Court File and Parties
COURT FILE NO.: CV-19-00615070-00CP DATE: 20210917
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
JOHN PETERS Plaintiff
- and -
SNC-LAVALIN GROUP INC., KEVIN LYNCH, NEIL BRUCE, SYLVAIN GIRARD and HARTLAND PATERSON Defendants
Counsel: Jay Strosberg, and Scott Robinson for the Plaintiff Katherine Kay, Daniel S. Murdoch, and Sinziana R. Hennig for the Defendants
Proceeding under the Class Proceedings Act, 1992
HEARD: In writing.
REASONS FOR DECISION - COSTS
PERELL, J.
[1] In this proposed class action under the [Class Proceedings Act, 1992][^1], John Peters sued SNC-Lavalin Group Inc., and Kevin Lynch, Neil Bruce, Sylvain Girard, and Hartland Paterson, who are four senior officers and directors of SNC. He advanced two causes of action: (a) a statutory cause of action for misrepresentation in the secondary market for securities pursuant to Part XXIII.1 of the [Ontario Securities Act][^2]; and (b) common law misrepresentation. The statutory cause of action required leave, and Mr. Peters moved for leave to assert it. He also moved for certification of both the statutory and the common law actions.
[2] As explained in considerable detail in the leave and certification motion decision,[^3] the essential core of Mr. Peters’ two causes of action is the singular legal proposition that a message from Prosecution Service on September 4, 2018 to SNC was a “material change” that was not disclosed as required by the Ontario Securities Act. His class action was totally dependent on the singular question of whether SNC’s disclosure of its failed negotiations to obtain an invitation from the Director of Public Prosecutions of Canada to negotiate a Remediation Agreement came thirty-six days too late.
[3] I concluded that there was no prospect that Mr. Peters’ action under Part XXIII.1 of the Ontario Securities Act could succeed. There was no material change to SNC’s business, operations, or capital. Further, in my opinion, standing alone, Mr. Peters’ common law negligence action was not certifiable as a class proceeding. I, therefore, dismissed his motion for leave to plead a cause of action under the Ontario Securities Act, and I dismissed his motion for certification.
[4] The Defendants seek $363,184, all inclusive, in costs of the two motions, consisting of $360,380 in fees assessed on a partial indemnity basis as 60% of the over $600,000 in legal fees actually incurred by the Defendants, and $2,804 in disbursements.
[5] Mr. Peters submits that the appropriate award is $250,000, all-inclusive. He submits that $363,184, all inclusive, is inappropriate because the Defendant’s claim for costs is: (a) excessive and unreasonable; and (b) it fails to take into account that the motion addressed complex and novel points of law and matters of public interest in the context of the remedial, investor-protection-focused Securities Act, particularly the scope of a “material change” that would mandate immediate disclosure to the public.
[6] The procedural background is set out in my Reasons for Decision, and I incorporate that decision into the immediate decision. I add that the Class Proceedings Fund agreed to support Mr. Peters’ action pursuant to the Law Society Act and this is some recognition that his proposed class action was being advanced as a matter in the public interest.[^4]
[7] Mr. Peters did not provide any information as to the legal resources he expended for the leave and certification motions, and I am not persuaded that there was anything unwarranted, excessive, or unreasonable in the quantum of the Defendants’ claim for partial indemnity costs.
[8] In Paniccia v. MDC Partners Inc.,[^5] I stated at paragraphs 6 and 9:
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.”
[C]ourts should second-guess the appropriateness of a litigant’s claim to be indemnified for his or her legal costs, which may be objectively unreasonable having regard to the circumstances of the particular case and regardless of how much the opponent will have expended for his or her legal expenses.
[9] In my opinion, in the immediate case, the Defendants’ claim for costs was well within the expectations of Mr. Peters of what would be his exposure to costs in the event of failure on the leave and certification motions. Having regard to comparable leave and certification motions, and the normal principles that govern the assessment of costs, $363,184, would be a fair and reasonable award of costs. Therefore, but for Mr. Peters’ arguments about s. 31(1) of the Class Proceedings Act, 1992 and about the novelty and the public importance of the case, I would have awarded the costs as requested.
[10] Turning to those arguments, an important factor in awarding costs in class actions is s. 31(1) of the Class Proceedings Act, 1992, which provides that:
- (1) 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.
[11] Under s. 31 (1) 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.[^6] The effect of s.31(1) is to encourage the court to recognize that class actions tend toward being test cases, the determination of a novel point of law, or the adjudication of matters of public interest and courts, therefore, should be alert to and respond to these tendencies when making decisions about costs.[^7]
[12] However, the idea of what counts for a matter of public interest is amorphous. When a defendant is successful in resisting certification and claims costs, there is no easily determinable legal litmus test as to when a court should exercise its discretion pursuant to s. 31(1) of the Class Proceedings Act, 1992 to make no order as to costs or to reduce the amount of costs the losing plaintiffs might otherwise be required to pay.[^8]
[13] What counts for a legal novelty is on a continuum because all lawsuits have some distinguishing element of novelty. What counts for a matter of public interest also runs the gamut from matters that are just fascinating or entertaining but unenlightening to matters that engage societal concerns of significant importance to access to justice, the administration of justice, or to the regulation and governance of a civil society. A matter of public interest is something more than a matter that might just interest the public, and it may not be possible for a court to provide a precise and comprehensive definition of the concept.[^9] Generally speaking, 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.[^10]
[14] In the immediate case, I agree with Mr. Peters’ argument that I should exercise my discretion to reduce the Defendants’ otherwise appropriate claim for costs from $363,184. In my opinion, the case was a legal novelty in the requisite sense to justify a reduction in costs. In my opinion, the case was a matter in the public interest that would also justify a reduction in the costs to be awarded.
[15] Having regard to all the circumstances and also to the normal discretionary principles that govern costs awards, I award $285,000, all-inclusive.
[16] Order accordingly.
Perell, J.
Released: September 17, 2021
COURT FILE NO.: CV-19-00615070-00CP DATE: 20210917
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
JOHN PETERS Plaintiff
- and -
SNC-LAVALIN GROUP INC., KEVIN LYNCH, NEIL BRUCE, SYLVAIN GIRARD and HARTLAND PATERSON Defendants
REASONS FOR DECISION - COSTS
PERELL J.
Released: September 17, 2021
[^1]: S.O. 1992, c. 6. [^2]: R.S.O. 1990, c. S.5. [^3]: Peters v. SNC-Lavalin Group Inc., 2021 ONSC 5021. [^4]: Das v. George Weston Limited, 2018 ONCA 1053. [^5]: 2018 ONSC 1775. [^6]: Sutherland v. Hudson's Bay Co., [2008] O.J. No. 602 at para. 11 (S.C.J.); Caputo v. Imperial Tobacco Ltd.(2005), 2005 CanLII 63806 (ON SC), 74 O.R. (3d) 728 at para. 32 (S.C.J.); Joanisse v. Barker, [2003] O.J. No. 4081 (S.C.J.); Fehringer v. Sun Media Corp., [2002] O.J. No. 5514 (S.C.J.); Garland v. Consumers' Gas Co. (1995), 1995 CanLII 7179 (ON SC), 22 O.R. (3d) 767 (Gen. Div.), aff’d (1996), 1996 CanLII 1022 (ON CA), 30 O.R. (3d) 414 (C.A.). [^7]: Das v. George Weston Limited, 2018 ONCA 1053; Fehr v. Sun Life Assurance Company of Canada, 2017 ONSC 2218 at para. 53. [^8]: Das v. George Weston Limited, 2018 ONCA 1053; Fehr v. Sun Life Assurance Company of Canada, 2017 ONSC 2218; Incredible Electronics Inc. v. Canada (Attorney General) 2006 CanLII 17939 (ON SC), [2006] O.J. No. 2155 (S.C.J.). [^9]: McLaine v. London Life Insurance Co., [2008] O.J. No. 2360 at paras. 14-17 (Div. Ct.); Vennell v. Barnado's (2004), 2004 CanLII 33357 (ON SC), 73 O.R. (3d) 13 at paras. 28-29 (S.C.J.). [^10]: Das v. George Weston Limited, 2018 ONCA 1053 at para. 248; Smith v. Inco Ltd., 2012 ONSC 5094; McCracken v. Canadian National Railway Company, 2012 ONCA 797 at para. 9; Ruffolo v. Sun Life Assurance Co. of Canada, 2009 ONCA 274 at paras. 38-41 aff’g (2008), 2008 CanLII 5962 (ON SC), 90 O.R. (3d) 59 (S.C.J.) leave to appeal to S.C.C. ref’d, [2009] S.C.C.A. No. 226; Kerr v. Danier Leathers Inc., 2007 SCC 44 at para. 67; Pearson v. Inco Ltd. (2006), 2006 CanLII 7666 (ON CA), 79 O.R. (3d) 427 at para. 9 (C.A.); Caputo v. Imperial Tobacco Ltd. (2005), 2005 CanLII 63806 (ON SC), 74 O.R. (3d) 728 at para. 36 (S.C.J.); Vennell v. Barnado's (2004), 2004 CanLII 33357 (ON SC), 73 O.R. (3d) 13 at paras. 31-32 (S.C.J.); Joanisse v. Barker [2003] O.J. No. 4081 at para. 14 (S.C.J.); Moyes v. Fortune Financial Corp., [2002] O.J. No. 4298 at para. 6 (S.C.J.); Gariepy v. Shell Oil Co., [2002] O.J. No. 3495 (S.C.J.); Williams v. Mutual Life Assurance Co. of Canada, 2001 CanLII 62796 (ON SC), [2001] O.J. No. 445 at paras. 24-26 (S.C.J.); Edwards v. Law Society of Upper Canada [1998] O.J. No. 6192 (Gen. Div.), aff'd (2000), 48 O.R. (3d) 329 (C.A.).