In his recent decision in1146845 Ontario Inc. v. Pillar to Post
Inc., Justice Perell of the Ontario Superior Court refused
to relieve class plaintiffs of their exposure to costs in their
unsuccesful defense of a motion to stay the class action. The
decision highlights the Ontario courts' reticence to reduce
costs awards against unsuccessful litigants, even in the context of
class actions, given that in the overwhelming majority of cases the
prime motivation of the parties are commercial and neither
altruistic nor for the greater public good.
The underlying motion in this case,
which we have previously written about, involved issues
regarding the effect of the statutory right to associate under
franchise legislation, the Arthur Wishart Act (Franchise
Disclosure), on an arbitration provision in a franchise
Justice Perell acknowledged in his decision that section 31(1)
of the Class Proceedings Act, 1992 encourages the court to
recognize that class actions tend toward being test cases, the
determination of novel points of law, or the adjudication of
matters of public interest, and courts, therefore, should respond
to these tendencies when making decisions about costs. However,
Justice Perell found that whether or not the case at bar involved
matters that were novel or in the public interest, ultimately the
litigation was hard fought and financially motivated, and the
plaintiffs, had they been successful on the motion, likely would
not have foregone costs. Justice Perell noted that in the case at
bar, as in many class actions, an unsuccessful party will submit
after-the-fact of the outcome that they should be relieved of costs
because of the novelty or public interest value of the case despite
the party's expectation before-the-fact that they would recover
costs if they were successful. Such after-the-fact submissions
should, Justice Perell noted, be "taken with more than a grain
of salt". In concluding his reasons, Justice Perell in fact
commended a practice where parties agree, prior to the outcome of
their contested motions, on whether or not the case at hand
classifies as novel or public interest litigation so as to avoid
after-the-fact pleas for relief based on claims of novelty or
Notably, Justice Perell also rejected the plaintiffs'
argument that the defendants had not been "totally
successful" on their motion because they had only achieved a
stay of proceedings, and the merits of the plaintiffs'
grievance had not yet been decided.
This decision illustrates that while the Class Proceedings
Act, 1992 emphasizes the fact that class actions are intended,
by design, to be in the public interest and often raise novel
issues, whether or not a particular case raises a novel legal issue
or is in the public interest has a somewhat "I know it when I
see it" quality to be determined at the judge's
discretion, and that it will be a relatively rare occasion where
courts will exercise that discretion to negate or diminish a costs
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