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Successful Defendants Ordered to Bear Own Costs of Common Issues Trial


Written by on October 9th, 2013

Berry v. Pulley was the first class proceeding in Canada to proceed to trial with a defendant class. As previously described here, the action arose out the acquisition of Air Ontario by Air Canada and a dispute between the pilots of these two airlines about the preparation of an integrated seniority list. Ultimately, the defendants were successful and the action was dismissed.

In Berry v Pulley et al, 2013 CanLII 54779, Justice Pepall ruled on the costs to be awarded for the trial. The trial had taken place over the course of several months. During the trial there were more than 43 volumes of documents, evidence was read-in from about 30 transcripts, and testimony was heard from approximately 20 witnesses. 

Ordinarily, costs follow the event. This principle applies equally in class proceedings. The defendants claimed $1.5 million in costs. The plaintiffs submitted that if awarded, the reasonable amount for costs and disbursements inclusive of HST would be $477,787.57. After hearing submissions, Justice Pepall concluded that the defendants, despite being successful at trial, were not entitled to any costs and the plaintiffs and defendants were ordered to bear their own costs.

Justice Pepall’s decision was an exercise of the inherent discretion of the court to determine the costs of and incidental to a proceeding or a step in a proceeding conferred by s.131 of the Courts of Justice Act.

In reaching her determination, Justice Pepall rejected the plaintiffs’ arguments based on factors specific to costs in class proceedings as set out in s. 31(1) of the Class Proceedings Act, 1992, (“CPA”). Justice Pepall found that the litigation did not involve significant matters of public interest and was not a test case.  In addition, although there were some novel points of law throughout the course of this litigation, the costs associated with determining these issues had been addressed through previous dispositions. At trial, the parties differed on the application of the law to the facts.  In this regard, the action did not raise a novel point of law.  Further, while there were procedural novelties that may have had a bearing on costs, Justice Pepall was not persuaded that the action raised a novel point of law sufficient to invoke the application of s. 31(1) of the CPA.

While Justice Pepall recognised that costs ordinarily follow the event and that offers to settle were made, Justice Pepall chose to exercise her discretion to not award any costs due to the defendants’ conduct during the litigation. Justice Pepall described this conduct as “shabby and high-handed”.  While not wishing to repeat all of the findings that she had made at the common issues trial, Justice Pepall was highly critical of the fact that the defendants had committed to a merger of the seniority lists and binding arbitration but later worked to prevent implementation of the arbitral award and list. Justice Pepall also made particular note of her finding at the common issues trial of the actions of certain of the defendant subclasses that constituted an illegal act.

Parties to litigation should take careful heed of the fact that it is not in every case that the successful party will be able to recover some of its costs from the unsuccessful party. The court retains ultimate discretion and the manner in which parties conduct themselves is a significant factor to be considered in the award of costs.  Unacceptable conduct, may, as here, lead to a finding that the successful party is not deserving of a costs award.

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