Court File and Parties
COURT FILE NO.: CV-17-00569023-00CP DATE: 2020/07/20 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Ashleka Persaud and Ten Eight Vacations Ltd. Plaintiffs – and – Talon International Inc. Defendant
Counsel:
Sean A. Brown, Paul Mack, and Candace Mak for the Plaintiffs Nancy J. Tourgis and Symon Zucker for the Defendant
Pursuant to the Class Proceedings Act, 1992
HEARD: In writing
PERELL, J.
Reasons for Decision - Costs
[1] In September 2018, this action under the Class Proceedings Act, 1992, [1] was conditionally certified. [2] The precondition for certification was that the Representative Plaintiffs, Ashleka Persaud and Ten Eight Vacations Ltd., replace their then Class Counsel, Levine, Sherkin, Boussidan P.C., with new Class Counsel. As explained in the Reasons for Decision, Levine Sherkin had a conflict of interest and had to be replaced.
[2] While the Representative Plaintiffs were preoccupied with finding new Class Counsel, several matters were in abeyance. One of those matters was the matter of the costs of the successful certification motion. Michael Wise, then of Levine, Sherkin, Boussidan P.C. had carriage of the certification motion.
[3] In a pathetic procedural history that for present purposes I need not recount, it was not until April 2020 that Flaherty McCarthy LLP and Mack Lawyers were substituted as Class Counsel. [3] Although they were not counsel on the certification motion, Flaherty McCarthy LLP and Mack Lawyers now seek the Representative Plaintiffs’ costs of the certification motion and also the costs of preparing costs submissions.
[4] More precisely, the Representative Plaintiffs seek costs of $66,576.88 on a substantial indemnity basis comprised of fees of $58,938.42, plus HST of $7,638.46 and disbursements of $2,624.42. In the alternative, the Representative Plaintiffs seek costs of $45,362.83 comprised of fees of $40,164.92, plus HST of $5,197.91 and disbursements of $2,624.42.
[5] In seeking substantial indemnity costs, the Representative Plaintiffs rely, in part, on the alleged dilatory and non-cooperative conduct of Talon in resisting the certification motion and an Offer to Settle of $61,977.22.
[6] The Representative Plaintiffs request costs of $2,132.99 on a partial indemnity basis for preparing the costs submission. This is comprised of fees of $1,887.60 plus HST of $245.39.
[7] Talon submits that there should be no order as to costs or, in the alternative, that costs should be in the cause.
[8] For the reasons that follow, I award costs on a partial indemnity basis of $35,000, all inclusive for the certification motion and costs of $1,000, all inclusive for the costs submissions, both payable forthwith.
[9] My explanation of these costs awards begins by noting that costs on a substantial indemnity basis are not appropriate. Talon’s conduct was not egregious and does not warrant a punitive award. Neither side can be lauded or applauded for the management of this action up to and including the certification motion.
[10] The normal rules for costs apply in the circumstances of the case. Although the Certification Motion involved a conditional Order, the Representative Plaintiffs were successful in having the action certified and are entitled to reasonable costs on a partial indemnity basis in accordance with the usual principles, which principles do not favour distributive costs awards.
[11] The Defendant’s multiple counsel expended more hours than Mr. Wise, but I have reviewed his costs outline and I would reduce the award for such matters as the Offer to Settle which was an ill-advised and ill-designed ploy that was not a sincere offer to compromise. I will repeat here, what I wrote recently in Harris v. Bayerische Motoren Werke Aktiengesellschaft, [4] at paragraphs 12-17:
The policy rationale and the technical requirements of Rule 49, and in particular the policy rationale and the technical requirements of discretionary Rule 49.13, which extends the Offer to Settle regime to interlocutory motions, are an ill fit for a certification motion. In these regards, it should be noted that unlike most interlocutory and purely procedural motions, a certification motion must be brought; it is a mandatory motion, but it does not decide the merits of the case. Even if the certification motion is brought on consent, the court is obliged to determine whether the case satisfies the certification criterion. In other words, in every event, the plaintiff must prepare a certification motion record and deliver a factum that satisfies the court that certification should be granted. These are unavoidable legal expenses, and the court cannot simply rubber stamp a consent order submitted by the parties. The court is obliged to be satisfied that the action is certifiable.
Further, and in any event, Rule 49 is awkward to apply in the context of a certification motion. In the immediate case, given the overwhelming success of Mr. Harris in achieving his goals for the common issues he sought to have certified, it was easy to say that BMW would have been better off had it accepted Mr. Harris’ offer, however, in many if not most cases it will not be easy at all and it will be a mugs game for the court to try to make the assessment.
Further still, in the context of the statutory regime, it is not a bad thing that a defendant takes up its right to oppose certification. A defendant’s resistance to certification is often productive in the sense that the outcome of the motion is a manageable class action that optimizes access to justice and judicial economy. A manageable class action also optimizes the productivity and economy of legal resources of the Class Members and of the Defendant.
Further still, there is an unfair asymmetry in applying the adverse costs consequences rules to a motion that does not decide the merits and that does avail itself easily to an offer to settle by the defendant.
If, as occurred in the immediate case, the defendant wages war, yields no quarter and forces the plaintiff and Class Counsel to fight for every inch of legal territory, then it will be an expensive legal endeavor, and if the defendant loses what is just one battle of the war, then it will pay a hefty enough price in accordance with the normal rules of costs that prescribe that the loser pays costs on a partial indemnity basis.
In other words, in the context of a contested certification motion, there is no need to pile on substantial indemnity costs for a defendant who is entitled to resist certification but who will pay significant costs on a partial indemnity basis, which costs could have been avoided if the defendant held fire for a determination on the substantive merits of the claim.
[12] In the immediate case, while the Defendant ultimately lost the certification motion, it did much better by refusing to accept the Settlement Offer than had it accepted it. Even on a technical level, the Offer to Settle Rule does not assist the Representative Plaintiffs in the immediate case.
[13] I disagree with Talon’s arguments that there should be no order as to costs or that the costs should be in the cause. Talon lost the certification motion, and the Representative Plaintiffs’ Claim for Costs is well below Talon’s reasonable expectations of the consequences of unsuccessfully resisting certification.
[14] In the circumstances of the Covid-19 emergency, these Reasons for Decision are deemed to be an Order of the court that is operative and enforceable without any need for a signed or entered, formal, typed order.
[15] The parties may submit formal orders for signing and entry once the court re-opens; however, these Reasons for Decision are an effective and binding Order from the time of release.
Perell, J.
Released: July 20, 2020
Court File and Parties (Summary)
COURT FILE NO.: CV-17-00569023-00CP DATE: 2020/07/20 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Ashleka Persaud and Ten Eight Vacations Ltd. Plaintiffs – and – Talon International Inc. Defendant
Reasons for Decision - Costs (Summary)
PERELL J. Released: July 20, 2020
Footnotes
[1] S.O. 1992, c. 6. [2] Persaud. v. Talon International Inc. 2019 ONSC 2488. [3] Persaud v. Talon International Inc., 2020 ONSC 2362. [4] 2020 ONSC 4220.