Law Times

Page 10 April 15, 2013 Law Times • FOCUS Plaintiffs paying big for failed certifications BY Julius Melnitzer For Law Times O ntario plaintiffs who lose certification motions or fail to succeed on the merits of a class action — and in many cases, the lawyers who have agreed to indemnify their clients — are paying the price big time. Witness the Ontario Superior Court of Justice's $1.7-million costs award in favour of Inco Ltd. after the company successfully appealed a $36-million trial judgment alleging that emissions from one of its plants had reduced property values in Port Colborne, Ont. As if that's not enough, the defendants are appealing, seeking twice that amount, and arguing the judge improperly took into account public interest considerations. In a separate case, another Superior Court judge awarded $675,000 in costs to AstraZeneca Pharmaceuticals PLC after dismissing a certification motion she found to be "seriously deficient, overly broad, unclear, and inconsistent." Although the award was considerably less than the $1.2 million AstraZeneca had requested, it was the plaintiffs who decided to appeal. They maintain the judge improperly took into account the indemnity agreement Baert also cautions that provided by the plaintiffs' high costs awards will imlaw firm, Toronto's Kim Orr, pede access to justice by to its clients. raising entry barriers for Kirk Baert, a plaintiffs' lawyers wishing to repreclass action lawyer at Tosent plaintiffs. "Very few ronto's Koskie Minsky LLP, law firms can absorb these says the reason the awards types of negative results, are high is there's too much so what we're going to end emphasis on the merits of up with is an oligopoly of a case at the certification a half dozen law firms that stage. "Eight days of certiwill be prosecuting class fication motions involving actions," he says. 10 experts' reports are the "The result is that cases type of things that give rise that are meritorious but to costs awards north of difficult will be choked off." $500,000," he says. Larry Lowenstein of "Similarly, leave appliOsler Hoskin & Harcourt cations in class actions are 'These rulings don't change the law because evidence laden and cost mil- all they do is confirm normal costs rules in LLP's Toronto office, a lions to prosecute." Ontario which dictate that costs follow the member of Inco's defence team in the Port Colborne Baert says there's too event and losers pay,' says Alan D'Silva. litigation, agrees that some much material before the court on class action motions and argues the recent cost awards have been significant but proportionality principle found in the Rules urges people to take them in context. "When plaintiffs win or cases are settled, of Civil Procedure should apply. "Defence judges award multipliers or premiums for firms have an incentive to load up on filings success as a way of compensating for the risks and they do," he says. "So judges have to have tighter control over involved," he says. "The most important factor in assessing what is filed." CANADIAN LAW LIST 2013 YOUR INSTANT CONNECTION TO CANADA'S LEGAL NETWORK Timminco 'consistent' with act Inside you will find: of more than 58,000 barristers, solicitors and Quebec notaries, corporate counsel, law firms and judges in Canada; for the Supreme Court of Canada, the Federal Court of Canada, Federal Cabinet Ministers, departments, boards, commissions and Crown corporations; February each year L88804-590 L88804-590 Prices subject to change without notice, to applicable taxes and shipping & handling. related to each province for the Courts of Appeal, Supreme Courts, County and District Courts, Provincial Courts, law societies, law schools, Legal Aid, and other law-related offices of importance. MORE THAN A PHONE BOOK Visit carswell.com or call 1.800.387.5164 for a 30-day no-risk evaluation Untitled-1 1 www.lawtimesnews.com the impact of recent costs awards is to make sure that we're not taking too small a sample of cases into account and I don't think the time is yet ripe to assess whether the playing field remains level." Alan D'Silva, who defends class actions at Stikeman Elliott LLP's Toronto office, says substantial costs awards against losing plaintiffs shouldn't come as a surprise to anyone. "These rulings don't change the law because all they do is confirm normal costs rules in Ontario which dictate that costs follow the event and losers pay," he says. "That doesn't mean that access to justice will be reduced but merely that plaintiffs' lawyers will have to be more astute in determining whether such access is appropriate in particular cases." From the perspective of the plaintiffs' bar, Dimitri Lascaris of Siskinds LLP in London, Ont., observes that market mechanisms are starting to operate in the class action funding arena. "Even the class proceedings fund [set up by Ontario legislation to fund meritorious cases] is advertising its availability in response to the entry of thirdparty funds to the class action market," he says. In the end, Lascaris adds, the basic principles remain the same for plaintiffs' law firms. "If you've got a good case, you'll find funding," he says. "If you don't, you'll have to take it on spec but with your eyes wide open." LT 13-01-29 3:10 PM Continued from page 9 "The Court of Appeal may well accept that exceptions can be carved into Timminco, but I would not be confident that the decision will be reversed," he says. "While it's clear that the legislation could be read in other ways, the Timminco interpretation is consistent with the wording of the Securities Act. It's certainly not some ridiculous statutory interpretation." Radnoff agrees that ultimately the problem is a practical one. "The question is whether plaintiffs in many cases are in a position to get leave within three years even where they act reasonably and with dispatch," says Radnoff. However that may be, defence counsel argue, the solution is one for the legislature and not the courts. "It may be that a three-year limitation period is not sufficient given the complexities of the litigation process, but the proper remedy for a legislative measure that is not working is a legislative amendment," says Lowenstein.LT

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