In a recent costs award, Belobaba J. has again taken costs in
certification motions to task. In Baroch v.
Canada Cartage, Belobaba J. made the following obiter
remarks regarding the perception of ever-declining costs awards at
requirements under the Class Proceedings Act are modest at
best and the legal fees should reflect this reality. Again, the
monetary reward for assuming the many risks of class action work
will not be found in costs outlines but in generous,
court-supported contingent fee agreements.
Belobaba J.'s assertion that lower costs are justified
because of the 'modest' requirements of certification
proceedings seemingly contradicts the guidance given in the Ontario
Court of Appeal's decision in Pearson v. Inco that, "a motion for
certification is a vital step in the proceeding and the parties
expect to devote substantial resources to prosecuting and defending
It also seems to contradict Belobaba J.'s own acknowledgment
of this reality in his series of costs awards released in late
2013, which garnered attention both within and beyond the legal community. In that
series of decisions, he expressly acknowledged the Court of
Appeal's direction in Pearson v. Inco and stated as
I have taken the liberty of juxtaposing [the directions of the
Court of Appeal] with my commentary that is added in italics.
(i) 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.
I understand this direction. Class actions often
involve claims in the many millions of dollars and will therefore
be rigorously prosecuted and defended. It follows from
this that the costs awards (even on a partial indemnity basis) will
Policy Concerns: 'No-Costs' vs. 'Loser
In late 2013, we posted about
Belobaba J.'s series of decisions wherein he lamented the
cost and 'excess' of certification motions and the
perceived decline in the number of new class actions. The
overarching messages arising from the series of decisions is that a
'no-costs' regime in class actions would further three
major goals of class action legislation: judicial efficiency,
increased access to courts, and behaviour modification.
Belobaba J.'s policy concerns are not unique. Currently, the
Law Commission of Ontario is in the process of reviewing class
action procedure. Among the issues that it will address is whether
Ontario should become a 'no-costs' class action
jurisdiction rather than a 'loser-pays' jurisdiction (see
earlier post). The final research paper is due on April 15,
However, there are other policy concerns in play. Perell
J.'s decision in Holley v. The Northern Trust Company, where two
defendants in a proposed class action were awarded sizeable costs
on a partial indemnity scale, mentions the importance of costs in
allocating risks. As support for his decision, Perell J. noted that
"An adverse costs system is what the Legislature intended; it
did not intend a costs regime that removes the risk. And it did not
impose a public interest burden on defendants, who are also
entitled to access to justice, by imposing an asymmetrical system
Until formal guidance is provided, either by legislature or the
appeal of a cost decision, the terrain remains uncertain. The only
guidepost available is the fact that Pearson v. Inco
remains good law, as does the understanding that, given the
complexity of class actions, certification will continue to be a
costly endeavour with the potential for large cost
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