Cost Awards in Class Actions: What Can a Successful Defendant Expect to Recover?
Class action proceedings are high-stakes, expensive litigation. Defendants typically expend significant resources to defend them. If successful, they can expect to recover a portion of their costs from the plaintiff. But, how much?
Trends in Ontario over time suggest that courts have been willing to award meaningful costs against class action plaintiffs in appropriate cases:
- In Das v George Weston Limited, 2017 ONSC 5583, the court granted a $2.3 million cost award to the defendants, who successfully defended a proposed $2 billion class action at a combined certification and summary judgment motion. The court reasoned that “there is no principled reason to deny the Defendants the costs of the certification motion” as the defendants “successfully resisted certification and under the loser-pays regime of the Class Proceedings Act, 1992, they are entitled to the spoils of victory.” The Court also appeared to chip away at an unsuccessful plaintiff’s ability to argue that a costs award ought to be reduced where a class action purports to advance the public interest. In Das, the court recognized that “a significant motivator in this proposed class action was money.”
- In Fairview Donut Inc v TDL Group Corp, 2014 ONSC 776, $1.85 million was awarded in a proposed $3 billion dollar class action following an eleven day certification hearing where the action would have satisfied the criterion for certification but for the defendants’ successful summary judgment motion.
- In Smith v Inco Ltd, 2012 ONSC 5094, a cost award of $1.8 million was ordered in a proposed $400 million dollar class action, accounting for costs from the date of certification through a trial of common issues.
However, costs awards to a successful party are always within the discretion of the judge and are inherently hard to predict. Costs that the court considers “unreasonable” will generally not be compensated. Counsel fees and hours that a court deems excessive may also be denied. The Ontario Superior Court has cautioned that high costs incurred in class proceedings could, in certain circumstances, be seen as excessive and unreasonable. The Court of Appeal has also recognized that costs of a large magnitude may be “exceptional”. The outcome on costs will be highly dependent on the circumstances of each case.
The Court’s decision in Das has been appealed and is currently under reserve. Class action litigants may therefore soon receive further appellate guidance on the assessment of costs in class proceedings.