Class Actions (Ont) - Costs. Davies v. Clarington (Municipality)
In Davies v. Clarington (Municipality) (Ont CA, 2023) the Court of Appeal considered costs awarded against non-parties, here in a class action context - and where the behaviour resembled the tort of maintenance [para 60: "The tort of champerty is a more egregious form of maintenance as the maintainer shares in the profits of the litigation: McIntyre Estate, at para. 26."]:
(3) The Tests for Non-Party Costs Liability. Peters v. SNC-Lavalin Group Inc.
 In Laval Tool, this court set out the two bases on which the Superior Court may order costs against a non-party.
 The first is the statutory jurisdiction under s. 131(1) of the CJA. That section provides that: “Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or 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”.
 The court confirmed in Laval Tool, at paras. 59-60, that the discretion to order costs payable by a non-party under the statutory jurisdiction is limited to situations in which the “person of straw” test is met. That test requires three things to be established:
(1) the non-party has status to bring the action; The trial judge held the person of straw test did not apply on the facts. The appellants do not challenge that finding in this court.
(2) the named party is not the true litigant; and
(3) the named party is a person of straw put forward to protect the true litigant from liability for costs
 The second basis discussed in Laval Tool for ordering costs against a non-party is the one that is germane to this appeal. That basis arises from a superior court’s inherent jurisdiction to prevent abuses of its process.
 Abuse of process is a flexible doctrine that is concerned with proceedings that are unfair to the point that they are contrary to the interest of justice. An abuse of process involves oppressive or vexatious treatment that undermines the public interest in a fair and just trial process and the proper administration of justice: Behn v. Moulton Contracting Ltd., 2013 SCC 26,  2 S.C.R. 227, at paras. 39-40.
 Laval Tool confirmed that “superior courts have inherent jurisdiction to order non-party costs, on a discretionary basis, in situations where the non-party has initiated or conducted litigation in such a manner as to amount to an abuse of process”: at para. 66. The discretion is to be exercised “sparingly and with caution”: at para. 68.
 The following examples were offered in Laval Tool, at paras. 74-75, to illustrate non-party conduct that may attract a costs sanction: (a) a non-party initiating proceedings through a nominal plaintiff in order to oppress the defendant; (b) a non-party putting forward a nominal plaintiff to employ the court's processes as an instrument to defraud the defendant; and (c) a non-party engaging in conduct that amounts to the tort of maintenance or that “resembles a maintainer”. This court also stated that other “[s]ituations of gross misconduct, vexatious conduct or conduct by a non-party that undermines the fair administration of justice … can be envisioned”: at para. 76. This court then referenced how an order for costs against a director, shareholder or principal of a corporation who committed fraud or gross misconduct in the instigation or conduct of the litigation involving the corporation may be warranted in exceptional circumstances: at para. 77.
 Relying on inherent jurisdiction, the Laval Tool court made a non-party costs order against an individual who had caused his corporation to bring an action for payment for services against a person with whom the corporation had no contract and for whom it had performed no services. The action was fictitious, there was no good reason for it to have been brought in the company name, and the non-party’s conduct resulted in a waste of the defendant’s and the public’s resources: at paras. 86-87.
 Two points from Laval Tool are fundamental. First, the court’s inherent power to order costs against non-parties is discretionary. Second, because it derives from the court’s power to prevent its process from being abused, it focusses on conduct of the non-party in instigating or controlling the litigation in a manner that results in such abuse. The examples of non-party conduct that were referenced in Laval Tool as potentially deserving of a costs sanction against a non-party, and the actual disposition made by the court on the facts before it, reinforce this. They are all cases where the non-party was actively involved in the instigation or conduct of the litigation or actively asserted a significant degree of control over it, and thus brought about the abuse of process.
 The reference to conduct resembling that of a maintainer is consistent with this theme, since the tort of maintenance is committed by a person who “for an improper motive, often described as wanton or officious intermeddling, become involved with disputes (litigation) of others in which [they have] no interest whatsoever and where the assistance [they render] to one or the other parties is without justification or excuse”: McIntyre Estate v. Ontario (Attorney General) (2002), 2002 CanLII 45046 (ON CA), 61 O.R. (3d) 257 (C.A.), at paras. 26-27. The tort of champerty is a more egregious form of maintenance as the maintainer shares in the profits of the litigation: McIntyre Estate, at para. 26.
 Even though the loans preceded the enactment of s. 33.1 of the CPA which now governs court approval of third-party funding agreements for class proceedings, the trial judge was of the view that Mr. Zuber, or his counsel, was required to obtain approval under the common law. At common law, a number of factors were considered before a funding agreement for a class proceeding was approved: Houle v. St. Jude Medical Inc., 2017 ONSC 5129, 9 C.P.C. (8th) 321, at paras. 63-65, aff’d 2018 ONSC 6352 (Div. Ct.), 29 C.P.C. (8th) 409. One factor was that the agreement could not interfere with the right of the representative plaintiff to control the litigation: Houle, at para. 64.
 I agree with the trial judge that the question of whether the loans should receive court approval and the question of whether the lenders engaged in an abuse of process are discrete questions. A failure to receive court approval of a third-party funding agreement does not necessarily mean the lenders engaged in conduct amounting to an abuse of process. Nothing in the case law preceding s. 33.1 of the CPA suggests that outcome. As the trial judge noted it was Mr. Zuber and his counsel who were required to seek approval, not the lenders. Moreover, at common law, the result of failing to obtain court approval where required is that the funding agreement does not come into force: Fehr v. Sun Life Assurance Company of Canada, 2012 ONSC 2715, 25 C.P.C. (7th) 68, at paras. 89-90. That would affect the enforcement of the loans as between Mr. Zuber and the lenders. It would not in and of itself justify imposing costs liability on the lenders in favour of the appellants.
 In conclusion, I am not persuaded by any of the appellants’ arguments that the trial judge erred in his approach to Laval Tool. It was open to the trial judge to find that the lenders, although they advanced loans at onerous rates of interest which accumulated to amounts in excess of what was available as a reasonable settlement, did not instigate or conduct Mr. Zuber’s litigation in a manner that constituted an abuse of process so as to attract costs liability as non-parties.
In Peters v. SNC-Lavalin Group Inc. (Ont CA, 2023) the Court of Appeal considers costs in a class action context:
 Section 31(1) of the Class Proceedings Act, 1992 explicitly permits the court to consider the novelty of the case and the public interest when awarding costs in a class proceeding:. Levac v. James
In exercising its discretion with respect to costs under subsection 131(1) of the Courts of Justice Act, the court may consider whether the class proceeding was a test case, raised a novel point of law or involved a matter of public importance. [Emphasis added.] In Das v. George Weston Limited, 2018 ONCA 1053, 43 E.T.R. (4th) 173, leave to appeal refused,  S.C.C.A. No. 69, at para. 239, this court explained the purpose of s. 31(1) of the Class Proceedings Act, 1992:
In applying the s. 31(1) factors, the court must have regard to the circumstances of the particular case and the purposes animating the CPA. Those purposes are: promoting access to justice, effecting behavioural modification, and making effective use of limited judicial resources: see Ruffolo, at para. 33. When considered alongside the other factors relevant to costs, most notably the outcome of the litigation, the s. 31(1) factors will often lead to some reduction in the costs awarded to a successful defendant. However, defendants who have successfully resisted a class proceeding claim should not routinely be required to shoulder the entire burden of their no doubt significant legal costs merely because the unsuccessful plaintiff’s claim raised a novel legal point or involved a matter of public interest. [Emphasis added.]
 I also do not accept that the motion judge erred in considering that the action was funded by the Class Proceedings Fund. In Das, at paras. 248-50, this court accepted that this may be a relevant, albeit not a determinative, consideration.
In Levac v. James (Ont CA, 2023) the Court of Appeal considers several cost factors that apply to class actions:
 Dr. James seeks leave to appeal the order that he pay the costs of Ms. Levac and the nurses.
 There is no dispute that a trial judge’s discretion to award costs is broad, and that leave will only be granted where there are strong grounds upon which the court could find that the motion judge made an error in principle or the costs award is plainly wrong: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9,  1 S.C.R. 303, at para. 27.
 On the costs to Ms. Levac, Dr. James argues that as the Class has not established complete liability against him and may in theory never establish that liability, a costs order at this stage of the litigation is premature. It remains open to Dr. James to defend the claims against him by rebutting the trial judge’s presumptive findings at individual trials. He contends that costs should have been left in the cause instead.
 I would reject this submission. The general rule that costs follow the event applies in Ontario class proceedings, just as it does in other forms of litigation: Ruffolo v. Sun Life Assurance Company of Canada, 2009 ONCA 274, 95 O.R. (3d) 709, at para. 34. While liability may ultimately be rebutted in respect of individual Class Members, the common findings finally resolved the certified common issues in favour of the Class. The costs of individual trials, should they occur, can be dealt with in those proceedings.
 Dr. James also argues that this case fits within s. 31 of the Class Proceedings Act, 1992, which allows for unique costs arrangements where the action is a test case, raises a novel point of law, or involves a matter of public interest.
 I would reject this submission. The trial judge addressed this very question, concluding that, “The present case is unique in terms of its subject matter but it is not unique in terms of its process or any features that would go to the payment of costs.” I see no basis to interfere with this finding, and in any event the determination that a special arrangement is justified under s. 31 is entirely discretionary.
 There is no basis on which to conclude that costs in favour of the Class were not appropriate following the common issues trial.
 Dr. James further argues that the trial judge erred in principle by ordering him to pay the costs of the co-defendant nurses.
 The trial judge relied on Moore v. Wienecke, 2008 ONCA 162, 90 O.R. (3d) 463, at para. 37, which confirmed that in a multiple-defendant case where the plaintiff succeeds against some defendants but not others, the “normal course” is for the unsuccessful defendant to pay the plaintiff’s costs and the plaintiff to pay the successful defendant’s costs. Deviations from this norm may be justified where it was reasonable for the plaintiff to sue multiple defendants in the same action and it is fair in the circumstances to shift costs from the plaintiff to the unsuccessful defendant: Moore, at para. 41.
 The trial judge explained why he ordered Dr. James to pay the costs of the nurses in this case as follows:
In my view, it is fair to shift to Dr. James any costs owed by the Plaintiff to the Nurse Defendants. It was evident to me early in the trial that the physician is responsible for the treatment and preparatory procedures performed by the nurses under his supervision and authority. He conceded as much himself in his testimony. For Dr. James to have sued the nurses in the first place instead of simply summonsing them as witnesses is perplexing to me. The responsible physician was not going to enjoy any positive findings or helpful answers to the common issues questions by trying to pin some of his responsibility on the nurses who assisted him. Dr. James argues such a deviation was not warranted for four reasons. First, he never attempted to shift the blame for the Class Members’ injuries onto the nurses. Second, the trial judge mistakenly accepted that Dr. James had brought the nurses into the action through a third party claim, when in fact Ms. Levac had claimed against the generic “Nurse Doe” beforehand. Third, the nature of the allegations against Dr. James and the nurses differed significantly. Fourth and finally, there is no evidence in the record that the Class would be unable to pay the costs of the nurses.
 I would reject this submission. The trial judge considered and applied the relevant factors in deciding whether to exercise his discretion, which need not be applied mechanically in every case: Moore, at para. 45. Trial judges are best positioned to assess the conduct of the parties in a lengthy class proceeding and to determine what costs arrangement is fair and reasonable in this regard: see e.g., Taylor v. Canada (Attorney General), 2022 ONCA 892, at para. 36. It was open to him to conclude that Dr. James was driving the case against the nurses and was primarily responsible for their remaining in the action. Indeed, Dr. James has maintained, in oral argument on appeal, that his crossclaims against the nursing defendants remain active and could be pursued if evidence of the nurses’ negligence is adduced at the individual trials, notwithstanding the trial judge’s conclusions that the case against them following a five-week trial was “remarkably thin” and disclosed “no sustainable legal claim.”
 Finally, Dr. James contends that the quantum of the costs awards in favour of the nurses was unreasonable and unsupported. He argues that, because the nurses’ counsel did not provide detailed time dockets, their overall costs should be reduced as it is impossible to determine whether the hours were reasonably necessary. He also asserts that there was no basis for awarding costs on a substantial indemnity basis.
 The trial judge found the amounts claimed for the entire action culminating in a five-week trial to be “extremely reasonable” and “relatively modest.” He stated that he was not inclined to look behind the costs claimed to evaluate their hourly content. As for the award of costs on a substantial indemnity basis, the trial judge accepted that all of the nurses had offered to settle the third party claims and crossclaims on a dismissal without costs basis at a very early stage in the litigation and that, even if r. 49 did not strictly apply, there was no basis for Dr. James to have kept them in the action. The trial judge was satisfied that the nurses’ claim for costs was reasonable, and he clearly explained the basis for awarding costs on a substantial indemnity basis.
 In light of the deference afforded to trial judges in their assessment of costs, I see no potential error that would justify granting leave to appeal the costs award.