v. Leigh Instruments Ltd. (Trustee of) (1999), 1999 3778 (ON CA), 45 O.R. (3d) 417 (C.A.), leave to appeal refused 188 D.L.R. (4th) vi (S.C.C.); Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303.

[77] In McNaughton Automotive Limited v. Co-operators General Insurance Company, 2005 1058 (ON SC), [2005] O.J. No. 179 (S.C.J.), leave to appeal ref’d, 2008 ONCA 597, where the plaintiff alleged that the defendant insurer had been intentionally dishonest, following Hamilton v. Open Window Bakery, supra, at para. 26, the Court of Appeal held that unproven allegations of dishonesty, as well as fraud, are capable of attracting substantial indemnity costs. See also Lewis v. Cantertrot Investments Limited, 2010 ONSC 5679.

5. Discretion to Reduce Costs or to Make No Order as to Costs

[78] 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.

[79] The court has the discretion to reduce the amount of costs or to order that there be no order as to costs when the proceeding is a test case: Dickason v. University of Alberta, 1992 30 (SCC), [1992] S.C.J. No. 76 at para. 56. A test case is a case selected to resolve a legal issue that would resolve other sometimes numerous pending or anticipated cases: Kerr v. Danier Leather Inc., [2007] 2 S.C.R. 331 at para. 65.

[80] A test case is a case advanced to determine a principle of law, and is not a mere application of law to a given fact situation: Caputo v. Imperial Tobacco Ltd. (2005), 2005 63806 (ON SC), 74 O.R. (3d) 728 (S.C.J.) at para. 33. A test case is a proceeding brought to ascertain a legal principle that would govern a number of similar actions pending or contemplated: Edwards v. Law Society of Upper Canada, [1998] O.J. No. 6192 (Gen. Div.) at para. 11; Williams v. Mutual Life Assurance Co. of Canada, 2001 62796 (ON SC), [2001] O.J. No. 445 (S.C.J.) at paras. 19-21; Price v. Panasonic Canada Inc., [2002] O.J. No. 5437 (S.C.J.) at para. 10; Vennell v. Barnado's (2004), 2004 33357 (ON SC), 73 O.R. (3d) 13 (S.C.J.) at para. 25.

[81] The court has the discretion to reduce the amount of costs or to order that there be no order as to costs when the proceeding raises novel issues, particularly where the resolution of this issue is in the public interest: Valpy v. Ontario (Commission on Election Finances), 1989 4330 (ON SC), [1989] O.J. No. 66 (Div. Ct.); Mahar v. Rogers Cablesystems Ltd., [1995] O.J. No. 3711 (Gen. Div.); C.U.P.E. Local 43 v. Metropolitan Toronto (Municipality) (1988), 1988 4692 (ON SC), 65 O.R. (2d) 47 (Div. Ct.); McNaughton Automotive Ltd v. Co-operators General Insurance Co. (2000), 2000 22409 (ON SC), 50 OR. (3d) 300 (S.C.J.); Gombu v. Ontario (Assistant Information and Privacy Commissioner), [2002] O.J. No. 2570 (Div. Ct.); 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.); Sutcliffe v. Ontario (Minister of the Environment), 2004 34994 (ON CA), [2004] O.J. No. 4494 (C.A.); Dam Investments Inc. v. Ontario (Minister of Finance), 2007 ONCA 527, [2007] O.J. No. 2674 (C.A.); 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.); Kelly v. Ontario, [2014] O.J. No. 3373 (S.C.J.); Fischer v. IG Investment Management Ltd., [2010] O.J. No. 2036 (S.C.J.) and 2014 ONSC 6260 (Div. Ct.).

[82] The court has the discretion to reduce the amount of costs or to order that there be no order as to costs when 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.

[83] The court has the discretion to reduce the amount of costs or to order that there be no order as to costs when 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.).

[84] To be a "matter of public interest," the action must have some specific, special significance for, or interest to, the community at large beyond the interests of the parties to the litigation: 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.); Moyes v. Fortune Financial Corp., [2002] O.J. No. 4298 (S.C.J.) at para. 6; 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. (2006), 2006 7666 (ON CA), 79 O.R. (3d) 427 (C.A.); Smith v. Inco Ltd., 2012 ONSC 5094.

[85] The court has the discretion to reduce the amount of costs or to order that there be no order as to costs when 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., supra, at paras. 8-9, 12-13, 15; Guelph (City) v. Wellington-Dufferin-Guelph Health Unit, 2011 ONSC 7523, [2011] O.J. No. 6009 (S.C.J.).

[86] 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.

[87] 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.

[88] A public interest litigant is usually a litigant that advocates a matter of public importance but with little or nothing personally to gain financially from participating in the litigation: Incredible Electronics Inc. v. Canada (Attorney General) (2006), 2006 17939 (ON SC), 80 O.R. (3d) 723 (S.C.J.); Mahmood v. Ottawa (City), 2017 ONSC 5138.

[89] However, that a proposed representative plaintiff brings an action out of a bona fide concern to vindicate his or her concern for the public interest does not necessarily insulate that person from an award of costs: Consumers' Association of Canada v. Coca-Cola Bottling Co., [2006] B.C.J. No. 1879 (S.C.J.) at paras. 25-27, aff’d 2007 BCCA 356, [2007] B.C.J. No. 1625 (C.A.); Arenson v. Toronto (City), 2012 ONSC 4488 at para. 7.

[90] 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., supra.

[91] 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; Vester v. Boston Scientific Ltd., 2017 ONSC 2498 at para. 50.

[92] If a litigant submits that a case is novel because there is no decided case directly on point, he or she may be met with the argument that although there are no decided cases, the law is clearly against the case, so the litigant should reasonably expect to lose and thus the case is not novel in the requisite sense that would justify making no order as to costs: Baldwin v. Daubney (2006), 2006 33317 (ON SC), 21 B.L.R. (4th) 232 (Ont. S.C.J.) at para. 22.

[93] In normal litigation, it is relatively rare that the court will invoke its discretion to eliminate or reduce an unsuccessful litigant’s exposure to costs because the party was litigating a novel point or was litigating in the public interest. This follows because in the overwhelming majority of cases, the prime motivation of the parties will not be altruistic. In most cases, even if there is some public benefit that may be achieved by the litigation or some advancement achieved in the development of the law, a party will have the expectation that if he or she is successful a partial indemnity for legal costs will follow and if the party fails, he or she will have to indemnify the successful party. An after-the-fact submission that the case was novel or in the public interest has to be taken with more than a grain of salt. There is some irony when an unsuccessful party introduces a novel point and then relies on it to avoid paying costs when it is doubtful that had they been successful, they would have agreed to forgo costs. See 1146845 Ontario Inc. v. Pillar to Post Inc., 2015 ONSC 1115.

6. Comparable Awards

(a) Awards for Plaintiffs

[94] In Green v. Canadian Imperial Bank of Commerce, 2016 ONSC 3829, the plaintiff was awarded $2.7 million for certification and for leave to commence an action under the Ontario Securities Act, R.S.O. 1990, c. S.5.

[95] In Trillium Motor World v. General Motors Canada Limited, 2016 ONSC 1725, the plaintiff was awarded $5.5 million following a 41-day common issues trial.

[96] In Labourers’ Pension Fund of Central and Eastern Canada (Trustees of) v. Sino-Forest Corp., 2015 ONSC 6354, the plaintiffs were awarded $673,398.92 following certification of the action and leave to commence a claim under the Ontario Securities Act, R.S.O. 1990, c. S.5.

[97] 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.

[98] In Dugal v. Manulife Financial Corp, 2013 ONSC 6354, [2013] O.J. No. 5088 (S.C.J.), a successful motion for leave and certification, the successful plaintiffs were awarded total costs of $567,234, all inclusive, with $100,000 payable in the cause.

[99] 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.

[100] In Abdula v. Canadian Solar, 2015 ONSC 1421, a successful motion for leave and certification, the successful plaintiff was awarded costs of $275,000 plus HST for the leave and certification and an associated refusals motions.

(b) Awards for Defendants

[101] In Fairview Donut Inc. v. TDL Group Corp., 2014 ONSC 776, the defendants were awarded $1.85 million after an 11-day hearing, where the action would have satisfied the criterion for certification but where the plaintiffs’ claim failed on the defendants’ summary judgment motion in an action where the plaintiff claimed $3 billion.

[102] In Smith v. Inco Ltd., 2012 ONSC 5094, the defendant was awarded $1.8 million from the date of certification through the trial of common issues.

[103] In 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2016 ONSC 5496, the defendant was awarded $1.5 million plus taxes following a common issues summary judgment motion.

[104] In Fehr v. Sun Life Assurance Co of Canada, 2017 ONSC 2218, a defendant was awarded $1.0 million after defeating certification, even though it did not technically succeed on its summary judgment motion.

[105] 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.

[106] In Martin v. AstraZeneca Pharmaceuticals PLC, 2012 ONSC 4666, the defendants were awarded $655,407.

[107] 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.

[108] 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.); 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.); Moyes v. Fortune Financial Corp., [2002] O.J. No. 1820 (S.C.J.); Caputo v. Imperial Tobacco Ltd., 2005 63806 (ON SC), [2005] O.J. No. 842 (S.C.J.); Joanisse v. Barker, [2003] O.J. No. 4081 (S.C.J.); Ragoonan v. Imperial Tobacco Canada Ltd., 2005 40373 (Ont. S.C.J.), aff’d 2009 4239 (Ont. Div. Ct.).

[109] There are cases where very modest costs have been 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.); and Controltech Engineering Inc. v. Ontario Hydro, [1998] O.J. No. 5350 (Gen. Div.).

D. Analysis and Discussion

[110] The Plaintiffs did not provide any evidence of the amount of costs that they would have claimed had they been the successful party. And putting aside the three arguments that: (1) the Defendants should not be entitled to costs of the jurisdiction motion, which was dismissed in its entirety; (2) the Defendants should not receive costs for the certification motion, which failed only on the cause of action criterion; and (3) there should no order as to costs or at a minimum that the costs should be substantially reduced to reflect the significant public interest in and novelty of the case, the Plaintiffs make no argument that the costs claimed by the Defendants are excessive, unreasonable, or beyond the reasonable expectations of the unsuccessful party.

[111] The Plaintiffs do make an argument that they did nothing that lengthened unnecessarily the duration of the proceeding and nothing improper, vexatious, unnecessary, or taken through negligence, mistake, or excessive caution. The Plaintiffs, however, do not make any argument that the Defendants did anything that lengthened unnecessarily the duration of the proceeding and nothing improper, vexatious, unnecessary, or taken through negligence, mistake, or excessive caution. The Plaintiffs make no argument that the Defendants’ lawyers overworked the files, charged excessively high hourly rates (the hourly rates actually were substantially discounted), or charged for services outside the scope of a partial indemnity award.

[112] In other words, but for the three arguments that the Plaintiffs and the Fund do make, the Plaintiffs do not argue that the successful Defendants should not be entitled to a substantial costs award for aggressively prosecuted and aggressively defended motions that were dispositive of a $2 billion proposed class action.

[113] The litigation was fundamentally, perhaps existentially, important to the parties. The issues were extremely complex and the amount of evidence enormous, including extensive evidence about private international law, foreign law, and domestic tort and fiduciary duty law.

[114] With the exception of Bureau Veritas’s lawyers, who commendably were prepared to not make every conceivable argument that could be made regardless of its materiality or cogency and whose focused submissions were the most helpful to the court, the motions were aggressively and passionately argued with little if anything of indulgences, concessions, admissions, or efforts to narrow the dispute.

[115] The Defendants were successful. The Plaintiffs’ proposed action was not certified; it was dismissed. Had the action been certified, substantial portions of the Statement of Claim would have been struck and modifications would likely have been made to the class definition and to the common issues depending on what causes of action were certified. Given the Defendants’ success and putting aside the Plaintiffs’ and the Fund’s three arguments, there is no principled reason to deny or reduce the amounts claimed for costs on a partial indemnity basis.

[116] But for the Plaintiffs’ three arguments, the amount of costs claimed is fair and reasonable and within the reasonable expectations of the unsuccessful party, and indeed, having regard to the blistering attack on the morality of the Defendants’ conduct, there might have been traction for costs on a substantial indemnity basis. From the beginning and up to and including the costs submissions, the Plaintiffs built their case by portraying the Defendants as profit mongering Western capitalist exploiters of the already exploited and vulnerable employees of their foreign suppliers and sub-suppliers.

[117] The Plaintiffs’ three arguments fail.

[118] As for the first argument, all the motions were essentially argued as one motion. The ways and means of the court’s jurisdiction over putative foreign class members was one of the live issues throughout most of the run up to the argument of the motions, and given the inability of all parties to narrow the issues, the court’s jurisdiction over foreign claimants remained a live issue. Subject to pending appeals in other cases, the court’s jurisdiction of foreign claimants remains a live issue in the jurisprudence. That, as between the Plaintiffs and Loblaws, Loblaws was unsuccessful on an aspect of the jurisdictional motion, (which actually most concerned the Crown) is of no particular moment.

[119] In any event, the jurisdictional issue was integrated with the other conflict of law issues during the argument of the motion, and to factor out an unsuccessful aspect of the jurisdictional motion would be to make a distributive costs award or to unfairly reduce a reasonable claim for costs for the totality of the motions.

[120] As for the second argument, the Defendants were the successful party on the certification motion, and they also succeeded on the pleadings motion. Further, subject to what the Court of Appeal may do on the appeals of my order, the class size may be substantially trimmed and some causes of action may still not be certified.

[121] There is no principled reason to deny the Defendants the costs of the certification motion. Further, for much the same reasons as the Plaintiffs’ first argument fails, their second argument also fails. The Defendants successfully resisted certification and under the loser-pays regime of the Class Proceedings Act, 1992, they are entitled to the spoils of victory.

[122] Turning to the Plaintiffs’ and the Fund’s third argument, assuming that the Plaintiffs’ claims were novel or in the public interest in the requisite sense that would justify a court making no order as to costs, it remains a matter of discretion whether the court should reduce the costs or make no order as to costs. I would not exercise that discretion in the circumstances of the immediate case.

[123] I respect the empathy, faith, fortitude, kindness, and pursuit of justice of the Plaintiffs’ lawyers and of the Class Proceedings Fund in taking on the case for the citizens of a foreign land, but a significant motivator in this proposed class action was money, independent of public policy, and the Plaintiffs were intent on intensifying the pressure and risks on the Defendants and to motivate them to settle and to pay a substantial award. This proposed class action was not purely altruistic and the Plaintiffs’ lawyers must be taken to have weighed the awards along with the risks when they decided to take on a case that they litigated with little or no mercy, temperance, or proportionality.

[124] The Plaintiffs pleaded and prosecuted their case in a way that indicated that they expected to be paid costs. They telegraphed that they would rebuff any argument that there should be no order as to costs because the case was novel or in the public interest. The Plaintiffs pleaded and prosecuted their case in a way that they should and would have reasonably expected: (a) to pay costs; and (b) that they would not be able to use the argument that the case was novel or in the public interest.

[125] Negligence and vicarious liability are non-intentional torts, but the Plaintiffs went out of their way to vilify the Defendants, and the subtext of the Plaintiffs’ pleaded negligence claims and their breach of fiduciary duty claim was that the Defendants purposely, knowingly, or recklessly for greed and personal profit, exploited the Class Members, some of whom unfortunately just happened to be at Rana Plaza on the day of the tragedy. The Plaintiffs presented the case as if the Defendants intentionally or recklessly injured the denizens of Rana Plaza; litigating in this fashion, the Plaintiffs should and would have reasonably expected to pay costs and not be able to use the argument that the case was novel or in the public interest.

[126] In this last regard, the Plaintiffs sought to make the Defendants liable for the deaths and injuries of 3,650 persons of whom approximately 50% had no relationship with the Defendants. Assuming that these remote persons remained in the class, the litigation risks of establishing a duty of care to them and also causation of harm are risks with attendant greater rewards that the Class Counsel and the Class Proceedings Fund must be taken to have purposefully pursued.

[127] The Plaintiffs’ lawyers prosecuted the proposed class action with the transparent expectation that they would receive their legal fees for the certification motion. Albeit late in the day, the Plaintiffs’ lawyers had an opportunity to have the motions determined on a no-costs basis, and they declined the offer. I do not fault them for refusing the offer, coming late as it did, but I disagree with their argument that the Defendants’ making of the offer indicates the Defendants must be taken to have conceded that the motions were in the public interest and novel. The public interest and novelty of the action is not something to be admitted or conceded. These factors actually exist or do not exist from the outset of the action. In my opinion, they did not exist in the requisite legal sense.

[128] Virtually every proposed class action is in the public interest in the sense of being something that may beneficially or adversely affect the personal, ideological, or financial interests of some portion of the public. This is also true of much of the court’s services in administering justice in civil cases outside of the Class Proceedings Act, 1992. In this general sense, the immediate case was and is in the public interest. However, it does not follow that a case in the public interest (or a case that is just interesting for the public to observe) will justify departing from the normal rules of a loser-pays adversarial system for the administration of justice.

[129] At its fundamental core, the Class Proceedings Act, 1992 is a public law statute. The Legislature has outsourced to entrepreneurial lawyers the prosecutorial function of civil claims against wrongdoers that harm groups and the Act claws back for the courts an administrative law jurisdiction that the Legislature otherwise has assigned to tribunals and regulators dealing with labour law, health law, securities law, consumer law, and competition law. But in designing this public law statute, the Legislature and the Court of Appeal in Pearson v. Inco Ltd., supra, at para. 13 established that while the court should be open to making an exceptional no costs order, the normal rule was that costs will ordinarily follow the event.

[130] I accept that the case at bar was in the public interest in the senses that the public would find it interesting and that the outcome would and does affect the personal, ideological, and financial interests of the public, but having regard to the way the case was pleaded and prosecuted, it would not be just or fair to regard it as one of the exceptional cases where either party should be exempt from the normal rule that costs will follow the event. I conclude that the Plaintiffs’ claims were not in the public interest in the requisite legal sense that would justify no award as to costs.

[131] For similar reasons, in my opinion, the Plaintiffs’ claims were not novel in the requisite legal sense.

[132] The Plaintiffs’ claims against the Defendants were grounded in well-established principles of the law of negligence. The Plaintiffs were arguing that their claims were analogous to duties of care that have previously been recognized by Canadian courts, or they were arguing for a change to the existing law that actually stood against their claims. The Plaintiffs’ claims were dismissed based on existing principles.

[133] The absence of proximity between the proposed class members and the Defendants was manifest under traditional principles, giving the Plaintiffs good reason to expect to fail. The Plaintiffs’ theory of negligence had never been accepted by any court anywhere in the common law world. The Plaintiffs' expert witness strained, contorted, and stretched the existing law in an attempt to advance a proposed class action in Ontario about a tragedy that occurred in a foreign land. The Plaintiffs would not concede that almost half of the class was at an even more remote degree of proximity than the class members who were employees of New Wave Style. At the end of the day, while unique or novel in some senses, the Plaintiffs’ claims were resolved in accordance with normative legal principles.

[134] Like snowflakes, every claim and defence can be said to be unique or novel in some sense while being typical and usual in other senses. That a particular case admits of possibly developing or changing the law does not mean that it is novel in a sense that would justify making no award as to costs for the party that succeeds in developing the law or for the party that succeeds in arresting the development or change in the law. Like the public interest exception to the loser pays rule, the novelty exception is a rare exception, and, in my opinion, it would be neither just or fair to apply the exception in the circumstances of the case at bar for either party.

E. Conclusion

[135] To conclude, the three arguments that the Plaintiffs and the Fund advance for a reduction of costs or for an order that there be no costs fail. It follows that the successful Defendants should be entitled to unreduced costs award of $1,350,000 for the Loblaws’ Defendants and $985,601.60 for the Bureau Veritas Defendants for the aggressively prosecuted and aggressively defended motions that were dispositive of a $2 billion proposed class action. Order accordingly.

Perell, J.

Released: September 20, 2017

CITATION: Das v. George Weston Limited, 2017 ONSC 5583

COURT FILE NO.: CV-15-526628CP

DATE: 20170920

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ARATI RANI DAS, REHANA KHATUN, MOHAMED ALAUDDIN and KASHEM ALI

Plaintiffs

– and –

GEORGE WESTON LIMITED, LOBLAWS COMPANIES LIMITED, LOBLAWS INC., JOE FRESH APPAREL CANADA INC., BUREAU VERITAS – REGISTRE INTERNATIONAL DE CLASSIFICATION DE NAVIRES ET D’AERONEFS SA, BUREAU VERITAS CONSUMER PRODUCT SERVICES, INC. and BUREAU VERITAS CONSUMER PRODUCTS SERVICES (BD) LTD.

Defendants

REASONS FOR DECISION - COSTS

PERELL J.

Released: September 20, 2017