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Are Canada's No Cost Class Action Jurisdictions Moving to a Pre-Certification Cost Regime?

4 minute read

While Ontario continues its review of its Class Proceedings legislation, including its rules in respect to awarding costs, the case law in Canada's so called “no cost” class action jurisdictions continues to develop.

British Columbia, Saskatchewan, Manitoba and the Federal Court each choose to adopt a “no cost” regime for class actions (subject to certain limited exceptions). While these jurisdictions adopted slightly different language in their legislation the legislative intent appeared clear. For example, section 40(l) of Saskatchewan Class Actions Act provides:

"Subject to subsection 2, neither the Court of Queen's Bench nor the Court of Appeal may award costs to any party to an application for certification pursuant to subsection 4(2) or section 5, to any party to a class action or to any party to an appeal arising from a class action at any stage of the application, action or appeal."

The British Columbia legislature adopted near identical language. Manitoba's Class Proceedings Act provides in section 37(1):

"Subject to this section, no costs may be awarded against any party with respect to any stage of a class proceeding, including a motion for certification under subsection 2(2) or section 3, or any appeal arising from a class proceeding."

The Federal Court Rules applicable to class actions brought in the Federal Court provide:

s.334.39, s.1 - "Subject to subsection 2, no costs may be awarded against any party to a motion for certification of a proceeding as a class proceeding, to a class proceeding or to an appeal arising from a class proceeding …"

Despite the similarity in the language in the Provincial Class Action legislation and the Federal Court Rules different outcomes have been achieved. In a recent decision of the Saskatchewan Court of Queen's Bench, Justice C.L. Dawson heard motions by the defendants to strike the claim immediately prior to hearing the certification application which had been served and filed. Dismissing the action on the basis that it was plain and obvious that the claim did not disclose a reasonable cause of action, the court went on to review prior cost decisions in Saskatchewan, British Columbia and the Federal Court.

Justice Dawson concluded that Saskatchewan jurisprudence established that the prohibition on awarding costs contained in section 40 of the Saskatchewan Class Actions Act does not operate to prohibit an award of costs “where a separate application is considered by the court prior to certification, even if they are argued at the same time.” Prior Saskatchewan decisions considered by Justice Dawson included a decision in which the plaintiffs' appeal from their failed Certification Application was dismissed - no costs awarded, a successful motion to dismiss a claim after the certification motion had been served but before it had been heard - costs awarded and an unsuccessful motion to strike a claim brought after a certification motion had been served - no costs on a discretionary basis.

Justice Dawson also reviewed a series of decisions from the British Columbia courts that had concluded that the provisions of that province's class proceedings legislation “provides protection to plaintiffs with respect to cost orders, but not prior to the certification application.” He also reviewed the Federal Court decision in Campbell v. Canada (Attorney General) in which, on appeal, Justice Pelletier allowed an appeal from a decision awarding of costs following a motion to strike a claim brought in the Federal Court. Justice Pelletier analyzed the provisions of Rule 334.39 (1) and concluded that there were two possible interpretations – the Rule grants immunity from costs for any proceeding designated as a class proceeding under the Rules or alternately, costs are available up until the time that a certification motion is served and filed. Justice Pelletier concluded that the Saskatchewan and British Columbia courts had given too narrow an interpretation to the “no costs” rule accepting that “If one accepts that the intention of the proponents of the “no costs” rule was to limit the role of costs as a disincentive to class action plaintiffs, then one should construe the rule so that it does so.”

Whether the existence of a “costs follows the event rule” such as that in Ontario in fact serves as a disincentive to class action plaintiffs is difficult to assess. What does appear evident is that the Saskatchewan and British Columbia approach appears to encourage defendants to move early to strike claims that “plainly and obviously” cannot succeed – perhaps an unintended but nevertheless positive affect.

The content contained in these blogs is intended to provide information about the subject matter and is not intended as legal advice. If you would like further information or advice on any of the subjects discussed in a blog post, please contact the author.

Angus T. McKinnon

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