Last month, Justice Belobaba released five costs decisions with
a strong message for the class action bar: access to justice is
becoming too expensive and the excesses of counsel are at least
partly to blame (Rosen v BMO Nesbitt Burns Inc., 2013 ONSC
6356; Crisante v DePuy Orthopaedics, 2013 ONSC 6351;
Dugal v Manulife Financial, 2013 ONSC 6354; Brown v Canada (Attorney General), 2013 ONSC
6887; and Sankar v Bell Mobility Inc., 2013
ONSC 6886). He found that excess appears to have become the norm,
causing access to justice to become too expensive in class actions,
an area of law specifically designed to achieve this fundamental
objective. As a result, he suggested that a "no costs"
rule would be much more sensible in the world of class actions, a
world "very different" from other litigation.
In 1982, the Ontario Law Reform Commission (the OLRC, now the
Law Commission of Ontario) recommended establishing class action
legislation with a distinctive no-costs regime as a general rule,
whereby costs would not be awarded to any party to a class action,
at any stage of the proceedings, including an appeal. A
similar regime was already in place in the United States. Instead
of following the OLRC's recommendation, the provincial
legislature adopted the views of the Attorney General's
Advisory Committee, of which Justice Belobaba was a member, to
follow Ontario's general rule that "costs follow the
event". Now, Justice Belobaba says the OLRC was right and he
was wrong. He hopes that the mistake will be corrected in the
course of the Law Commission of Ontario's current review of
Ontario's class action legislation, which is now underway.
There is already a no-costs regime in British Columbia and
certification costs awards are capped in Quebec.
So as the annual number of Ontario class actions declines,
Justice Belobaba clarified that, while he will continue to consider
and apply the factors set out in the Rules of Civil
Procedure and the various binding directions of the Court of
Appeal, he will also aim for more transparent and predictable costs
decisions in conventional certification motions. Historical costs
awards in similar cases will be seriously considered. In cases
where the final fees or disbursement amount is dramatically above
the norm, the costs award may be made in two parts: a portion that
is payable immediately and a further portion that is payable in the
With the "access to justice" objective keenly in mind,
Justice Belobaba's anticipated results are: 1) lower than
expected costs awards, 2) leaner and more focused certification
motions, with a greater measure of predictability, and 3) overall,
the continuing viability of class actions.
Justice Belobaba's decisions appear to be part of a growing
trend. Justice Perell released a costs decision last month as a
result of a motion for documentary productions (The Trustees of
the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund
v SCN Group Inc., 2013 ONSC 7122). The successful defendant
claimed close to $100,000 in fees and disbursements for resisting
an interlocutory motion in an already certified class action.
Justice Perell noted that access to justice is an entitlement of
defendants just as it is for plaintiffs and that spiraling costs in
class proceedings have become a threat to the viability of the
class action regime. Fashioning a creative hybrid solution, he
ultimately held that the appropriate award was costs in any event
of the cause in the full amount claimed by the defendant, but with
only 25 percent payable forthwith and the balance to be paid either
a) as a set off against any future costs awards made against the
defendant or b) to the defendant should it ultimately be successful
in defending the class action at trial.
A no-costs regime is not imminent and, as Justice Belobaba
acknowledges, it remains to be seen how his approach will play out.
Assuming that significant adverse cost awards act as a disincentive
for plaintiffs' lawyers to commence class actions, then
reducing that risk may increase the prospect of class actions going
forward. However, some members of the plaintiff bar argue that
access to justice will actually be further denied, given that
plaintiffs' lawyers are often the beneficiaries of costs
awards. They suggest that defendants will have incentive to drive
up the costs of certification motions, forcing plaintiffs'
lawyers to spend more time but be compensated with less, thereby
bearing increased risks.
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