Date: 20100311
Docket: T-1943-06
Citation: 2010
FC 279
Ottawa, Ontario, March 11, 2010
PRESENT: The Honourable Madam Justice Hansen
BETWEEN:
BERNARD VINCENT CAMPBELL,
SHARLE EDWARD WIDENMAIER,
LENARD ROY LINK, and WILLIAM A HEIDT
Plaintiffs
and
THE ATTORNEY GENERAL OF CANADA and
the MINISTER OF NATIONAL DEFENCE
Defendants
REASONS FOR ORDER AND ORDER
[1] The Defendants bring this motion in writing for costs for
all steps taken in this proposed class proceeding up to the Court’s decision,
2009 FC 30, granting the Plaintiffs’ motion for approval to discontinue. The
Defendants claim their costs pursuant to Part 11 of the Federal Courts Rules,
SOR/98-106 (Rules), alternatively, pursuant to Rule 334.39 or, in the further
alternative, against the Plaintiffs’ counsel personally.
[2] The Defendants take the
position that as parties against whom an action has been discontinued under
Rule 402 they are prima facie entitled to their costs. They submit that
the “no costs” regime found in Rule 334.39 has no application because the
action was never certified and, therefore, never became a class proceeding.
The Defendants argue that at the pre-certification stage, the matter is an
ordinary action.
[3] In the alternative, the
Defendants submit that if Rule 334.39 does apply, it should only apply to those
steps respecting the motions for certification and that no other steps should
be excluded. However, the Defendants also argue that the circumstances in the
present case justify an award of costs under the exceptions set out in Rule
334.9(1) (a),(b) and (c).
[4] The Plaintiffs dispute
the Defendants’ characterization that pre-certification a proposed class action
is an ordinary action. The Plaintiffs submit that a proposed class action does
not become an ordinary action unless and until the court refuses to certify the
action as a class action. In support of this assertion, the Plaintiffs rely on
the decisions in Logan v. Canada (Minister of Health), [2003] O.J. No. 418,
paras. 11 and 13, (Sup. Ct. Ont.) and Hoffman v. Monsanto Canada Inc.,
2002 SKQB 190, Smith J. at para. 19.
[5] The Plaintiffs maintain
that there are strong policy reasons for excluding class actions from the
normal costs regime, in particular, access to justice. They submit that
awarding costs in these circumstances would have a chilling effect on the
filing of class actions in the Federal Court.
[6] The central question on
this motion is to what extent, if any, does the “no costs” provision, Rule
334.39, in Part 5.1 of the Rules governing class proceedings apply. It reads:
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334.39 (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, unless
(a) the
conduct of the party unnecessarily lengthened the duration of the proceeding;
(b) any step
in the proceeding by the party was improper, vexatious or unnecessary or was
taken through negligence, mistake or excessive caution; or
(c) exceptional
circumstances make it unjust to deprive the successful party of costs.
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334.39
(1) Sous réserve du paragraphe (2), les dépens ne sont adjugés contre une
partie à une requête en vue de faire autoriser l’instance comme recours
collectif, à un recours collectif ou à un appel découlant d’un recours
collectif, que dans les cas suivants :
a)
sa conduite a eu pour effet de prolonger inutilement la durée de l’instance;
b)
une mesure prise par elle au cours de l’instance était inappropriée,
vexatoire ou inutile ou a été effectuée de manière négligente, par erreur ou
avec trop de circonspection;
c)
des circonstances exceptionnelles font en sorte qu’il serait injuste d’en
priver
la
partie qui a eu gain de cause.
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[7] Before turning to a
review of the cases upon which the parties rely, it should be noted that there
have been no decisions in this Court in relation to the issue raised in this
motion. However, subsection 37(1), the “no costs” provision in the British
Columbia Class Proceedings Act, R.S.B.C. 1996, c.50 has been considered in
a number of decisions in that jurisdiction. Although subsection 37(1) and Rule
334.39(1) are not worded identically, there are no material differences for the
purpose of this motion. Subsection 37(1) reads:
37
(1) Subject to this section, neither the Supreme Court nor the Court of Appeal
may award costs to any party to an application for certification under section
2 (2) or 3, to any party to a class proceeding or to any party to an appeal
arising from a class proceeding at any stage of the application, proceeding or
appeal.
[8] In support of their
argument that at the pre-certification stage the matter is an ordinary action,
the Defendants rely on a number of decisions from British Columbia: Smith v.
Canada (Attorney General), 2006 BCCA 407; Consumers' Assn. of Canada v.
Coca-Cola Bottling Co., 2007 BCCA 356, at para. 12; Killough v. Canadian
Red Cross Society, [1998] B.C.J. No. 3019, at para. 15; and Edmonds v.
Actton Super-Save Gas Stations Ltd., [1996] B.C.J. No. 2051, at para. 4.
[9] In Smith, on the
question of costs following a dismissal of an appeal from a decision striking
out an action brought under the Class Proceedings Act, the British
Columbia Court of Appeal observed, at paragraph 6, that as the action had been
struck out before certification “it had not crossed the threshold of the no
costs regime.” Similarly, in Consumers, the British Columbia Court of
Appeal, at paragraph 12, stated:
The
Class Proceedings Act provides protection to plaintiffs with respect to
costs orders, but not prior to the certification application. The statute
gives no direction to the Court as to the awarding of costs if the proceedings
are dismissed prior to the application for certification. It follows that when
the action is dismissed prior to the application for certification the ordinary
rule applies, namely, the costs follow the event. …
[10] In Killough, at
paragraph 15, Justice Smith noted:
In
my view, s. 37 has no application here. Subsection (1) deals with costs of the
certification application. We have not dealt with that yet. Subsection (2)
deals with costs in a class proceeding and it is clear from s. 2 of the Act
that there is no class proceeding until a certification order is made under
s-s. (2). In my view, we are dealing with an ordinary action at this stage and
the ordinary rules should apply.
[11] Lastly, in Edmonds, at paragraph 4,
Justice Brenner, as he was then, stated:
With
respect to the contention that the court ought to be mindful of s. 37 of the
Class Proceedings Act, it is clear in my view that that provision only applies
and becomes operative once the court embarks upon an application for
certification under the statute. Until such time as a certification hearing
commences, the litigation is ordinary litigation and it is governed by the
Rules of Court.
[12] As noted above, the
Plaintiffs rely on the Ontario decision in Logan and the Saskatchewan decision in Hoffman as authority
for the proposition that a proposed class action does not become an ordinary action
unless and until the court refuses to certify the action as a class action. In
Logan, an Ontario decision, Justice Winkler, as he then was,
specifically rejected the Defendants’ assertion that “… a class proceeding is
not commenced until the action is certified and until that time the proceeding
is merely an individual action.” This same view was echoed by Justice Smith in
Hoffman, a Saskatchewan decision.
[13] In my view, the British Columbia decisions do not
support the Defendants’ assertion that the “no costs” regime does not come into
play until the action is certified. The statement in Smith that prior
to certification the ordinary costs Rules apply must be read in the context in
which it was made. The Court of Appeal was referring with approval to Justice
Smith’s statement in Killough in which he concluded that section 37 had
no application in that case because there had been no application for
certification and the matter was not a class proceeding. In Consumers,
the Court of Appeal did not say that if the action was not certified the
ordinary Rules applied. Instead, the Court of Appeal, as in the earlier
decision in Edmonds, held that the
legislation provided the Plaintiffs with no protection from a costs award prior
to the application for certification.
[14] For the purpose of
resolving the main issue in this case, it is not necessary to decide whether
under the Rules prior to certification an action is an ordinary action. The
Defendants’ assertion is also at odds with Rule 334.39(1). The language of
Rule 334.39 is clear. It specifically precludes an award of costs in relation
to the motion for certification.
[15] In their submissions,
the Defendants also argue that “even if the ‘no costs’ exception applies to
this matter, the means by which the Plaintiffs chose to conduct and abandon
this matter were such that it would be unjust not to award costs to Canada.”
They also submit that as the Court stated in Smith, at paragraph 7,
costs are appropriate to discourage improper or hopeless actions. The
Defendants cite the exceptions in Rule 334.39(a), (b) and (c). In my view,
this argument is misplaced. The exceptions in Rule 334.39(a), (b) and (c)
relate only to the three situations set out in the Rule and cannot be used as a
basis for an award of costs for other steps in an action. With respect to the
costs incurred by the Defendants on the motion for certification, although the
motion was never adjudicated for the reasons set out in my earlier decisions,
at the time the motion was filed and the work was done by the parties, it was
an appropriate and timely step in the proceedings. As I indicated in my
earlier reasons, if there has been an abuse of process, it arises from the
action filed in Saskatchewan and it is in that forum
that it should be raised.
[16] As to the other steps
taken prior to the discontinuance, under Rule 402 a party against whom an
action has been discontinued, unless otherwise ordered by the Court, is
entitled to costs. While I appreciate the important policy underlying a “no
costs” regime, namely, access to the courts for potential litigants who might
not have the financial means, a deliberate choice was made at the time this
Court’s class proceedings rules were adopted to limit the costs protection to
the three situations set out in Rule 334.39. I am unable to conclude that the
circumstances in the present case warrant a departure from Rule 402. Having
reached this conclusion, there is no need to consider the additional arguments
advanced by the Defendants concerning their entitlement to costs.
[17] The Defendants seek a
lump sum costs award for fees in the amount of $73,500 plus disbursements in
the amount of $61,184.08 for a total of $137,676.59. According to their draft
bill of costs, the Defendants calculated the amount for fees on the basis of
the top range of Column V. Alternatively, they ask for an award of taxable
fees calculated under Column V of Tariff B plus disbursements in accordance
with the draft bill of costs provided to the Court. It should also be noted
that these amounts include the fees and disbursements in connection with the
motion for certification.
[18] In making a
determination on costs, the Defendants submits that the factors in Rule
400(3)(a), (b), (g), (i), (k)(i),(ii), and (o) are particularly relevant in
this case. The Defendants also submit that lump sum awards are preferable as
they are generally more efficient and save the parties from a further
expenditure of time and resources.
[19] There is no doubt that
the within proceeding is complex litigation. The factual allegations span a
number of decades and occur in a number of geographic locations, the putative Plaintiffs
will likely not be similarly situated in either law or in fact and the legal
issues are complex. These same considerations create a greater volume of
work. As to the result in the proceeding, I have already commented on this
factor in my earlier decisions and there is no need for further repetition.
[20] Having said this, I am
not persuaded that this particular litigation and the above factors warrant an
award of costs at the top range of Column V. Further, based on the above
analysis, the Defendants are not entitled to their costs for the certification
motion. I also note that in some of the claimed items, the appearance was not
solely related to matters other than the certification motion. As well, with
regard to the disbursements for items such as transcription services, courier
services, on-line research and photocopying, it was not possible to ascertain
with any certainty to what extent some of the disbursements were incurred in
relation to the certification motion.
[21] While these comments
point to the costs being determined on taxation, in my view, given the history
of this matter, a lump sum award is preferable. In arriving at the amount for
fees, I have reviewed each of the items claimed and I have concluded that costs
should be awarded on the basis of the top range of Column IV and the bottom
range of Column V. I have also taken into account the Defendants’ limited
success on the discontinuance motion. With regard to the disbursements,
particularly those where it is not possible to discern with any degree of
accuracy the disbursements that were incurred on the certification motion, I
have apportioned those disbursements between the certification motion and the
other steps. I appreciate that this is not an exact calculation, but in my
view it far outweighs the further expenditure of time and resources associated
with a taxation.
[22] Accordingly, there will
be an award of costs in the amount of $60,000.00, inclusive of disbursements.
In my view, there is insufficient evidence before the Court to make this award
of costs against counsel for the Plaintiffs personally.
ORDER
THIS COURT ORDERS that: the Plaintiffs shall pay
the Defendants costs in the amount of $60,000.00, inclusive of disbursements.
“Dolores
M. Hansen”
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