Court File and Parties

COURT FILE NO.: CV-19-612148-00CP DATE: 20210817

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

KIMBERLEY CARTER, KEITH HALLIDAY and DEONARINE PHAGOO Plaintiffs

• and -

FORD MOTOR COMPANY OF CANADA, LTD., FORD CREDIT CANADA LIMITED and FORD MOTOR COMPANY Defendants

COUNSEL: James Sayce and Aryan Ziaie for the Plaintiffs Cheryl Woodin, Ilan Ishai and Ethan Z. Schiff for the Defendants

Proceeding under the Class Proceedings Act, 1992

HEARD: In writing

REASONS FOR DECISION – COSTS

PERELL, J.

PERCHIK: […] You should know about events in the outside world!

MAN: Why should I break my head about the outside world? Let the outside world break its own head.

TEVYE: He is right. As the Good Book says, "If you spit in the air, it lands in your face."

PERCHIK: Nonsense. You can't close your eyes to what's happening in the world.

TEVYE: He is right.

RABBI: He's right and he's right? They can't both be right.

TEVYE: You know, you are also right.

[Joseph Stein, Screen Play: Fiddler on the Roof, 1971]

A. Introduction

[1] With a sarcastic debate about who was the more successful litigant, this is a costs decision with respect to the Plaintiffs’ certification motion. With a sarcastic debate, it is also a costs decision about the Defendants’ undoubtedly successful preliminary motion to strike some of the Plaintiffs’ evidence for the certification motion.

[2] In this proposed class action under the Class Proceedings Act, 1992,[^1] the Plaintiffs, Kimberley Carter, Keith Halliday, and Deonarine Phagoo, sue the Defendants, Ford Motor Company of Canada Ltd., Ford Credit Canada Limited and Ford Motor Company (collectively “Ford Motor Co.”). The Plaintiffs allege that the Defendants designed, engineered, developed, researched, manufactured, marketed, distributed, sold, and leased motor vehicles in Ontario and the rest of Canada containing a defective water pump system. The Plaintiffs allege that the defective water pump system was dangerous. They allege that the defect caused the water pump to leak coolant into other engine parts with the result that there was catastrophic damage to the engine of the vehicles.

[3] The Plaintiffs moved for certification of their action as a class action. The Defendants ferociously resisted the certification motion, and they brought a preliminary motion for an Order that certain evidence be struck from the certification record. I granted the motion.[^2] I ordered the costs to the Defendants payable in any event of the cause of the certification motion.

[4] On the certification motion, the Defendants asserted that none of the five certification criteria were satisfied, and they brought a cross-motion, which replicated their challenge to the cause of action criterion for certification.

[5] With revisions to the class definition and to common issues, I certified a class action for negligence in design for a class of persons and corporations in Canada who while they owned or leased certain Ford Motor Co. vehicles had a water pump that failed and: (a) the vehicle sustained damage; or (b) the vehicle sustained damage and the Class Member suffered a personal injury. I did not certify the Plaintiffs’ claims in negligence for negligent manufacturing, failure to warn, and for the cost of repairing a dangerous product that presents a real and substantial danger. I did not certify the Plaintiffs’ claims sounding in contract or unjust enrichment, or for disgorgement.[^3] I removed Ford Credit Canada Limited as a defendant to the action.

[6] The Plaintiffs request costs of $354,759.57 on the Certification Motion, comprised of fees of $227,630.10 plus HST and disbursements of $97,537.56 inclusive of HST. Of the disbursements, $85,796.75 (all-inclusive) is for expert fees. ($71,660.07 incurred for Professor White’s evidence and $14,136.68 incurred for Mr. Stockton’s evidence.)

[7] The Plaintiffs conceded that the Defendants are entitled to the costs of the evidence motion and submit that the appropriate quantum for those costs is $12,000, all inclusive. The Plaintiffs’ own costs for that motion were $11,844.66, ($10,482.00 in fees plus $1,362.66 in HST).

[8] For their part, the Defendants seek costs of $16,612.70, all inclusive, for the evidence motion and they submit that there should be no order as to costs with respect to the certification motion.

[9] For the reasons that follow:

a. for the preliminary motion, I award the Defendants costs of $16,612.70 payable forthwith; and

b. for the certification motion, I award the Plaintiffs costs of $197,750 payable forthwith (comprised of fees of $175,000 plus HST) and costs of $97,537.56 for disbursements payable in the cause of the common issues trial (inclusive of HST).

B. General Principles – Costs and Class Proceedings

[10] 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.[^4]

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

[12] An 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.[^6]

[13] The court's discretion in awarding costs arises under the authority of s. 131 of the Courts of Justice Act[^7] and is to be exercised by a consideration of the factors in rule 57.01(1) of the Rules of Civil Procedure.[^8] 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.

[14] 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.[^9] This is the "loser-pays" principle.

[15] A critical controlling principle for the awarding of costs is that the sum awarded reflect the fair and reasonable expectations of the unsuccessful litigant.[^10] In Boucher v. Public Accountants for the Province of Ontario,[^11] 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.

[16] In Davies v. Clarington (Municipality)[^12] at para. 52, Justice Epstein stated that the overriding principle in awarding costs is reasonableness. She stated:

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."

[17] 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.

[18] The same approach is applied to the recovery of fees paid to an expert witness. In Pearson v. Inco Ltd.,[^13] at para. 20, Justice Nordheimer stated:

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

[19] 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.[^14] 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.[^15]

[20] 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.[^16]

[21] 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.[^17] 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.[^18] A costs award must be fair to the defendants and should reflect their reasonable and effective efforts and concessions to limit the scope of the motion and the defendants should not reasonably be expected to pay for the inefficiencies of the plaintiff.[^19] On a certification motion, an unsuccessful defendant should not be expected to finance the plaintiff's litigation expense in attempting to prove the merits of the case against them at trial; a defendant should not have to pay for legal services tacked on to the certification and leave motion that should more properly be paid for if the plaintiff is successful in the litigation.[^20]

[22] 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.[^21]

[23] 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 make it worthwhile to enlarge the investment in the defence or prosecution of the case.[^22]

[24] In appropriate cases, costs in the cause is a means 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.[^23] In some cases, it may be appropriate to make a hybrid award with some costs payable forthwith and the balance payable in the cause.[^24]

C. The Costs of the Preliminary Motion to Strike Evidence

[25] The Defendants were successful on the preliminary motion. Their claim of costs of $16,612.70 for this motion was in the circumstances of the vigorously contested certification motion fair and reasonable and their claim ought to have been within the reasonable contemplation of the unsuccessful Plaintiffs. I award the Defendants the costs as claimed; i.e., costs of $16,612.70 payable forthwith. These costs may be setoff against the Defendants’ liability to pay the costs of the certification motion.

D. Miscellaneous Matters

[26] Before addressing the contentious matter of whether the Plaintiffs are right in asking for costs of $354,759.57 on the Certification Motion because they succeeded in achieving certification of a class action against the Defendants or whether the Defendants are right that there should be no order as to costs because the Plaintiffs’ success fell far short of their aspirations, it is necessary to address four arguments (three by the Plaintiffs and one argument by the Defendants) that should be discounted or not counted as relevant to the exercise of the court’s discretion with respect to the costs of the certification motion.

[27] In this regard, first, the plaintiffs rely on what Justice Morgan recently wrote in Azar v. Strada Crush Limited[^25] as a counter to the Defendants’ argument that there should be no order as to costs because of the Plaintiffs’ alleged limited success (partial victory) on the certification motion. Thus, in paragraph 2 of their Original Costs Submissions, the Plaintiffs state:

2 Earlier this week, Justice Morgan disposed of the same “partial victory” arguments with an apt sports analogy:

5. True story: a friend born in what was then Leningrad (now St. Petersburg) once related to me that in the old Soviet Union days, people were told after the 1972 summit series that Team Canada’s hockey victory was not really a victory, but rather was more of a draw. The explanation for this was that the Soviet team had scored more goals than the Canadian team over the course of the series, and that all the Canadians had done was to win more games. But of course, that is not how the hockey series worked, and it is not how the CPA works either. It is not considered a success if you score a few goals of your own before being on the receiving end of Paul Henderson’s winning shot; and it is not a partial victory to pass a few initial hurdles before being denied certification altogether.

[28] While I happen to agree with what Justice Morgan concluded and while I admire the artful expression of that conclusion, his decision in Azar v. Strada Crush Limited neither helps nor harms the Plaintiffs’ arguments in the immediate case. Azar was a case in which the Plaintiffs absolutely lost their certification motion; there was no limited success or partial victory to speak of in that case, as Justice Morgan notes in the above passage.

[29] Second, in a somewhat related point, the Plaintiffs are incorrect in their submission that the Defendants’ limited success argument is a request for a distributive costs award. The Defendants actually do not dispute the general principle that distributive costs awards are not appropriate in class proceedings.[^26] As the discussion below will reveal, the Defendants’ argument is not that the costs should be distributed; rather, they argue that in the circumstances of the immediate case, given the outcome of the motion, it is fair that the Plaintiffs not receive costs for their limited success and that the Defendants also not receive costs for their substantial success in reducing their liability and other risks in the proposed class action. Each party bearing their own costs for their respective successes is not a distributive costs award.

[30] Third, the Plaintiffs’ main arguments are also not helped by their submission that the Defendants unnecessarily added to the complexity of the matter by bringing a redundant pleadings motion. Whether or not the pleadings motion was technically necessary or whether it was redundant having regard to the fact that the test for the pleadings motion is the same as the test for the cause of action criterion for certification, the pleadings motion did not, in any event, add to the complexity of the matter either substantively or procedurally. The analysis and the arguments would have been the same with or without the Defendants’ cross-motion. Given that truth, I need not decide whether the pleadings motion was technically necessary or whether it was redundant.

[31] Fourth, the Defendants’ argument that the Plaintiffs pleaded frivolous claims in breach of contract and unjust enrichment, as well as baseless claims in negligent manufacture, development, engineering, research, distribution, marketing, sale and lease is not correct. Without detracting from my ultimate conclusion that it was plain and obvious that the Plaintiffs did not satisfy the cause of action criterion for fourteen of their pleaded causes of action, how they pleaded the material facts of their action would not have much changed. More to the point, the theory of the Plaintiffs’ case, which had some novel aspects, was at least worthy of being tested in the crucible of a real contest. In the litigation poker of a Rule 21 motion, there was no good reason for the Plaintiffs to fold their cards and simply leave the table because the Defendants challenged the legal viability of various causes of action. It was in the interests of justice and the development of law to have both parties lay down their legal cards.

[32] In short, as I shall next explain, what the dispute and the controversy in the immediate case is mainly about is the application of the rule 57.01 factors that guide the court’s discretion with respect to costs; in particular, factors 57.01(1) (0.a), (0.b), (a), (c), (g), and (i) and the general principles that guide the court’s discretion with respect to costs in the context of the Class Proceedings Act, 1992.

E. The Limited Success Argument

[33] The Defendants’ argue that the parties should bear their own costs for the certification motion based on a before and after analysis comparing the plaintiffs’ aspirations before the hearing of the certification motion with the realization of those aspirations after the hearing of the certification motion. This argument is detailed in paragraphs 1, 3, 4, 7, and 8 of the Defendants’ costs submissions as follows:

1. The defendants submit that the parties should each bear their own costs for the plaintiffs' certification motion and the defendants' motion to strike claims. The defendants do not seek a distributive costs award – rather this result properly accounts for the plaintiffs' "limited success" as well as the defendants' substantial success. The plaintiffs asserted 15 causes of action in tort, contract and unjust enrichment against three defendants on behalf of every current and former owner and lessee of 396,787 vehicles. Instead, the certified action includes a single cause of action against two defendants on behalf of only a fraction of the proposed class members who while they owned or leased a class vehicle had a water pump failure and: (a) the vehicle sustained damage; or (b) the vehicle sustained damage and the class member suffered a personal injury. The plaintiffs' proposed common issues for aggregate damages and disgorgement have likewise been scuttled.

2. The certified claim is hardly recognizable from the one which was pleaded and pursued through certification and in defence to the motion to strike claims. As a result of the defendants' position on the motions, and in contrast to the proposed action, the claim as certified is now manageable because: (a) all of the plaintiffs' proposed causes of action, other than negligent design, were struck; (b) the class size is appropriately limited (on the best available evidence, the certified class cuts the number of vehicles at issue to a small fraction of that proposed and removes the vast majority of potential class members who own, owned, lease or leased an impugned vehicle but had (or have had) no problems); and (c) the only certified common issues relate to the negligent design claim and punitive damages.

3. The plaintiffs were also only nominally successful on the viability of the relief sought. The Consolidated and Amended Statement of Claim sounds primarily in pure economic loss, which claims were not certified. The plaintiffs focussed on these claims in argument, asserting among other things that the defendants' interpretation of 1688782 Ontario Inc v Maple Leaf Foods Inc. was "aspirational in the extreme". The defendants dared to aspire and were successful – their success should be reflected in the costs analysis.

4. The plaintiffs' limited success in this matter is not comparable to the case law on which they rely to justify full costs. Though limited defendant success may not justify a costs reduction, "genuine divided success" or, like here, substantial defendant success, will.

5. […] Awarding the plaintiffs their costs for getting one claim certified while their remaining 14 claims were not certified or were struck only encourages plaintiffs to overreach. It does not discourage plaintiffs from pleading implausible or overly ambitious claims, since there is no downside – success on only one certification issue would still produce full costs of an overblown and wrong in law proposal.

[34] In their Original Costs Submissions, the Plaintiffs anticipated the Defendants’ argument that there should be no order as to costs given what the Defendants’ had achieved at the certification motion and the Plaintiffs repeated their counterargument in their Reply Costs Submissions. The relevant paragraphs of the Plaintiffs’ Original Costs Submissions are paragraphs, 12-16, which stated:

12. The Plaintiffs succeeded on the motion. They obtained a certification order. No exceptional circumstances are present in this case to warrant a departure from the general rule that they are entitled to their costs.

13. As the Plaintiffs stated in their moving factum “[a]t its heart, this is a negligent design case.” The Plaintiffs succeeded in certifying the core cause of action and common issues in this proceeding.

14. The Court's refusal to certify certain causes of action is immaterial to the costs analysis. Awarding costs based on the success or failure of particular causes of action is inconsistent with the guidance of the Court of Appeal for Ontario, which has clarified that costs of a certification motion are awarded on the whole motion, not broken down to success at a granular level:

Simply put, the [CPA] aims to provide access to the justice system to litigants to whom procedural barriers and economics would otherwise present insurmountable hurdles. It is not in keeping with the spirit of that aim to penalize successful plaintiffs by attempting to break the certification motion down with a play-by-play analysis and apportioning costs accordingly.[^27]

15. A fair claim for costs should not be diminished because the Defendants limited the class size or decreased their exposure through the removal of the pure economic loss claims.[^28] As this Court has aptly stated, “[i]t is not uncommon in class proceedings that a representative plaintiff’s aspirations are not totally fulfilled, but – as a general rule – that does not mean that his or her costs claim for a successful certification motion should be reduced.”[^29]

16. Ultimately, the threshold question on a certification motion is whether an action should be certified or not. It is the merits of that issue which a judge must determine. Costs should be awarded based on the determination of that issue, and not in relation to the success or failure of particular proposed common issues or other certification criteria. The Plaintiffs were successful and are entitled to their costs.

[35] The relevant paragraphs of the Plaintiffs’ Reply Costs Submissions are paragraphs, 3, 4, 7, 12 and 13, which stated:

3. It bears repeating that the Defendants tried on every possible certification argument […], and they fought certification forcefully on every step of the test. The battle is over. The dust has settled and the Plaintiffs are left standing with a certified class proceeding of substantial importance to the tens of thousands of Class Members who are thousands of dollars out of pocket. Still, the Defendants seek to escape the battleground with an award of $16,612.70 and leave the Plaintiffs with nothing. The Defendants’ chutzpah flounders on its clear departure from fundamental costs principles, repeated mischaracterizations of the Plaintiffs’ claim, and a boastful misinterpretation of the Court's Reasons for Decision. While the Court certainly has discretion to reduce the successful party’s costs if it failed to admit things it should have admitted, or prolonged the proceeding unnecessarily, the Plaintiffs did no such thing on the certification motion.

4. Again, the Defendants recast the Plaintiffs’ claim by arguing that it is “hardly recognizable from the one which was pleaded and pursued through certification.” This submission is disingenuous. The design defect has always been and remains the core of the case, and the pleadings survived a blitzkrieg attack on both real and fantastical aspects of the claim. Professor White’s evidence focussed on the design fault, identified alternative designs, and was accepted as “some basis in fact for proving that the water pumps have a design defect…”.

5. The Class is smaller than originally framed, but it is still substantial and each Class Member’s claim is valuable. The Plaintiffs are out of pocket $4,200 and $8,535. Every Class Member will have claims of a similar value or more for personal injury claimants. The size of the Class is expected to comprise tens of thousands of Vehicles according to the Plaintiffs’ expert, Edward Stockton. The certification of this class proceeding is no small success; […]

6. The Defendants’ submission that the Plaintiffs’ claims were frivolous is improper. The Court did not describe them as such. All pleaded claims were grounded in the jurisprudence. […] Claims that do not survive the 5(1)(a) test are not automatically frivolous. The Defendants did not make this argument at the motion and it is inappropriate for the Defendants to retroactively recast the claims as such.

7. If anything, the Defendants created unnecessary complexity by presenting unrelenting arguments with respect to the commonality of a defect in mass-produced vehicles, identifiable class, preferable procedure or suitable representative plaintiffs. These arguments should have been conceded. It also bears noting that the Defendants’ successful motion to strike evidence had zero effect on the outcome of the certification motion.

[36] Ignoring the snideness, both the Plaintiffs’ and the Defendants’ arguments are pitched as righteous arguments and the arguments do support the positions they are respectively taking as to how the court should exercise its discretion about costs. Technically or strictly speaking, the Plaintiffs won the battle of the certification motion and the Defendants lost. Substantively speaking, although the Plaintiffs’ aspirations for a greater success on the battlefield fell far short of the goal, the Plaintiffs achieved a substantial success for a substantial number of Class Members. Keeping in mind that the certification motion is the D-Day not the VE-Day of the Class Proceedings Act, 1992, although the Defendants technically and substantively lost the certification battle, they achieved a substantial success in the overall litigation. It is quite correct for the Defendants to say in effect that the court cannot close its eyes to what's happening in the world of this class proceeding.

[37] However, both sides’ arguments are also unrighteousness in that they overreach and go too far. Their absolute non-discretionary arguments are not in keeping with the spirit and policies of the Class Proceedings Act, 1992 nor of the costs provisions of the Courts of Justice Act and the Rules of Civil Procedure. Both sides’ selfish and self-serving arguments focus on a success that ignores the main policy goal of access to justice for the properly identified Class Members for whom a class action is the preferable procedure.

[38] Defendants in actions under the Class Proceedings Act, 1992 are undoubtedly entitled to resist certification, and in this regard, it is to be noted that even if a defendant consents to certification, the court is still obliged to be satisfied that the certification criteria are satisfied.[^30]

[39] It is always in the interests of justice for both the Defendants and for the putative Class Members that the certification criteria be tested and satisfied, and in some cases, of which the present case is an example, there may be a reduction in the indemnification for the legal expense incurred by a plaintiff where his or her Class Counsel’s litigation reach exceeds the grasp.

[40] The reason for this reduction is not so much to award the Defendant for its tactical, strategic, or substantive success on the certification motion, although that is a factor that the court is entitled to consider, but because it is in the interests of justice not to have an overinclusive class membership.

[41] The reason for this reduction is also not so much to punish the Plaintiffs for an overblown and wrong in law proposal, although that too is a factor that the court is entitled to consider but because overinclusiveness is potentially unfair to both the class members who should be included and to those who are over-included.

[42] Overinclusive class membership may not be in the interests of justice. Like litigation generally, very few class actions are actually tried, and the overwhelming majority are settled. If there is a settlement, it is not access to justice if the class members’ already compromised compensation and already contingency fee reduced recovery is further diluted by sharing it with the over-included class members. (In this regard, it is worth noting that unless the court intervenes, Class Counsel has no skin in this skinning.) If the settlement minimizes or excludes compensation for class members for whom the defendant has no genuine liability, then these Class Members may feel that they have been just cannon fodder in the litigation or a negotiating chip in the settlement. If the settlement adjusts for the over-included class members, then there may be conflicts of interest amongst the class membership about the fairness of the settlement. Overinclusiveness is a potential problem.

[43] Approaching the matter of over-inclusiveness of class membership from the perspective of the defendant in a class proceeding, the purpose of class proceedings is access to justice not only for class members but also access to justice for the defendant. One of the palpable ironies of class proceedings is that quite often when a class action settles, the defendant, which fought so hard to gut the class size, seeks an amendment to the class definition to engorge it. While the newly added class members will have the opportunity to opt out, few will do so, and thus, while the defendant will get more bang from the settlement release, the compensation to class members will be diluted. Putting the irony aside, the point to emphasize is that the over-included class members should not be played as pawns to be ransomed, sacrificed, or abandoned for the benefit of the defendant.

[44] In the immediate case, the Defendants had a substantial success in reducing the class size and while they did themselves a favour, ironically they also did a favour for the putative Class Members whose claims were certified. What emerged was a manageable class action for claimants and an action that may be more amenable for a fair settlement.

[45] In other words, in the context of the Class Proceedings Act, the purposes of the costs rules should be to advance six 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; (3) to discourage frivolous claims and defences; (4) to discourage underinclusive or overinclusive class membership; (5) to discourage and sanction inappropriate behaviour by litigants in their conduct of the proceedings; and (6) to encourage settlements.

[46] In the context of the immediate case, putting aside the matter of the disbursements, which I will address in the next part of these Reasons for Decision, I think that there should be a reduction in the indemnification for the litigation expense of the certification motion. In making the reduction, I do not much rely on the success arguments of either party and rather, in my opinion, the reduction is justified by the purposes of the costs rules in the context of a proceeding under the Class Proceedings Act, 1992 and by factors 57.01(1) (0.a), (0.b), (a), (c), (g), and (i).

[47] For these reasons, I award the Plaintiffs for the certification motion costs of $197,750 payable forthwith (comprised of fees $175,000 plus HST) and costs of $97,537.56 for disbursements payable in the cause of the common issues trial (inclusive of HST).

F. The Costs for the Disbursements for the Certification Motion

[48] Turning to the matter of the disbursements, the Plaintiffs retained Professor Christopher White to opine on the nature and commonality of the water pump design. Professor White delivered three reports. The Plaintiffs also retained the automotive economist Edward Stockton to provide expert evidence on the reliability and implications of the warranty claim rates set out in Gregory West’s affidavit filed with the Defendants’ responding record. In my Reasons for Decision, I found that both Mr. West’s evidence and Mr. Stockton’s evidence were neither helpful nor harmful.

[49] In their Costs Submissions, the Defendants argued that there should be no award or a substantially reduced award made for the contributions to the certification motion of Professor White and Mr. Stockton. Thus, the arguments stated in paragraph 11 of their written submissions:

11. In addition, to the extent any costs or disbursements are awarded to the plaintiffs here, the expert fees in the plaintiffs' disbursements should be deducted to remove Mr. Stockton's report (which was $14,136.68), and Dr. White's reply report (an unspecified sum in the total expenditure of $71,660.07) because they are improper reply and are not costs that the defendants could have reasonably expected to pay. In particular: (a) Mr. Stockton's report was purported reply to the defendants' affidavit from its sole fact witness, which the plaintiffs mischaracterize as opining on failure rates. In fact, the defendants' evidence did not address failure rates; it simply conveyed warranty claim rates based on the defendants' data. Mr. Stockton's report was completely unnecessary and nothing turned on it in the court's decision. The plaintiffs should not recover the applicable disbursement; and (b) Dr. White's "reply" report was purportedly reply to the defendants' affidavit from its sole fact witness. The issues addressed (implicated vehicles and variation in water pumps over time) are not the proper subject of reply evidence from an expert witness. Given the relatively small scope of Dr. White's reply report, the defendants propose $10,000 be deducted from the total disbursements associated with Dr. White.

[50] For present purposes, I need not decide whether or not Dr. White’s reply report was proper reply and I have already noted that I did not find the expert’s reports particularly helpful for the certification motion. These reports, however, may be helpful to the common issues judge and in my opinion, the appropriate way to treat all the disbursements is to award them payable in the cause of the common issues trial.

G. Conclusion

[51] For the above reasons: (a) for the preliminary motion, I award the Defendants costs of $16,612.70 payable forthwith; and (b) for the certification motion, I award the Plaintiffs costs of $197,750 payable forthwith and costs of $97,537.56 for disbursements payable in the cause of the common issues trial.

[52] Order accordingly.

Perell, J.

Released: August 17, 2021

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