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Justice J. R. Henderson of the Ontario Superior Court has awarded Inco $1,766,000 in legal costs arising from the Smith v. Inco nickel contamination class action  in  Port Colborne, Ontario. This is less than a quarter of Inco’s actual legal costs, which exceeded $5,340,000 after certification.

“[1] This is my decision with respect to the costs of this proceeding from January 19, 2006, the date of the certification of this action as a class proceeding, until July 6, 2010, the date of my decision after the trial of the common issues.

[2] On the appeal from the trial decision the Ontario Court of Appeal (“OCA”) dismissed the claim of the plaintiff class against the defendant Inco. As the party that was ultimately successful, Inco requests its costs on a partial indemnity basis from the date of certification until the date of Inco’s offer to settle, June 10, 2009, and on a substantial indemnity basis thereafter.

[3] However, Inco does not request its costs from the representative plaintiff or from the class members, but by payment out of the Class Proceedings Fund (“the Fund”), an account that is maintained and administered by the Law Foundation of Ontario (“LFO”) pursuant to s.59.1 of the Law Society Act, R.S.O. 1990, c. L.8.”

Inco would have been entitled to costs of $3,532,000, if not for s. 31(1) of the Class Proceedings Act:

31(1) 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 caseraised a novel point of law or involved a matter of public interest.

 Justice Henderson agreed that this class-action involved a novel point of law on a matter of public interest. He  therefore cut Inco’s otherwise recoverable costs in half:

[107] Further, in any costs award the court must balance the chilling effect of a large costs award against the need to discourage frivolous and unnecessary litigation… The Fund is available for the purpose of facilitating access to justice for large groups of the population who may wish to pursue a class proceeding. However, the Fund is not bottomless and a costs order that would cripple the Fund should not be made as it could unduly stifle subsequent claims.

[108] In that respect, I must also consider that Inco does not have a bottomless supply of money with which to defend claims. Inco is clearly out-of-pocket for its legal fees and for its legal disbursements. Inco should not be made to suffer the consequences of an inadequate costs order.

The Port Colborne plaintiffs, and their lawyers, must be grateful that Inco sought its costs from the  Law Foundation, and not from them personally.



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