REASONS FOR DECISION - COSTS

COURT FILE NO.: CV-20-00639259-00CP DATE: 20230120

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

NICOLE CURTIS, AMR GALAL and KATRINA BUHLMAN Plaintiffs

• and - MEDCAN HEALTH MANAGEMENT INC, ANDREW CARRAGHER, SHAUN C. FRANCIS, EDWIN F. HAWKEN, URBAN JOSEPH, BEAU LASKEY, THOMAS P. REEVES, OWEN ROGERS, CRAIG SHEPHERD Defendants

Proceedings under the Class Proceedings Act, 1992

Counsel: Andrew Monkhouse for the Plaintiffs Jeffrey E. Goodman for the Defendants

HEARD: In writing

PERELL, J.

A. Introduction and Overview

[1] In this certified class action under the Class Proceedings Act, 1992, the Plaintiffs Nicole Curtis, Amr Galal, and Katrina Buhlman sue the Defendants Medcan Health Management Inc., Andrew Carragher, Shaun C. Francis, Edwin F. Hawken, Urban Joseph, Beau Laskey, Thomas P. Reeves, Owen Rogers, and Craig Shepherd. The Defendants Carragher, Francis, Hawken, Joseph, Laskey, Reeves, Rogers and Shepherd are Medcan’s directors.

[2] In 2021, the Plaintiffs moved for certification and the Defendants brought a summary judgment motion to have the Plaintiffs’ action dismissed. The motions were argued as one motion. I dismissed the summary judgment motion because the matter of the running of limitation periods and the matter of releases were genuine issues requiring a trial, and I dismissed the certification motion because the Plaintiffs had not satisfied the preferable procedure criterion. Curtis v. Medcan Health Management Inc., 2021 ONSC 4584.

[3] My decision on the certification motion was reversed by the Divisional Court. Curtis v. Medcan Health Management Inc., 2022 ONSC 5176.

[4] The Divisional Court directed that I determine the costs of the certification motion and also the costs of the appeal.

[5] The Plaintiffs request costs of $346,838.18, all inclusive, for the certification motion on a partial indemnity scale.

[6] The Plaintiffs request costs of $10,153.05, all inclusive, for the appeal.

[7] The Defendants do not dispute the costs claimed for the appeal to the Divisional Court. Order to go accordingly.

[8] The Defendants do oppose the quantum of costs sought in respect of the certification motion. They submit that the costs are grossly excessive and ought to be significantly reduced. For comparison purposes, the Defendants’ partial indemnity costs for the same motion were $92,040.00, and the Defendants submit that the fair and reasonable award of costs for the Plaintiffs would be $92,000.

[9] For the reasons that follow, I award the Plaintiffs $140,000, all inclusive, for the certification motion.

[10] The court’s discretion in awarding costs arises under the authority of s. 131(1) of the Courts of Justice Act and is to be exercised by a consideration of the factors in rule 57.01(1) of the Rules of Civil Procedure. These factors include the principle of indemnification, the reasonable expectations of the parties, the complexity of the proceeding, the importance of the proceeding, and the conduct of the parties in litigation.

[11] 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. McCracken v. Canadian National Railway, 2012 ONSC 6838; Hague v. Liberty Mutual Insurance Co., [2005] O.J. No. 1660 (S.C.J.); Pike's Tent and Awning Ltd. v. Cormdale Genetics Inc. (1998), 27 C.P.C. (4th) 352 (Ont. Gen. Div.); Bell Canada v. Olympia & York Developments Ltd. (1994), 17 O.R. (3d) 135 (C.A.).

[12] A critical controlling principle for the awarding of costs is that the sum awarded reflect the fair and reasonable expectations of the unsuccessful litigant. Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 at para. 24 (C.A.); Stellarbridge Management Inc. v. Magna International (Canada) Inc., [2004] O.J. No. 2102 at para. 97 (C.A.); Zesta Engineering Ltd. v. Cloutier (2002), 21 C.C.E.L. (3d) 161 at para. 4 (Ont. C.A.); McGee v. London Life Insurance Co., [2008] O.J. No. 5312 at paras. 5-8 (S.C.J.); Caputo v. Imperial Tobacco Ltd. (2005), 74 O.R. (3d) 728 at paras. 23-25 (S.C.J.); Lee v. General Motors Co. of Canada, [2004] O.J. No. 2245 (S.C.J.). The overriding principle in awarding costs is reasonableness. Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 at para. 52 (C.A.).

[13] 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. Das v. George Weston Limited, 2017 ONSC 5583 at para. 65, var’d 2018 ONCA 1053.

[14] In Davies v. Clarington (Municipality) (2009), 2009 ONCA 722 at para. 52, Justice Epstein stated that the overriding principle in awarding costs is reasonableness. She stated:

52. 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), , 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."

[15] In my opinion, the Plaintiffs’ claim for costs for the certification motion goes far beyond the reasonable expectation of the unsuccessful party. As proposed class actions go, the Plaintiffs certification motion was not complex.

[16] No contested certification motion is simple but unpaid employment benefits class actions are now a well-established genre of class action and while each class action is unique to its own circumstances, the crucial circumstance in the immediate case was the matter of whether the Plaintiffs’ and the putative Class Members’ claim for their alleged entitlements under the Employment Standards Act, 2000 were statute barred. That issue remains to be determined but it did not make the certification motion a complex motion to prepare for or to argue.

[17] Defendants’ Counsels’ dockets for the certification motion reveal that the Defendants’ full indemnity costs would have been approximately $153,000, which would mean that the Defendants’ partial indemnity costs (at 60%) would be approximately $92,000. Had the Defendants been successful on its summary judgment motion, which would also have entailed success on the certification motion, a partial indemnity award of $92,000 would have been fair and reasonable and within the Plaintiffs’ reasonable expectations. The situation has now reversed itself but a partial indemnity costs claim of approximately $347,000 is unreasonable and far beyond the reasonable expectations of the losing party. Neither party should overspend on legal expenses simply because the economies of scale of a class proceeding makes it worthwhile to enlarge the investment in the defence or prosecution. Vester v Boston Scientific Ltd., 2017 ONSC 2498 at para 39.

[18] The cost outline submitted by Class Counsel indicates that the Class Counsel spent 1,121.2 hours of time preparing for and attending what was a one-day certification motion. That is excessive to the extreme. The hourly rates of the Plaintiffs’ lawyers who were engaged on the file are on the high side having regard to their years of experience and their level of responsibility for the carriage of the file. Ms. Alexandra Monkhouse, who was a five-year call at the time of the certification motion charged an hourly rate of $550.00 per hour which was the same rate as Mr. Andrew Monkhouse, who was an eight-year call at the time of the certification motion. By comparison, Mr. Goodman, who had first chair for Defence Counsel, had an hourly rate $685 and he was a thirty-one-year call at the time of the certification motion.

[19] Having regard to all of the usual factors that go into the court’s exercise of discretion in awarding costs, I award the Plaintiffs’ $140,000, all inclusive, for the certification motion and $10,153.05, all inclusive, for the appeal.

Perell, J. Released: January 20, 2023