Costs expectations in Ontario becoming proportionate to risk and complexity – Court awards $1.85 million

Arguments have been cropping up for some time that, given the increased ease of certifying class actions, certification may not be a battle worth fighting for defendants - especially if they cannot recover their costs.

As Justice Perell put it in Cavanaugh v. Grenville Christian College:

Inevitably, the loser of a certification motion, be it the plaintiff or the defendant, will argue that the winner’s claim for costs is excessive, unreasonable, and beyond the reasonable expectations of the losing party.[1]

Encouragingly for defendants, however, there has been a trend of higher costs awards for those who successfully resist certification.  Ontario costs awards relating to certification have been increasing over the years,[2] but the recent award of $1.85 million in the case of Fairview Donut Inc. v. The TDL Group Corp.[3] is a high water mark.  In this case, the defendant both successfully resisted certification and won summary judgment.[4] 

In Fairview Donut Justice Strathy held that some of the factors weighing in favour of the large award were;

(1)  The “enormous stakes” – the alleged amount of damages owing to the Plaintiff were in the order of $3 billion which was, “an amount that had some air of reality”;

(2)  The issues being of great important to both parties;

(3)  Substantive rights of the parties having been finally determined; and

(4)  The extraordinary complexity of the proceedings and the factual matrix.[5]

While the defendant TDL had been billed nearly $3 million, the decision confirms a trend of seeing defendants unshackled by low precedent awards.  If the case is justifiably complex and risky enough, costs commensurate with the effort of a successful defence are warranted.

As costs awards increase so do the reasonable expectations of parties’ exposure when commencing the class actions process.  Perhaps high costs awards will soon become as inevitable as the arguments put forward to resist them.

[1] 2012 ONSC 4786 at para. 1

[2] See, for example, McCracken v Canadian National Railway, 2010 ONSC 6026 ($740,650 inclusive of fees and disbursements awarded “really to class counsel” for the plaintiff at first instance, the decision was overturned on appeal, 2010 ONCA 445, CN was then awarded $475,000 inclusive of fees and disbursements for costs of the certification motion); Martin v. Astra Zeneca Pharmaceuticals PLC, 2012 ONSC 4666 ($475,000 for fees and $198,000 for disbursements awarded to the successful defendants), aff’d 2013 ONSC 1169 (Div Ct.); Cannon v. Funds for Canada Foundation,  ($570,000 for fees on certification and summary judgment, and $200,000 for disbursements awarded to the successful plaintiffs),

[4] Reasons at 2012 ONSC 1252, appeal dismissed by the Ontario Court of Appeal, at 2012 ONCA 867, leave to appeal to the Supreme Court of Canada denied, 2013 SCCA No. 47.

[5] At paras. 21-22.

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