COURT FILE NO.: CV-19-00028402-A1CP
DATE: 20221103
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Timothy Gordon, Angela Thomson, John Ng-Lun, John Sitter and Fadiya Shamasha, Plaintiffs
AND
837690 Ontario Limited, Defendant
AND
Tyco Integrated Fire & Security Canada, Inc. o/a Johnson Controls, Troy Life & Fire Safety Ltd. and MK Electric Ltd. and A.P.I. Alarm Inc., Third Parties
BEFORE: Justice Spencer Nicholson
COUNSEL: Harvey Strosberg, Sharon Strosberg and Justin Smith for the Plaintiffs
Chris Stribopoulos, Mario Delgado, Christine Galea, Travis Walker and Balraj Sihota for the Defendant
Lindsay Lorimer, Rachel Cooper and Connor Campbell for the Third Party, Tyco Integrated Fire & Security Canada Inc. o/a Johns Controls
Natasha O’Toole for the Third Party, Troy Life & Fire Safety Ltd.
Jessica Cosentino for the Third Party, MK Electric Ltd.
Christine Calalang for the Third Party, A.P.I. Alarm Inc.
HEARD: In Writing
Proceedings under the Class Proceedings Act, 1992
COSTS ENDORSEMENT RE: CERTIFICATION MOTION
NICHOLSON J.:
[1] This now certified class action arises out of a fire in a residential and commercial high-rise located in downtown Windsor. The tenants sought to have the proceedings certified as a class proceeding. The owner of the building resisted the motion. The owner also third partied four other entities who it alleged were responsible for the damage caused by the fire.
[2] In my decision dated February 14, 2022, I certified this matter as a class proceeding under the Class Proceedings Act, 1992 and invited written submissions in respect of costs.
[3] I received multiple submissions. The plaintiffs seek costs in the amount of $435,867.17. This consists of $306,446.10 in fees, plus HST thereon, on a partial indemnity basis. The plaintiffs claim to have in excess of $510,000 in actual legal fees. They also seek their disbursements in the amount of $79,227.06, plus HST. These costs are sought from the defendant, 837690 Ontario Limited. The plaintiffs also assert that the third parties were unsuccessful on the certification motion and should be responsible for some of the plaintiffs’ costs.
[4] The four third parties, Tyco Integrated, Troy Life, MK Electric and A.P.I. Alarm Inc., also seek their costs of the certification. These costs are sought from the plaintiffs, as follows:
(a) Tyco $53,907.05 all-inclusive
(b) Troy $9,866.03 all-inclusive
(c) MK Electric $9,337.76 all-inclusive
(d) A.P.I. Alarm $10,243.90 all-inclusive.
[5] This endorsement explains my decision on costs.
Legal Principles:
[6] In Pearson v. Inco Ltd., 2006 ONCA 7666, the motion judge refused to certify the proceedings as a class proceeding and awarded costs in favour of the defendant. On appeal, the Court of Appeal certified the proceeding, but narrowed the scope of the claim and size of the proposed class.
[7] The defendant following the certification motion had sought costs in the amount of $250,000 for fees and disbursements. The motion judge awarded $45,000 for fees and $40,000 for disbursements. Following the appeal, the plaintiff sought costs of approximately $366,000.
[8] The Court of Appeal noted that the costs award should take into account the limited degree of success achieved by the plaintiffs and that the case involved a matter of public interest. However, the Court of Appeal also made it clear that distributive costs awards are to be avoided. In Pearson, the Court of Appeal, at para. 5, quoted Winkler J. in Lau v. Bayview Landmark Inc., [1999] O.J. No. 4385, 92 A.C.W.S. (3d) 752 (S.C.J.), at para. 3, as follows:
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.
[9] The Court of Appeal also confirmed that in dealing with costs in class proceedings, s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C. 43 and Rule 57.01 of the Rules of Civil Procedure continue to apply. The Court stated, at paragraph 13 that the following principles and factors apply:
(1) The normal rule that costs will ordinarily follow the event applies;
(2) The costs must reflect what is fair and reasonable (Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 ONCA 14579, 71 O.R. (3d) 291);
(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 views of the motion judge concerning the complexity of the issues and what is fair and reasonable;
(7) If the case raised an issue of public importance;
(8) A fundamental object of the Class Proceedings Act, 1992 is to provide enhanced access to justice.
[10] I note that in Pearson, the Court of Appeal awarded the plaintiff $90,000 in fees for the costs of the certification motion.
[11] Perell J. has repeatedly noted in his costs endorsements in class proceedings that 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.
(See, for example: Vester v. Boston Scientific Ltd., 2017 ONSC 2498 and Fehr v. Sun Life Assurance Company of Canada, 2017 ONSC 2218).
[12] Perell J. has also enunciated concern about the rise in costs awards in certification motions. In Heller v. Uber Technologies Inc., 2018 ONSC 1690, he commenced his costs endorsement by stating, as follows in paras. 1, 2 and 3:
[1] Like a forest fire in this era of climate change, costs in class proceedings have gotten out of control.
[2] The tendency of Class Counsel or Defence Counsel to exercise little restraint because the courts will not second-guess either side’s allocation of legal resources needs to be stopped because it is not fair to the litigants and because runaway legal expense is an obstacle for access to justice for both plaintiffs and defendants.
[3] The court is part of the problem. The court’s failure to rein in the expectations of the parties to what is a genuinely reasonable allocation of legal resources, even for a high risk-and-reward class action, just fuels the fire storm. It requires no change in the law to bring some control, proportionality, and reasonableness back. All it requires is for the court to do its job, and not leave it to the lawyers to unreasonably determine what is a reasonable costs award in a class action.
[13] I do note, however, that in Heller, supra, Perell J. was awarding costs in relation to a stay motion, not a certification motion. However, his caution must still be kept in mind as he was clearly referring to the costs problem of class actions in general.
[14] I was also referred to the costs decision of Belobaba J. in Rosen v. BMO Nesbitt Burns Inc., 2013 ONSC 6356. He, too, pointed out that costs in certification motions have become excessive. In that decision, he provides commentary in relation to each factor enumerated in the Pearson decision. He also charted costs awards over the previous six years (from the date of his decision) demarcating cases above and below the $500,000 in costs sought threshold.
Arguments of the Parties:
The Plaintiffs:
[15] The plaintiffs argue that the amount sought in partial indemnity costs is reasonable and should be approved. They argue that a certification is a vital step in the proceedings and the parties are expected to devote substantial resources to prosecuting and defending a certification motion. They also argue that this particular certification motion was “hard fought”.
[16] In respect of the third parties, the plaintiffs argue that the third parties elected to plead into the main action and are therefore bound by the certification order. The third parties participated in the certification motion, adopting the defendant’s position in opposition of certification. Since certification occurred, the third parties were unsuccessful relative the plaintiffs and the plaintiffs are entitled to recover their costs from the third parties.
The Defendant:
[17] The defendant relies heavily on the principle that costs awards must be “fair and reasonable” and stress the statements made by Perell J. in Heller, supra. The defendant submits that the plaintiffs’ fees are excessive in the circumstances of this motion. They point out that the plaintiffs’ lawyers are national leaders in class action law and were likely able to recycle in-house precedents that would have been available to them. The defendant argues that it is very unlikely that the documents prepared in this action were unique documents drafted from “scratch”.
[18] As required, especially if a party is alleging that the amount of time expended is excessive, the defendant has produced its own Bill of Costs. The defendant’s lawyers expended 574.9 hours compared to the plaintiffs’ lawyers 841.6 hours. The defendant’s lawyers’ actual time expended was $209,825.18.
[19] Further, the defendant argues that the plaintiffs’ partial indemnity rates substantially exceed the maximum partial indemnity rate of $350.00 set out in the Civil Rules Committee’s costs grid. The defendant relies upon Workman Optometry v. Aviva Insurance, 2021 ONSC 4668, in which Belobaba J., in the context of a hard-fought procedural motion, described that hourly rate parameters set out in the costs grid should be applied.
[20] Finally, the defendant argues that it should not be held responsible for issues that were strictly between the plaintiffs and the third parties. The certification motion was adjourned due to one such issue.
Third Parties:
[21] It should be noted that the third parties offered a joint position during the certification motion and in their costs submissions, with counsel for Tyco making arguments during each. Obviously, such an approach resulted in substantial savings to this group of litigants’ overall costs.
[22] The third parties take the position that they were entirely successful with respect to their position on the certification motion as the Court found it inappropriate to include reference to “subcontractors” or “contractors” in three of the common issues that were certified. The third parties argue that this was an important issue to them, as a contrary finding would have necessitated their participation in the common issues trial despite no pleading being made as against them.
[23] The third parties seek their costs as against the plaintiffs as it was the plaintiffs who on the eve of the certification motion gave notice of an intention to amend the common issues and the pleadings to allege negligence as against the third parties. This, in their submission, “fundamentally changed” the landscape of the claim as against the third parties and, thus, their litigation strategy.
[24] The third parties assert that they did not oppose certification, they only opposed their inclusion in the common issues trial as noted in my certification decision. In any event, the third parties argue that their involvement did not generate any costs for the plaintiffs as the plaintiffs delivered their motion record before the third parties were even served with the third party claim.
Analysis:
Plaintiffs:
[25] Presumptively, the plaintiffs are entitled to their costs of the certification motion. The class proceeding was certified. The legal authorities provide that the court is not to parse success on an issue-by-issue basis. The issue, thus, is not entitlement as between the plaintiffs and the defendant, but quantum.
[26] There is no basis for costs on a substantial indemnity basis and the plaintiffs did not make that suggestion.
[27] Pearson requires that I consider that a motion for certification is a vital step in such proceedings. I agree that the certification motion was hard fought, although I would not classify it as being any harder fought than most certification motions. The defendant did, properly in my view, raise the jurisdiction issue. The plaintiffs urge me to find that to be evidence of the certification being “hard fought”. It did add complexity to the motion. The defendant’s position was ultimately unsuccessful.
[28] From a complexity perspective, the plaintiffs had argued wholeheartedly during the certification motion that because similar class proceedings had been certified in cases involving fires and apartment buildings (or malls) that the within case was the perfect class proceeding. The fact that there were similar cases leads me to believe that this was not a particularly complex matter. It was, again, somewhat complicated by the jurisdictional issue that arose under the Residential Tenancies Act, 2006, S.O. 2006, c. 17.
[29] I am also required to consider the reasonable expectations of the parties. The defendant’s Bill of Costs is an important starting point in that exercise. Simply because the defendant spent less on legal fees does not mean that the plaintiffs’ fees are unreasonable. In fact, I conclude that the defendant would reasonably anticipate that the plaintiffs would incur greater legal expenses than the defendant. Typically, the hourly rate for plaintiffs’ counsel would exceed that of defense counsel, whose client is more likely to insist upon compensation being paid on an hourly rate basis. Such clients are in a much better negotiating position vis-à-vis their counsel when it comes to hourly rates. Furthermore, the plaintiffs’ lawyers would expend greater resources communicating with and managing the proposed class members. I agree with counsel for the plaintiffs that there is an asymmetrical evidentiary and procedural burden facing plaintiffs on a certification motion.
[30] In fixing costs under Rule 57.01, the court should consider the hourly rates of counsel. Mr. Strosberg has 51 years of experience. His hourly rate was $1050 as of 2019. Ms. Strosberg, called in 2001, had an hourly rate of $675 in 2019 and $750 in 2021. Mr. Smith, called in 2018, had an hourly rate of $275 in 2019 and $325 in 2021.
[31] It must be kept in mind that those hourly rates were not negotiated between those lawyers and the plaintiffs. Plaintiffs’ counsel can charge those hourly rates due to their reputations and their prior results in class proceedings. While they are entitled to charge what the marketplace will bear, it is my view that they cannot necessarily expect unsuccessful defendants to be ordered to pay costs based on such high hourly rates.
[32] By contrast, the defendant’s lawyers’ hourly rates were $375 per hour for Mr. Stribopoulos, called in 1994, $325 per hour for Mr. Delgado (2007 call) and $300 per hour for Ms. Galea (2009 call). Again, I recognize that these hourly rates are likely client driven. These hourly rates cannot necessarily set the bar for determining reasonable expectations either.
[33] I will note that Ms. Lorimer, for Tyco, with 22 years of experience had an hourly rate of $700 per hour. Ms. Cooper, with 13 years of experience, charges $525 per hour. Mr. Campbell, a 2021 call, has an hourly rate of $400. Those hourly rates are more suggestive that the plaintiffs’ lawyers’ hourly rates are within the range of reasonable for class proceedings.
[34] Finally, the hourly rates of the lawyers for the remaining third parties--Ms. Cosentino, Mr. White, Ms. O’Toole, Ms. Polano, Ms. Calalang and Mr. Cole--are more in line with the defendant’s lawyers’ hourly rates.
[35] In any event, the court is not required to engage in a mathematical calculation of hourly rate times hours spent. Nor is the court to scrutinize the time spent to account for every hour. The role of the court is to fix a fair and reasonable figure for costs, keeping in mind what the unsuccessful party ought to reasonably expect to pay. In doing so, I have attempt to account for the discrepancies in hourly rates.
[36] In reviewing the cases provided by counsel, this two-day motion was not particularly lengthy as certification hearings go. As part of the equation in determining what an unsuccessful party might reasonably expect to pay, the court may consider other cases. However, given the uniqueness of each case, such an endeavour is not always very helpful. The parties did not provide other cases for my comparison. In the cases provided, it is noteworthy that costs awards in certification motions are typically very large. Thus, based on the body of case law, unsuccessful defendants clearly appreciate that they are facing significant cost consequences in the event of certification.
[37] I must also recognize, as I did in my reasons for certifying the proceeding, that this proceeding is an important access to justice vehicle for the tenants of the building. Absent this proceeding, many, if not most, of the tenants may have opted not to pursue any remedy. Thus, the stakes in the certification motion were high since had the certification been denied, the litigation could well have been halted. However, I also appreciate the arguments of the defendant from the certification hearing that it is not abundantly clear that any one tenant has a particularly large claim factoring in the defendant’s efforts at mitigation.
[38] I have concluded that a fair and reasonable sum for the defendant to pay to the plaintiffs in respect of their legal fees for the certification motion is $250,000, plus HST.
[39] In arriving at that number, I have adjusted the hourly rates in some measure and reduced some of the time for the inevitable over-preparation or duplication of work. This is by no means a criticism of plaintiffs’ lawyers’ handling of the file, just a recognition that duplication must occur when multiple lawyers are working on the same file. However, there was no “mathematical” arrival at this figure. It is, in my view, simply a fair and reasonable sum that this unsuccessful defendant might anticipate paying on a certification motion of this nature in light of their own Bill of Costs.
[40] I must also consider the plaintiffs’ disbursements. The disbursements total $79,277.06. The largest item was for the expert report, in the amount of $71,262.87.
[41] Perell J. described costs principles relating to disbursements, particularly for experts, in Das v. George Weston Limited, 2017 ONSC 5583. At paragraphs 70-73, Perell J. stated as follows:
[70] 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: Hamfler v. 1682787 Ontario Inc., 2011 ONSC 3331; Bombardier Inc. v. AS Estonian Air, 2013 ONSC 4209; Batchelor v. Looney; 2016 ONSC 1535; Mayer v. 1474479 Ontario Inc., 2014 ONSC 2622; 495793 Ontario Ltd. (c.o.b. Central Auto Parts) v. Barclay, 2015 ONSC 602.
[71] 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 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.
[72] In order to assist the court in determining whether an expert’s fee is fair and reasonable, the party claiming the disbursement should provide information about the amount of time spent by the expert in preparing the report and attending at trial (including preparation time), together with the hourly rate of the expert: Hamfler v. 1682787 Ontario Inc., 2011 ONSC 3331 at paras. 24-25; 495793 Ontario Ltd. (c.o.b. Central Auto Parts) v. Barclay, 2015 ONSC 602 at para. 28; Abdula v. Canadian Solar Inc., 2015 ONSC 1421 at para. 13; Ryan v. Rayner, 2015 ONSC 3310 at para. 11; Parent v. Janandee Management Inc., 2016 ONSC 3899 at para. 28; Pyatt v. Roessle Estate, 2017 ONSC 3878 at paras. 21-22.
[73] In Hamfler v. 1682787 Ontario Inc., supra, 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?
[42] The purpose of the Roar Engineering Report was to identify the origin and cause of the subject fire. It is obviously going to be an important report with respect to the litigation as a whole. The issues that the report address will be central to the litigation. However, its importance on the certification motion was somewhat muted. This is in part because the defendant did not choose to challenge the cause or origin of the fire at this stage of the proceedings. It is difficult to fault the plaintiffs for not anticipating that the defendant would not do so (or perhaps could not do so). Further, the court was simply looking for “some basis in fact” and thus did not have to heavily scrutinize the experts’ findings.
[43] However, I have absolutely no basis by which to judge the reasonableness of the fees charged by Roar Engineering. Their fees may be perfectly reasonable or wildly inflated. In a brief attendance on April 12, 2022, the defendant indicated that they wanted production of the plaintiffs’ lawyers’ dockets and a breakdown of the disbursements. In two brief endorsements, with respect to this issue, I ultimately indicated that I was not going to order the production of dockets at that time but might request further submissions if I thought I needed dockets. I do not. However, I did not make any request with respect to expert fees.
[44] Accordingly, it would be unfair for me to penalize the plaintiffs’ for not providing further evidence in support of their expert and thus, withhold this disbursement from them. It is entirely possible that their experts’ account could have been justified. However, I also do not wish to have this costs issue linger any longer.
[45] Accordingly, I am going to order that the defendant pay the sum of $50,000 to the plaintiffs now in respect of the Roar Engineering Report, without prejudice to either side to re-raise this issue when the matter concludes. As I have noted, this report had some utility during the certification motion, and will undoubtedly have some considerable relevance going forward.
[46] In other words, the plaintiffs will have to justify the Roar account in the future.
[47] Thus, I fix the disbursements payable to the plaintiffs by the defendant in the amount of $58,014.19, without prejudice to either party to re-adjust the amount to be paid for the Roar Engineering Report in the future. HST on that sum is $7,541.85.
[48] Thus, the total amount of costs that I award to the plaintiffs by the defendant is $250,000 for fees, plus $32,500 for HST, plus disbursements of $65,556.04 (incl. taxes). The grand total is accordingly $348,056.04.
The Third Parties:
[49] I am of the view that pursuant to s. 131 of the Courts of Justice Act, I have the authority to award costs in favour or against the third parties. The section gives the court discretion to determine “by whom and to what extent” costs are to be paid. The third parties are parties to this litigation. They participated in the certification hearing. The issues are whether they are entitled to their costs and if so, by whom.
[50] It must be remembered that the four third parties were brought into this litigation by the defendant, not the plaintiffs. All four of the third parties defended the main action. By doing so, they acquired the same rights and obligations in the main action as the defendant. Whether or not they defended the main action, the third parties would have been bound by the certification order (see: Rule 29.05 of the Rules of Civil Procedure).
[51] As I noted in the certification decision, third parties do not often participate in certification motions. Indeed, in this case, the third parties appear to have intended to have somewhat limited roles in the certification motion. However, they did participate. Counsel for all of the third parties attended at all of the case conferences leading up to the certification motion. They participated in the cross-examinations, including posing questions to some of the witnesses.
[52] I note that the original timetable did contemplate that the third parties might deliver factums for the certification motion. However, I accept that the third parties had not originally intended to participate in this particular certification motion, in any meaningful way. In fact, they may have been precluded from doing so had anybody raised the issue.
[53] However, the plaintiffs’ factum, served on August 10, 2021, approximately 6 weeks in advance of the originally scheduled dates for the certification motion, in my view clearly “changed the landscape”. The plaintiffs sought to assert revised common issues. The plaintiffs did so in a footnote in their factum, which read:
“As each of the third parties delivered a statement of defence after the delivery of the notice of motion in the within motion, the plaintiffs have necessarily amended the proposed common issues from the Notice of Motion to reflect the involvement of the third parties.”
[54] Thus, the factum presented common issues which, for the first time, explicitly implicated the third parties, as follows:
Common Issue 1—Did the Defendant and any of the third parties owe a duty of care to the Class and Family Class when they operated, maintained and/or monitored Westcourt Place, including the electrical systems and the fire prevention system? If so, who owed a duty of care to the Class and Family Class?
Common Issue 2—If the answer to question 1 is yes, did the Defendant or the Defendant and any of the third parties breach the standard of care expected of them in relation to the operation, maintenance and/or monitoring of Westcourt Place, including the electrical systems and the fire prevention system? If so, who breached the standard of care and how?
Common Issue 9—Is the Defendant vicariously liable or otherwise responsible for the acts and/or omissions of its officers, directors, employees, agents, and representatives and/or the third parties?
[55] The plaintiffs’ factum also included reference to the plaintiffs’ intention to amend the claim after the disposition of the certification motion to allege negligence as against the third parties.
[56] Given that third parties rarely participate in certification motions, it is unsurprising that there is a dearth of cases in which costs involving third parties is an issue. I was provided with the case of Lipson v. Cassels Brock & Blackwell, 2013 ONSC 6450. This was a costs decision relating to a successful certification motion. It does appear that the third parties in that case had participated in the certification motion and opposed certification. At paragraph 18, Perell J. describes that third parties did not deliver any evidence for the record and limited their participation to a short factum and argument about the limitation period defence.
[57] The issue in Lipson was whether there would be an award of costs against the third parties. Perell J. ultimately awarded no costs as against them, leaving open the possibility that the defendant could later seek some costs from the third parties.
[58] The Lipson case is of little assistance to the circumstances before me. In the within case, the third parties are asserting their right to costs as against the plaintiffs.
[59] However, in other contexts plaintiffs have been ordered to pay the costs of third parties. In Guarantee Co. of North America v. Resource Funding Ltd., 2009 CarswellOnt 4583, Newbould J, at para. 5, described that the normal rule is that an unsuccessful plaintiff will not be charged with the costs of the third party although there may be situations in which fairness requires an unsuccessful plaintiff to bear a successful third party’s costs. In doing so, Newbould J., quoted from McLachlin J. (as she then was) in Milina v. Bartsch (1985), 1985 BCSC 454, 1 C.P.C. (2d) 269 (B.C.S.C.), who noted in that case that the plaintiff “did not sue the third party, did not want him in the case and was not responsible for joining him”. In those cases, it would be unfair to visit the third party’s costs on the plaintiff.
[60] However, McLachlin J. did identify situations in which a plaintiff can be held responsible for a third party’s costs. One instance described in Milina v. Bartsch by McLachlin J, was where the third party was brought or kept in the matter by reason of the act or neglect of the plaintiff.
[61] I note that the Ontario Court of Appeal referred to Newbould J.’s decision in Guarantee Co. with approval in Sanofi Pasteur Limited v. UPS SCS, Inc., 2015 ONCA 88.
[62] In the present case, it is clear to me that the third parties were drawn into actively participating in the certification motion by the plaintiffs, not the defendant. The third parties have produced a slew of emails that indicate that the third parties were not taking a position on certification up until the plaintiffs revealed their intention to amend the common issues. The third parties made clear to the plaintiffs as late as October 22, 2021, that they could not permit the proposed amended common issues to be certified without opposition.
[63] The plaintiffs were, in my view, attempting to hook the third parties by amending the common issues. The third parties thus incurred legal expenses that would not otherwise have been incurred. The plaintiffs ought to be held to account for that decision if it is determined that the third parties were “successful”.
[64] In determining whether the third parties were “successful” it is necessary to examine their position on the certification motion. I have re-reviewed the third parties’ joint factum. The third parties did support the position of the defendant, as they stated quite clearly within the factum, as follows:
“The third parties “repeat[ed] and rely[ied] on the submissions of the Defendant save and except the Third Parties do not concede and, in fact, contest, that s. 5(1) of the Class Proceedings Act has been satisfied.”
[65] The third parties’ support of the defendant on certification is understandable. Had the certification motion failed, the third party claims may have been unnecessary. Thus, while I noted in my decision that the third parties did not oppose certification per se it is clear that the third parties hoped for the certification to fail. Thus, given that the certification motion did not fail, the third parties arguably were not entirely successful.
[66] The third parties also opposed certification of common issues 1, 2 and 9, as amended. In my decision, I agreed with the third parties that the Amended Fresh Statement of Claim did not disclose a cause of action as against them. Further, I agreed with the third parties that the words “contractors” and “subcontractors” should be removed from common issues 1, 2 and 9.
[67] Thus, the third parties enjoyed a large measure of success on the certification motion vis-à-vis the plaintiffs. I recognize that the court should avoid making distributive costs awards. However, the third parties participated in the certification motion on a very narrow basis and were entirely successful. It is my view that the third parties are thus entitled to their costs, on a partial indemnity basis, from the plaintiffs who drew them into participating during the motion.
[68] The same principles apply to quantifying those costs as noted above, with the ultimate goal being to fix fair and reasonable costs that the “unsuccessful” party would reasonably expect to pay.
[69] I have already indicated a willingness to reduce the hourly rates of plaintiffs’ counsel. For the same reason, it is my view that Tyco’s counsel, who have high hourly rates, should also have their rates reduced. The plaintiffs should not be deprived of high hourly rates but yet still required to pay a costs award based on high hourly rates.
[70] I do approve of the third parties uniting together. This was a practical, cost-effective way for them to present their position to the court. It also was perfectly sensible for the third parties to have Ms. Lorimar lead their submissions, given her apparent experience in class proceeding matters.
[71] In that regard, the third parties are seeking their costs for only a short period of time, from August 27, 2021, to the date of the certification motion. I appreciate that the third parties had to “cram” the necessary work into a small period. Nevertheless, this is a factor which I must consider in determining the proportionality of their award.
[72] Especially with respect to Tyco, where two seasoned counsel were involved, there must have been some duplication of efforts. As I did with respect to the plaintiffs, there must be some reduction owing to inefficiencies in distributing the work and redundancy.
[73] Finally, I fixed the plaintiffs’ fees for the entire certification motion at $250,000. It would be incongruent to fix the third parties’ costs on the narrow issues involved here, even recognizing their importance to the third parties, without ensuring some proportionality with the plaintiffs’ award.
[74] I have concluded that a fair and reasonable fee to be paid by the plaintiffs to the third parties, as a group, is $40,000, plus HST of $5,200.00. That shall be divided on a pro rata basis, as follows:
- Tyco $29,213.42
- Troy $5,356.08
- MK Electric $5,069.28
- A.P.I. Alarm $5,561.22
[75] The award of costs in favour of the third parties as against the plaintiffs is without prejudice to the third parties’ right to seek the costs other than what is covered within their costs outlines from the defendant at the conclusion of the third party claims.
Disposition:
[76] For the foregoing reasons, I award costs payable by the defendant to the plaintiffs in the amount of $250,000 for fees, $32,500 for HST and $65,556.04 for disbursements, for a grand total of $348,056.04. This is without prejudice to either party seeking to re-adjust the sum of $50,000 allocated to the Roar Engineering Report at the conclusion of the proceedings.
[77] However, the plaintiffs shall pay to the third parties the sum of $45,200 all-inclusive with respect to the third parties’ costs of the certification motion from August 27, 2021, to the conclusion of the motion. Those costs are to be allocated among the four third parties on a pro rata basis.
Justice Spencer Nicholson
Released: November 3, 2022