The costs regime in Ontario dictates that in general, the losing party to a motion or proceeding will pay a portion of the victor's costs. In exercising its discretion to award costs in class actions, the court may consider whether the class proceeding was a test case, raised a novel point of law or involved a matter of public interest.
In Lavier v. MyTravel Canada Holidays Inc., 2008 CanLII 44697 Justice Perell provided the following comments on how the principles and purposes of Ontario's costs regime should be applied in class proceedings:
…where a plaintiff brings a reasonable but ultimately unsuccessful motion for certification but one that does not qualify as a test case, novel issue of law, or matter in the public interest, then the defendant should anticipate a less than complete indemnity but an indemnity designed: to discourage frivolous claims; to discourage and sanction inappropriate behaviour by litigants in the conduct of the proceedings; and to facilitate access to justice. In anticipating costs, a defendant should rein in any tendency to commit more resources than are necessary to fairly test and challenge the propriety of certifying class proceedings.
Justice Strathy adopted this approach in Williams v. Canon Canada Inc., 2012 ONSC 1856. The plaintiffs were unsuccessful on their certification motion. The defendants requested costs on a partial indemnity basis in the amount of $764,944.37. The litigation did not involve any novel points of law or the public interest and it was not a test case. The action was not frivolous and there was no need for costs to be used as a deterrence or sanction. The defendants had incurred substantial costs that might have been reasonable from the corporate perspective, but which should not be visited on the plaintiffs.
With respect to access to justice, Justice Strathy also discussed how, in the reality of Ontario class actions practice, class counsel bear the costs. Justice Perell had noted that it was typical for class counsel to indemnify the representative plaintiff against an adverse costs award in his decision in McCracken v. Canadian National Railway, 2010 ONSC 6026. Despite the fact that the amount requested by the defendants would not break the bank of an entrepreneurial class action law firm, it was enough to cause a representative plaintiff to lose their house. In the end, Justice Strathy awarded costs in the amount of $200,000, approximately 25% of what the defendants had requested in Williams.
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