A continuing theme this year relates to the approach by the
courts to awarding legal costs to a successful party. Courts have
sent mixed signals on the extent to which a party can recover costs
at various stages of a class proceeding. This is an important issue
given that the scale of costs in class proceedings can be so
substantial. Parties and their counsel should be mindful of their
(to some degree unpredictable) potential to recover costs when
successful or, conversely, the risk of being ordered to pay the
other party's costs, and factor this in when assessing strategy
at various stages of the litigation.
Courts have examined the issue of costs in the context of
approving class counsel fees following the conclusion of a class
proceeding. In one
decision late last year, Belobaba J. of the Ontario Superior
Court of Justice expressed skepticism towards basing class
counsel's fees on billable hours, noting that this approach
could result in over-lawyering and docket-padding. In that
decision, he approved class counsel fees which were instead a
percentage of the settlement under a contingency fee
Similarly, in another
case that was settled, an arbitrator awarded class counsel fees
of $10.45 million by applying a multiplier to the class
counsel's base fees. The appropriateness of the multiplier
depended on the risk incurred by class counsel in continuing the
proceeding under a contingency agreement, and the degree of success
A Dutch Date At Court?
In an earlier set of
decisions, Belobaba J. had voiced reservations about awarding
large amounts of costs against a plaintiff who was unsuccessful at
the certification stage. He feared that large cost awards could
limit access to justice. This approach would see parties absorbing
their own costs to a large extent regardless of the outcome.
Picking Up The Tab
However, in a
decision later this year, Perell J., also of the Ontario
Superior Court of Justice, affirmed that the intent behind the
province's Class Proceedings Act is to institute a cost system
whereby the loser pays at least some of the winner's costs. The
system is symmetrical between plaintiffs and defendants. Perell J.
had no trouble awarding a significant cost award in favor of a
successful defendant where the plaintiff's allegations required
the defendant to incur significant expenses in reasonably defending
Strathy J. (as he then was) similarly
awarded a successful defendant $1.85 million in costs at
summary judgment. He cited the sum being claimed by the plaintiff
($3 billion) and the complexity and importance of the issues,
requiring substantial work by counsel.
Throughout 2014, the courts have shown a complex contextual
approach to awarding costs, which introduces an element of
unpredictability. While a defendant who is successful in court
generally can expect to recover some of its legal costs from the
unsuccessful plaintiff, meaningful recovery is not a certainty in
the class proceeding context.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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