The Adverse Costs Consequences of Class Actions

Costs Stack Up (Image via Forbes.com)

[113]      Based on anecdotal evidence available to me as a class actions judge, it is my opinion that the large costs awards that have been awarded in recent years are having adverse consequences. One apparent adverse consequence of the potential for these large costs awards is that many parties to class actions through their lawyers show no restraint in their approach to prosecuting or defending the certification motion. The parties roll the dice that they will be the successful party, show no restraint in running up costs, but hope to recover an enormous award of costs. Another consequence of the potential for these large costs awards is that in order to avoid the sting of the enormous adverse costs awards, the unsuccessful parties make disingenuous or ironical arguments that their claim or defence raised a novel issue or was in the public interest. Another adverse consequence is that the court’s response to arguments about costs has been inconsistent, and the outcome of costs determinations is uncertain and unpredictable.  Another very serious consequence is that the number of new class actions appears to be declining, and small but possibly meritorious class actions are disappearing as class counsel warily select the cases that they will prosecute. The risk of grotesque adverse costs awards is a serious disincentive to law firms being prepared to take on class actions and serve the public’s demand for access to justice.

McCracken v. Canadian National Railway Company2012 ONSC 6838 (Ont SCJ)- Costs Endorsement per Perell J.

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