Court File and Parties

Court File No.: CV-16-544173-00CP Date: 2019/06/05 Ontario Superior Court of Justice

Between: Vince Cappelli, Plaintiff – and – Nobilis Health Corp., Harry Joseph Fleming, Christopher H. Lloyd, Andrew Chen, Kenneth J. Klein and Calvetti Ferguson, P.C., Defendants

Counsel: Andrew Morganti, Eli Karp and Hadi Davarinia for the Plaintiff Alan Lenczner, Nilou Nezhat and Brendan Morrison for the Defendant Nobilis Health Corp.

Proceeding pursuant to: the Class Proceedings Act, 1992

Heard: In writing

Perell, J.

Reasons for Decision - Costs

[1] Pursuant to the Class Proceedings Act, 1992 and s. 138.3 of the Ontario Securities Act and the comparable statutes across Canada, Vince Cappelli sued Nobilis Health Corp., Harry Joseph Fleming, Christopher H. Lloyd, Andrew Chen, Kenneth J. Klein, and Calvetti Ferguson, P.C. for misrepresentation in the secondary market for corporate securities.

[2] The action settled as against all of the defendants - with the exception of Nobilis.

[3] Mr. Cappelli sought certification of a class action and leave to pursue his statutory claim for secondary market misrepresentations as against Nobilis. I declined to grant leave, and I dismissed the certification motion. Cappelli v. Nobilis Health Corp. 2019 ONSC 2266.

[4] Nobilis requested costs of $200,000 on a partial indemnity basis plus disbursements of $311,696.39 for an all-inclusive amount of $537,696.39.

[5] Nobilis also submits that the costs ought to be paid from the settlement funds being held in trust by Class Counsel on behalf of the Class. However, in bringing his action, Mr. Cappelli was supported by the Class Proceedings Fund of the Law Foundation of Ontario, and I agree with his submission that there is no basis for paying costs from the funds now being held in trust by Class Counsel. The Class Proceedings Fund is ultimately responsible for the costs awarded against the Representative Plaintiff.

[6] Mr. Cappelli does not oppose Nobilis’ request for a partial indemnity award in respect of fees, but it opposes Nobilis’ request for disbursements, which it submits is excessive.

[7] The bulk of Nobilis’ disbursements are the cost of three expert’s reports.

[8] Although he did not produce the invoices, Mr. Cappelli’s disbursements, including the cost of his experts, totals $200,281.25. Mr. Cappelli submits that Nobilis’ claim for disbursements should be reduced by roughly 1/3 to $200,000 to bring the costs of the experts more in line, but, more to the point, Mr. Cappelli submits that there should be a reduction because there is duplication or overlap in the evidence proffered by Nobilis’ three experts.

[9] 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. Batchelor v. Looney, 2016 ONSC 1535; 495793 Ontario Ltd. (c.o.b. Central Auto Parts) v. Barclay, 2015 ONSC 602; Mayer v. 1474479 Ontario Inc., 2014 ONSC 2622; Bombardier Inc. v. AS Estonian Air, 2013 ONSC 4209; Hamfler v. 1682787 Ontario Inc., 2011 ONSC 3331.

[10] 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, as he then was, 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.

[11] In Hamfler v. 1682787 Ontario Inc., 2011 ONSC 3331, 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?

[12] Mr. Cappelli concedes that Nobilis’ experts provided relevant evidence that was of assistance to the court, but submits that the evidence of Messrs. Lendez and Chesser was superfluous, and unnecessarily duplicative.

[13] I would agree with Mr. Cappelli that there was some duplication, but I did not regard it as unnecessary duplication. I regarded the experts’ evidence as necessary and critical. It was more or less inevitable that there would be some overlap since all the experts were addressing, among other things, the predicate issue of materiality from differing perspectives.

[14] In any event, having regard to the defendant’s litigation risk and the other factors described above, I am satisfied that Nobilis’ disbursements for its expenditures for expert testimony are fair and reasonable.

[15] Accordingly, I award costs as requested.

Perell, J. Released: June 5, 2019