Court File and Parties

COURT FILE NO.: 05-CV-300430CP DATE: 20200706 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

BARRY LAVENDER Plaintiff

• and -

MILLER BERNSTEIN LLP Defendant

Proceeding under the Class Proceedings Act, 1992

BEFORE: Justice Edward P. Belobaba

COUNSEL: Daniel Bach for Plaintiff / Moving Party Robert W. Staley and Nathan J. Shaheen for Defendant / Responding Party Paul J. Pape and Shantona Chaudhury for the Law Foundation of Ontario / Class Proceedings Fund / Intervener

HEARD: In writing

Costs Award on Dismissal of Action

[1] In this class action, the Court of Appeal reversed [1] the summary judgment decision in the court below [2] and dismissed the core negligence claims against the defendant auditor. The “knowing assistance” claim was not pursued and formed no part of the summary judgment litigation. It remains alive as part of the original action. The plaintiff acknowledges that the “knowing assistance” claim has no chance of success and asks that the class action be formally dismissed.

[2] I have no difficulty granting this order. The bulk of the claims have been dismissed. Where there is no prospect of success (of the remaining claim) class members will not be prejudiced by the dismissal of a certified class action. [3]

[3] The defendant auditor does not object to the dismissal of the action but asks for the costs incurred over the nine years of defending the action. The defendant claims $471,185.12 on a partial indemnity scale for the costs of the action and adds just under $14,000 for the costs of this motion, for a total of $485,000.

[4] The defendant’s costs submission is resisted by the Law Foundation of Ontario. The LFO provided financial support to the plaintiff throughout the summary judgment litigation via its Class Proceeding Fund (CPF) and will be obliged to pay any additional costs award “for the action.”

[5] The LFO points to the costs already awarded by the Court of Appeal - $1,009,063.32 for the summary judgement motion and $159,463.29 for the appeal – and submits that no further costs should be awarded.

[6] The LFO argues that it was the reasonable expectation of the plaintiff and the LFO that the costs sought by the defendant in connection with the summary judgment motion constituted the entirety of the costs it intended to seek. This reasonable expectation, says the LFO, flowed from the defendant’s representations at the Court of Appeal. In arguing that it should receive the full amount of $1,009,063.32 because this amount was less than what the plaintiff had sought for the summary judgment motion, the defendant led the Court of Appeal and the parties to believe that the requests were for the same thing, i.e. costs of the summary judgment motion including all costs relating to the merits of the common issues. Were this not so, says the LFO, the comparison would have been inapposite.

[7] However, the fact remains that the summary judgment motion was not dispositive of all the issues. As already noted, the “knowing assistance” claim was not pursued. This remaining component of the original action remained in place. The defendant is entitled to the costs incurred attending to this remaining component. The only question is quantum.

[8] I have reviewed the defendant’s costs outline in some detail. I remain hard pressed to understand how the defendant could have generated some $470,000 in costs tending to an issue (the “knowing assistance” claim) that never materialized as an important feature of this litigation. The $470,000 amount appears to be excessive and unreasonable. I contrast this amount with the plaintiff’s evidence that his actual costs in this regard were only $114,000. This is more in line with what, in my view, is appropriate. If I apply the 40 per cent discount suggested by the Court of Appeal [4] to determine the partial indemnity equivalent, the final partial indemnity amount is about $68,000.

[9] In my view, $68,000 to cover the costs of what formed no part of the summary judgment litigation and what remained of the action is a fair and reasonable costs award in all the circumstances. Adding to this amount the reasonable costs of this motion – not the almost $14,000 suggested by the defendant but more like $4000 given the limited success herein – my final tally is $72,000 all in.

[10] I note that the LFO suggested in the alternative that the costs award for the action should not exceed $55,000. This would be insufficient. Applying the factors set out in Rule 57.01(1), I find that a $72,000 costs award is fair and reasonable.

Disposition

[11] The action is dismissed.

[12] Costs for the action are fixed at $72,000 all-inclusive and are payable forthwith by the LFO / CPF to the defendant.

[13] Order to go accordingly.

Signed: Justice E. P. Belobaba

Notwithstanding Rule 59.05, this Order is effective from the date it is made and is enforceable without any need for entry and filing. In accordance with Rules 77.07(6) and 1.04, no formal Order need be entered and filed unless an appeal or a motion for leave to appeal is brought to an appellate court. Any party to this Judgment [Order] may nonetheless submit a formal Judgment [Order] for original signing, entry and filing when the Court returns to regular operations.

Date: July 6, 2020

[1] Lavender v. Miller Bernstein LLP, 2018 ONCA 729 (Leave to appeal to SCC dismissed May 2, 2019). [2] Lavender v. Miller Bernstein LLP, 2017 ONSC 3958. [3] Iovine v. Toronto Sun Wah Trading Inc., 2019 ONSC 7409 at para. 29. [4] Bain v. UBS Securities Canada Inc, 2018 ONCA 190 at paras. 32-33. For my part, I continue to use the Grid rates for partial indemnity calculations because, as it turns out, they are representative of “60 per cent of reasonable actual rates”: see the discussion in Goldsmith v. National Bank of Canada 2015 ONSC 4581 at para. 9-12; and Mask v. Silvercorp Metals Inc., 2015 ONSC 7780 at paras. 8-10. Here, it was simpler and more efficient to take the plaintiff’s evidence of $114,000 in actual costs and reduce this by 40 per cent to generate the partial indemnity amount.