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Justice J. R. Henderson of the Ontario Superior Court has awarded
Inco $1,766,000 in legal costs arising from the Smith v.
Inco nickel contamination class action in Port
Colborne, Ontario. This is less than a quarter of Inco's actual
legal costs, which exceeded $5,340,000 after
certification.
"[1] This is my decision with respect to the costs of this
proceeding from January 19, 2006, the date of the certification of
this action as a class proceeding, until July 6, 2010, the date of
my decision after the trial of the common issues.
[2] On the appeal from the trial decision the Ontario Court of
Appeal ("OCA") dismissed the claim of the plaintiff class
against the defendant Inco. As the party that was ultimately
successful, Inco requests its costs on a partial indemnity basis
from the date of certification until the date of Inco's offer
to settle, June 10, 2009, and on a substantial indemnity basis
thereafter.
[3] However, Inco does not request its costs from the
representative plaintiff or from the class members, but by payment
out of the Class Proceedings Fund ("the Fund"), an
account that is maintained and administered by the Law Foundation of Ontario ("LFO")
pursuant to s.59.1 of the Law Society Act, R.S.O. 1990, c.
L.8."
Inco would have been entitled to costs of $3,532,000, if
not for s. 31(1) of the Class Proceedings Act:
31(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.
Justice Henderson agreed that this class-action involved a
novel point of law on a matter of public interest. He
therefore cut Inco's otherwise recoverable costs in
half:
[107] Further, in any costs award the court must balance the
chilling effect of a large costs award against the need to
discourage frivolous and unnecessary litigation... The Fund is
available for the purpose of facilitating access to justice for
large groups of the population who may wish to pursue a class
proceeding. However, the Fund is not bottomless and a costs order
that would cripple the Fund should not be made as it could unduly
stifle subsequent claims.
[108] In that respect, I must also consider that Inco does not
have a bottomless supply of money with which to defend claims. Inco
is clearly out-of-pocket for its legal fees and for its legal
disbursements. Inco should not be made to suffer the consequences
of an inadequate costs order.
The Port Colborne plaintiffs, and their lawyers, must be
grateful that Inco sought its costs from the Law Foundation,
and not from them personally.
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