



COURT OF APPEAL FOR ONTARIO

CITATION: Amyotrophic Lateral Sclerosis Society of Essex v. Windsor (City), 2013 ONCA 254

DATE: 20130425

DOCKET: C56337 and C56338

Winkler C.J.O., Weiler and Laskin JJ.A.

BETWEEN

Amyotrophic Lateral Sclerosis Society of Essex
    County

Plaintiff (Appellant)

and

The Corporation of the City of Windsor

Defendant (Respondent)

BETWEEN

Belle River District Minor Hockey Association Inc.,
    and Essex County Dancers Incorporated

Plaintiffs (Appellants)

and

The Corporation of the Town of Tecumseh

Defendant (Respondent)

Earl A. Cherniak, Q.C. and Peter W. Kryworuk, for the
    appellants

Scott C. Hutchison and Brendan Van Niejenhuis, for the
    respondents

Heard: April 3, 2013

On appeal from the order of the Divisional Court (Reilly,
    Aston and Ray JJ.), dated August 23, 2012.

Weiler J.A.:

[1]

The issue on these appeals is whether the Divisional Court erred in
    principle in refusing to award costs in two class action proceedings despite
    the appellants success on the substantive issue they appealed. Instead, the
    court ordered that the costs of the appeals and of the motions for leave to
    appeal were to be determined by the motion judge as part of the overall costs
    of the certification motions.

[2]

For the reasons that follow, I am of the opinion that the Divisional
    Court did err in principle and that its refusal to award costs was plainly
    wrong.

A.

Background

[3]

In the two class proceedings, the appellants are three charitable
    organizations that engage in fundraising activities such as lotteries and
    bingo. The appellants claim that the respondent municipalities charged licensing
    and administration fees that greatly exceeded their associated costs of
    regulation. They allege that the fees are in effect a tax imposed without
    legislative authority and thus are
ultra vires
the municipalities. They
    seek restitution.

[4]

The proposed class consists of all those persons who paid such fees to
    the municipalities from 1990 to the present. At the certification motion, the
    motion judge certified the proceedings as class actions but, based on his
    interpretation of the existing jurisprudence  namely, that the cause of action
    was complete at the moment the payments were made  held that time started to
    run from the date the licencing fees were paid. Accordingly, he limited the
    scope of the respective classes to those persons whose claims were not
prima
    facie
time-barred by the
Limitations Act, 2002
, S.O. 2002, c.24,
    Sched. B.

[5]

On appeal, the Divisional Court held that the motion judge erred in law
    in limiting the size of the respective classes for this reason. The statements
    of claim in the actions pleaded a discoverability/concealment issue that could extend
    the time frame for any claim. However, this issue would only be determined
    based on evidence. Because the determination of whether a class should be
    certified under s. 5(1)(a) of the
Class Proceedings Act, 1992,
S.O.
    1992 c. 6 (
CPA
), is made by reference only to the pleadings and any
    documents identified in the pleadings, the limitations issue ought not to have
    been decided on the motion for certification.

[6]

In addition to the limitations issue, the respondents raised a number of
    alternative arguments concerning certification both before the motion judge and
    the Divisional Court. In view of his decision with respect to the limitations
    issue, the motion judge was not required to deal with these arguments. The appellants
    asked the Divisional Court to do so and to render a decision on the
    certification motion. The Divisional Court decided that the preferable course
    was to refer the other arguments back to the motion judge for reconsideration.

[7]

When approaching the issue of costs, the Divisional Court appears to
    have been of the opinion that success on appeal was divided. It stated, at
    para. 2: The plaintiffs were successful in having the decision of the Motion
    Judge set aside but unsuccessful in obtaining an order certifying the class
    proceeding. That issue was remitted to the Motions Judge and the outcome on the
    original certification motion remains uncertain.

[8]

The Divisional Court then gave five inter-related reasons for its
    decision to remit the costs back to the motion judge. As set out in para. 4 of
    the courts endorsement on costs, they are as follows:

(i)      This
    procedure almost certainly forecloses the possibility that the costs issue
    might follow a different appeal route from the certification motion itself;

(ii)      The
    Motions Judge is in a better position to understand the reasonableness of the
    very substantial costs that are claimed because of his close familiarity with
    the case from case managing the matter;

(iii)     If, at
    the end of the day, the only impact of this appeal is that the original order
    is not changed in any substantial way, or simply granted for different reason,
    or the certification motion fails altogether, it may be that neither side
    should be awarded costs, or that the plaintiffs ought to pay costs;

(iv)     In these
    circumstances, the appeal and motion to leave for appeal, are a component of
    the costs of the certification motion and not capable of being fairly resolved
    in a discrete or isolated fashion;

(v)     Patterson
    J. originally decided that the costs of certification ought to be reserved to
    trial.  He gave no reasons for that conclusion but it ought to be left open to
    him to make the same order on the reconsideration.  A separate order for costs
    by this panel would undermine his discretion.

B.

Analysis

[9]

Before turning to the law, I must first resolve the question of whether
    success on the appeal was divided. In my opinion, it was not. The appellants
    were entirely successful on the issue they appealed. It was the appellants
    success on the limitations issue that opened up the necessity to deal with the
    additional issues raised by the respondents. Although the Divisional Court
    could have decided these issues, it exercised its discretion to refer them back
    to the motion judge. Having exercised its discretion as it did, the Divisional
    Court refused to give the appellants the ultimate remedy of certification. In
    these circumstances, the fact that the appellants did not obtain the remedy
    they sought did not detract from their significant success on the appeal. The respondents
    are not entitled to rely on the general rule that where success on appeal is
    substantially dividedan award of costs of the appeal will not be made:
Lowndes
    v. Summit Ford Sales Ltd.,
[2006] O.J. No. 1438 (C.A.), at para. 3.

(1)

The General Rule When a New Trial is Ordered

[10]

The
    mischaracterization of the appellants success on appeal led the Divisional
    Court to consider only two possible dispositions: that the costs should be
    conditional on the plaintiffs success at the re-hearing or that costs should
    be remitted to the motion judge to be considered as a component of the overall
    costs of the certification motion. It failed to consider the general rule and
    the rationale underlying it, that where an appeal is allowed and results in a
    re-hearing, the costs of the appeal should be awarded to the successful
    appellant and should not depend on the outcome of the re-hearing: see Donald J.
    M. Brown,
Civil Appeals
, vol. 2, looseleaf (Toronto: Canvasback publishing,
    2008), at para. 6:3250.

[11]

Decisions
    in which this general rule has been applied include:
Mak v. TD Waterhouse
    Canada
(2005), 198 O.A.C. 92 (Div. Ct.), at para 25;
Kings Bay
    Development Corp. v. Cornerstone Custom Homes Ltd.,
2009 ONCA 611, 82 C.L.R.
    (3d) 1, at paras. 2 and 37;
Rowlands v. Wright,
2009 ONCA 492, at
    paras. 29-31;
Oz Optics Ltd. v. Timbercon, Inc.,
2011 ONCA 714, 343
    D.L.R. (4th) 443, at paras. 75-78;
Consulate Ventures Inc. v. Amico
    Contracting & Engineering (1992) Inc.,
2007 ONCA 499, at paras. 1-2;
Tucker
    v. Cadillac Fairview Corp.
(2005), 200 O.A.C. 140, at paras. 16 and 25-30;
    and
Sagl v. Cosburn, Griffiths & Brandham Insurance Brokers Ltd.,
2009 ONCA 638, at paras. 6-8.

[12]

Applying
    this jurisprudence to these class proceedings, it is important to separate the
    appeal from the forthcoming certification motion. The appeal from the motion
    judge was a discrete procedural step; its costs should not be treated as merely
    a component of the costs of the certification motion. The outstanding issues to
    be determined on the certification motion were not determined on the
    appellants appeal to the Divisional Court. The costs of the appeal and the
    related motion for leave to appeal are stand-alone costs incurred by a group of
    litigants who want their day in court.

[13]

The
    delayed recovery of costs until the outcome of the certification motion and
    potentially of the case itself does not promote access to justice, a goal of
    the
CPA
. This court has held that this principle should be taken into
    account in making awards in class actions: see
Sharma v. Timminco Ltd.,
2012
    ONCA 322, 19 C.P.C. (7th) 271, at para. 5. The respondents were entitled to
    advance their argument concerning the limitation period on the certification
    motion. However, it is not generally appropriate that the appellants carry the
    financial burden of their successful appeal from the motion judges decision until
    the conclusion of the certification motion and potentially until the trial
    itself.

(2)

Remitting Costs back to the Motion Judge

[14]

The
    Divisional Court further erred in principle in remitting the costs of the
    appeal to the motion judge whose error necessitated the appeal. The parties
    could reasonably have expected the court to make an order as to costs, even if
    it was only an order for costs that depended on the result at the certification
    hearing or the trial. If the court was going to depart from that expectation
    and remit the costs of the appeal back to the motion judge, it ought to have
    given the parties an opportunity to make submissions on this proposed procedure.
    The appellants assert it did not do so.

[15]

In
    addition, the authority of the Divisional Court to remit the costs of the
appeal
back to the motion judge is not immediately apparent to me. Section 131(1) of
    the
Courts of Justice Act,
R.S.O. 1990, c. C.43 provides:

Subject to the provisions of an Act or rules of
    court, the costs of and incidental to a proceeding or a step in a proceeding
    are in the discretion of the court, and the court may determine by whom and to
    what extent the costs shall be paid.

[16]

The
    implication of s. 131(1) is that the court hearing a proceeding or a step in a
    proceeding will fix those costs. The use of the definite article the before
    the word court as opposed to the indefinite article a reinforces that
    implication. This implies that the court hearing the appeal should decide the
    costs of the appeal. Nothing in the
CPA
suggests the contrary.

[17]

Even
    assuming that the Divisional Court had the authority to make the order it did,
    it should not have done so in this case. The Divisional Court was in the best
    position to make an award as to costs; it had a full appreciation of the
    factors to be considered in making an award as to costs.  Further, as I noted
    above, the appellants enjoyed significant success on their appeal to the
    Divisional Court and should have received their costs on the appeal.

(3)

This Courts Decision in
Sharma

[18]

During
    argument of the appeal, the Courts attention was drawn to its decision in
Sharma
where, as in this case, the sole issue on the appeal was a limitation issue on
    a certification motion for a class proceeding. The Court of Appeal reversed the
    motion judge on the limitation issue. The balance of the issues respecting
    certification was remitted to the motion judge for determination.

[19]

With
    respect to the costs of the appeal, the court commented that access to justice
    and the appellants success on the appeal were important considerations.
    However, considering the novel issue of law raised in the pleadings, the court ordered
    costs in the cause. It held, at para. 5, that, [s]uccess in the ultimate
    proceedings should in this circumstance serve as the ultimate determining
    factor for the payment of costs.

[20]

The
    decision of this court respecting costs illustrates that the general rule  that
    the costs of an appeal are a separate discrete step and should not be treated
    as merely a component of the costs of the certification motion  is not an
    inflexible one. Costs remain in the discretion of the court. However, the court
    must correctly characterize the success of the parties on an appeal and weigh
    the importance of the various factors, including access to justice, in the
    balance. In addition, it is generally not appropriate for the appellate court
    to ask the motion judge to determine the costs of an appeal from an order made
    by that same judge. In
Sharma
, the Court of Appeal fixed the costs of
    the appeal.

C.

Conclusion

[21]

For
    the reasons given, I would allow the appeal as to costs and order that the
    costs of the appeals and of the motions for leave to appeal to the Divisional
    Court be awarded to the appellants on a partial indemnity basis.

[22]

Bearing
    in mind the submissions of the respondents counsel that fees for three senior
    counsel was excessive and that there was some overlap in the costs due to
    different senior counsel within the same firm dealing with this file, I would reduce
    the costs sought and award costs inclusive of any applicable taxes and
    disbursements as follows:

(i)      Windsor action - $65,000

(ii)      Tecumseh action - $67,000

[23]

Costs
    of the leave motion for the appeal to this court and of the appeal are to the
    appellants and are fixed in the amount of $16,500 inclusive of any applicable
    taxes and disbursements.

Released: Apr 25, 2013                                Karen
    M. Weiler J.A.

WKW                                                      I
    agree Warren K. Winkler C.J.O.

I
    agree John Laskin J.A.


