Personal Liability of Class Counsel for the Costs of a Class Proceeding
On September 26, 2011, the Ontario Court of Appeal will hear an appeal from a decision of Cullity J., who rightly characterized the issue on the motion before him as one "of considerable importance for the proper conduct of class proceedings." The decision will be important to class counsel since it addresses the duty to explain and clearly document the risks of adverse costs consequences to their representative plaintiff clients. If upheld, the decision may also provide a potential avenue for defendants in successful class actions to seek costs where class counsel have not discharged their burden.
In Attis v. Canada (Minister of Health), the federal Crown brought a motion seeking an order that class counsel pay the costs of a failed class action. The representative plaintiffs had brought a class action against the Minister of Health for negligence for permitting the manufacture and sale of breast implants in Canada. The certification motion was dismissed and the representative plaintiffs unsuccessfully appealed all the way to the Supreme Court of Canada. They were ordered to pay costs at each stage, which, in the end, totalled over $165,000.
Upon receiving notice of the costs awards, the representative plaintiffs sued their solicitors in negligence, alleging that they had not been advised of their potential liability to pay the defendants’ costs if the proceedings were unsuccessful. The Crown was advised that the plaintiffs were impecunious and subsisting on disability benefits due to their poor health, which they attributed to the Minister’s negligence. The Crown brought a motion for directions under s. 12 of the Class Proceedings Act seeking an order that the costs be paid by class counsel. The motion was granted.
The motion judge decided the issue based on the principle that a solicitor is liable to pay costs of proceedings instituted without his client’s authority. In support of this proposition, the motion judge referred to various provisions of the Rules of Civil Procedure and 19th century common law jurisprudence. The motion judge held that there was no distinction between the situation in which the client gives no consent to commence the proceeding and the situation in which the client gives an “uninformed consent;” as fiduciaries, class counsel have “an obligation to inform the plaintiffs of all material facts that were likely to affect their judgment on the question whether to authorize the proceeding in which they would be the plaintiffs.” The motion judge held that the burden is on the solicitor to establish that full disclosure about the material risks to a client has been provided. The burden is high, and has been expressed as a “heavy onus.”
The motion judge held that on the evidence before him, the plaintiffs’ personal liability for costs was never addressed, or addressed with sufficient clarity. Although class counsel had testified that he explained the risk of adverse costs awards to his client, his contentions were not supported by documentary evidence and the plaintiffs’ testimony was believable.
The Court of Appeal’s judgment in Attis is expected to pronounce on the scope of the duty of class counsel to their representative plaintiff clients. If the substance of the decision is upheld, Attis may also provide a means for class action defendants in Ontario to seek costs from class counsel personally where their “heavy onus” of disclosure has not been discharged.
Attis v. Canada (Minister of Health)
Hearing Date: September 26, 2011
class action class counsel Costs fiduciary liabilities Ontario Court of Appeal onus Rules of Civil Procedure