MacQueen v. Sydney Steel Corporation

MacQueen v. Sydney Steel Corporation Court Supreme Court Date 2013-02-27 Citation 2013 NSSC 442 Docket Hfx 218010 Judge/Registrar/Adjudicator Murphy, John D. (Honourable Justice) Document Type Decision Relations Library Sheet - MacQueen v. Sydney Steel Corporation - 2013 NSSC 442 - 2013-02-27 - Library Sheet Decision Content Supreme Court of Nova Scotia Citation: MacQueen v. Sydney Steel Corporation, 2013 NSSC 442 Date: 20130227 Docket: Halifax No. 218010 Registry: Halifax Between: Neila Catherine MacQueen, Joseph M. Pettipas, Ann Marie Ross, Kathleen Iris Crawford and the Estate of Carl Anthony Crawford by his executor or representative Kathleen Iris Crawford Plaintiffs v. Sydney Steel Corporation, a body corporate; The Attorney General of Nova Scotia representing Her Majesty the Queen in right of the Province of Nova Scotia, the Attorney General of Canada representing Her Majesty the Queen in right of Canada Defendants Note: This disbursements decision was given orally following plaintiffs’ successful motion in Supreme Court for class action certification. The Nova Scotia Court of Appeal has set aside the certification order, and will be addressing costs both at the motion in this court and in the Court of Appeal. This decision may therefore be superseded by a Court of Appeal ruling. It is being released in writing in response to a request from counsel for the Attorney General of Nova Scotia. Judge: The Honourable Justice John D. Murphy Written Decision: March 5, 2014 {Oral decision rendered February 27, 2013.} Counsel: Ray Wagner, QC, Scott Ritchie, QC, Michael Dull, for the plaintiffs Paul Evraire, QC, Angela Green, Melissa Chan, for defendants-Department of Justice (Canada) Agnes MacNeil, Alison Campbell, for defendants- Attorney General of Nova Scotia and SYSCO By the Court: INTRODUCTION [1] I am going to give an oral decision this morning with respect to the disbursements claimed following certification in the MacQueen matter. The usual reservation - I wanted to get the decision to you as quickly as I could. I may put something in writing. If so, it will echo what I say this morning with the usual cleanup. I am not sure that I’m going to do that, but depending on how things develop I may do so. I am going to review the background and eventually get to the result. [2] Following certification of this case as a class action, the plaintiffs claimed costs and disbursements with respect to the motion for certification. The plaintiffs claim (and this is both Wagner and Siskinds’ costs and disbursements) was for costs of $1.5 million plus disbursements of $676,443 plus tax. Extensive submissions were received. There was strong opposition by both defendants to the quantum of the costs and to the disbursements. On September 6, 2012, there was a cost award made of $400,000 divided equally between the defendants unless they agreed otherwise. [3] We are here today to talk about the disbursements. They were advanced in the original claim and on September 6th I advised that the disbursement claim was so lacking in detail that I could not make an award at that time. I commented on the parties’ submissions and the authorities and I determined that the plaintiffs should have an opportunity to submit more detail to support their disbursement claim and that the defendants should be able to respond. [4] I did provide some guidelines, I advised generally the categories of disbursements which would be allowed, subject to satisfactory detail and evidence of payment. [5] And just to briefly summarize, I indicated faxes would be not allowed, as they are included in overhead; copies would be allowed at five cents a page unless a higher cost was established; long distance and postage were okay as long as they were paid, and reasonable of course; research was not allowable as a disbursement (I considered it to be included in the law firm overhead); binding would be allowed only if outside the office. [6] The main concerns were the big items: agents’ fees and expert reports. I indicated they would be allowed if detail were provided and the claim was reasonable. I didn’t specify the exact detail which would be required except that it had to be a reasonably detailed itemization. I indicated that investigation would not be allowed without more information - it was not what I considered to be a normal disbursement. For travel, mileage and meals, also a major item, I advised that more information would be needed and I did give some guidance about lawyer travel and parties’ travel for discovery and cross examination. [7] With respect to out-of-province counsel, I indicated reasonable expenses for one Ontario lawyer travelling to court hearings, cross examinations in court, discovery of opposing witnesses; submissions and reasonable meetings would be allowed based on economy airfare and reasonable hotel expense. [8] Court filing fees – I indicated would be allowable as long as they related to certification. Document duplication and related services were allowable if properly supported, and reasonable disbursements would be allowed for preparation of transcripts if done outside the law firm. With respect to newspaper ads and subscriptions, I indicated that more detail was required before I could assess that. [9] The major concerns in September were the big items: the agents’ fees and expert reports, the investigation matter and the travel mileage and meals claim. [10] Counsel provided further submissions on disbursements after September 6th , affidavits from Wagners and Siskinds were received; and in those affidavits the claims were revised, ‑ they were reduced ‑ and the subsequent submissions from the defendants vigorously opposed the payment of the disbursements sought. The disbursements claimed by the two plaintiffs’ firms, or on behalf of the plaintiffs, as a result of their submissions and affidavits following the September hearing were reduced from $676,443 to $350,361.90. [11] For ease of reference, the figures that I am using are largely taken from the comparison prepared by the Attorney General of Nova Scotia which is Appendix ‘A’ to their brief of October 29th ; and I will indicate that the figures may not be absolutely precise. I was trying to do a reconciliation - my figure is about $150 higher than the Attorney General’s figure - I do not think we should get caught up on that, those minor differences are not material at this point. And I may say a little bit more about the numbers later, but if I am off by a few dollars on something, I am prepared to be corrected, and that goes for everything I say. [12] After that reduction to $350,000, the Attorney General of Nova Scotia continued to..I was going to say ‘complain’ but that is not the right word..continued to object with respect to the detail and the supporting documentation. With respect to experts the Attorney General of Nova Scotia sought a copy of the retainer and invoices, indicated that the hours that the experts worked and their rates should be provided, that information should be available about sub-experts or persons retained by the experts who testified, and that more information was needed about experts’ travel. There were concerns raised with respect to the reason for certain expenses, and particularly Dr. Lambert’s soil sampling and whether it was done initially for the purpose of this case. Some expenses were challenged as being unrelated to the motion for certification. There was a Supreme Court of Canada application referenced and some other items which were challenged. [13] With respect to travel, the Attorney General of Nova Scotia reiterated that there was not enough information - the date, the reason for travel and the identity of the traveller should be provided. Although it was minor, there was also a concern raised with respect to some filing fees which the Attorney General maintained related to the main action and not certification. [14] The Attorney General of Nova Scotia’s position remained that there was insufficient detail to assess the reasonableness of the disbursements, and requested the Court to decline to award any disbursements which were not adequately explained or justified, which were not clearly related to certification and which lacked specificity. [15] The Attorney General of Canada’s response echoed the Attorney General of Nova Scotia..well I guess it wasn’t an echo because the Attorney General of Canada filed a few days before the Attorney General of Nova Scotia, but it was the same sort of concern. The Attorney General of Canada took the position the plaintiffs had not established that the disbursements were necessary and reasonable, and did not justify the appropriateness of the amount claimed or establish relation to certification. [16] For travel the Attorney General of Canada noted that the plaintiffs did not indicate who travelled, the location from which they left and the destination or the specific purpose of the trip to show its relation to certification. [17] For expert witnesses, the Attorney General of Canada noted that there were no hourly rates or hours worked provided and the services were not specified; the descriptions were very cryptic. [18] The Attorney General of Canada suggested that I consider disbursements awards made in other cases and make an award in this case in proportion to the fees which were allowed when the costs were adjudicated. After reviewing other cases, the Attorney General of Canada suggested I award disbursements equal to 27 per cent of the costs award and that would result in disbursements of $98,240. The Attorney General of Canada also noted that the plaintiffs’ affidavits did not specify that all disbursements were paid, but in some cases just incurred. [19] I am going to make two points here - first, I am not going to make what I consider to be an artificial award based upon a percentage of fees. I don’t fault the Attorney General of Canada for making that suggestion, but I’m not prepared to approach disbursements that way. In my view a party who is entitled to recover disbursements should recover what they can establish was reasonably paid - not an estimate or some percentage of another item such as the costs award. So I am not going to make the award based on a percentage of the costs award. [20] Also I am satisfied that the disbursements claimed by the plaintiffs have been paid - whether or not they are recoverable by the plaintiffs from the defendants (which is what I have to decide obviously) I have no concern that the disbursements which are claimed have been paid. There was an issue about questioning the wording in the affidavit from Wagners, but plaintiffs’ counsel as officers of the court have stated in subsequent submissions, in particular their December 3rd submission at paragraphs 8 and 9, that all amounts claimed were paid, and I accept that representation - end of story on that point. [21] Now I will refer further to that reply submission by the plaintiffs on December 3rd, from which I just mentioned paragraphs 8 and 9. In that submission the plaintiffs say the defendants’ concerns about the quantum of the disbursements are what they call technical objections and they say that the defendants seek so much detail as to impinge on litigation privilege. And this is the first time that the litigation privilege argument gets raised ‑ it’s in December. The plaintiffs in that December 3rd reply submission also reduced their claim further - they removed all or part of some travel claims without indicating which traveller they were referring to or where the person went, and they also removed the claim for an agent getting assistance from an expert. [22] The travel reduction was in an amount of $18,126.23. The plaintiffs advised that with respect to travel the specific purpose and destination of the trips they were claiming would not be provided. They say that is protected by litigation privilege, and also they don’t say who travelled. [23] With respect to experts, the plaintiffs reiterate their position that the experts were necessary and I can say, I agree that the testimony of the experts who gave evidence at the hearing was necessary, but that does not automatically make the disbursement for their fees and expenses reasonable and recoverable. [24] At paragraph 26 of the December 3rd brief, the plaintiffs offered to provide invoices from experts, but only redacted in a manner to protect litigation privilege. The plaintiffs agreed to discount the $23,000 item for the consultant employed by Dr. Soskolne to assist with preparation for discovery and cross examination. So after the December 3rd submission the result of the plaintiffs’ position was, as I understand it, their claim for disbursements was reduced by $23,000 for the assistance preparing the testimony of Dr. Soskolne and $18,126.23 for travel expenses. There was a total reduction of $41,126.23 which brings the plaintiffs’ total disbursements claim to approximately $310,000 – I will give a little more detailed figure later, but just to put it in context ‑ as of December 3rd the plaintiffs were seeking about $310,000. They did offer to provide more evidence including expert invoices as I indicated, but only redacted or sealed from the defendants, I presume, sealing them to protect litigation privilege. [25] Final replies came from the defendants. The Attorney General of Nova Scotia maintained that the plaintiffs’ claim still lacked supporting documents and detail for travel and experts. They questioned the role of a grant which Dr. Lambert allegedly received and its relation to the expenses claimed for soil sampling work. The Nova Scotia defendants continued to insist on receiving supporting documentation. [26] The Attorney General of Nova Scotia says the issue should be finalized now, the Court should allow what is established where further documents are not needed, and that would be for things such as copying and long distance, and that the Court should disallow disbursements which the plaintiffs have not properly proved. The Attorney General of Nova Scotia seeks costs for responding to what they call “inconclusive submissions” from the plaintiffs. [27] The Attorney General of Canada’s last reply also seeks finality now, and suggests that no further submissions be allowed. The Attorney General of Canada says if the plaintiffs claim litigation privilege as a basis to withhold details, then those parts of the disbursement claim should be withdrawn. The Attorney General of Canada insists on receiving information including hourly rates and hours spent in order to address the reasonableness of the expert fees, and continues to maintain the 27 per cent of the costs award as a fair disbursement allowance, but I have indicated I am not going to decide on that basis. [28] I realize I have only been saying things you already knew but I thought that I should cover the background. My analysis follows. There are some categories of disbursements which are not seriously disputed. The plaintiffs have established that they were incurred and paid and I can indicate they are reasonable. For these I am using, just for ease now, the Attorney General of Nova Scotia consolidation which I indicated accompanied their October 29th response brief Appendix ‘A.’ Those disbursements which are in my view clearly recoverable in full are as follows. There is the courier expense of $2,819.16; there is the photocopying at five cents a page which is $1,900; long distance charges of $1,557.83; postage of $1,632.84; audiovisual (I guess that’s what ‘AV’ is) duplication and services $1,530.56. [29] The prothonotary disbursements: (and I do not want to get into too much minutia here) ‑ I find that three of the prothonotary’s disbursements relate to certification. First of all, the filing fee for the certification application $56.50; the fee for continuation of the proceeding under the Class Proceedings Act $57.68 ‑ I realize that is arguable whether that is part of certification or part of the main proceeding, but I am prepared to put it under certification; and also the fee for the audio CD on January 25, 2010 which was while we were in the middle of certification issues: $40.60. [30] So the total that I have allowed recoverable in full now under those categories (and I will deal with the other categories in a minute) the items I have mentioned, they total $9,595.47. [31] So what does that leave us with? As I understand the numbers, we are left with, from the original claim or from the claim after September, a total of $340,203 which is agents’ and expert fees which would have been $251,979; travel, mileage and meals $77,631; the transcripts of $9,430; and the newspaper ads and subscriptions of $1,123. Now I have deducted some amounts from those figures. First, I have deducted $418.25 from the filing fees and the prothonotary’s fees - they relate to the main action I find and not to certification. I have also deducted, and this is with the plaintiffs’ concurrence, $18,126.83 from the travel and mileage claims - that was taken off after September. So that leaves a travel, mileage and meal claim of $59,544.24. [32] I understood the plaintiffs were deducting, they said they were prepared to deduct and would be amenable to deducting (and I took that as an agreement), $23,000 from the agents’ and expert fees - that’s for the external preparation. That would reduce that item, the expert and agents’ fees to $228,979.48. And the transcripts remain at $9,430 and the newspapers and subscriptions at $1,123. [33] So my understanding of what remains in issue then after I have allowed the $9,595.47 that I previously referred to for the courier and so on, that there remains in issue (and I know I’m repeating myself here, but I want to be clear) there remains in issue the $59,544.24 for travel and mileage; $228,979.48 for experts; $9,430 for transcripts; $1,123 for newspapers and subscriptions: a total of $299,076.72 - and I recognize there may be some different views within a few dollars on those, and I can be corrected. [34] So the issue for me is how do I deal with those remaining amounts, that $299,000? As I have indicated, the plaintiffs have established that the disbursements were incurred and paid - I accept that. The issue is, are they recoverable as reasonable disbursements in connection with the certification? The plaintiffs have the burden to establish that. The defendants say there is insufficient information provided. The plaintiffs say the information the defendants are seeking is protected by litigation privilege. [35] In my view there is merit to both positions. With respect to the defendants’ position, I agree that insufficient information has been provided to assess the reasonableness of the disbursements. Absent agreement this Court does not allow travel disbursements without being advised who travelled, where they went, why and when. Similarly, the Court does not award substantial expert fees, very substantial fees, in this case almost $229,000 without a substantial amount of backup information, usually to include some or all of the experts’ invoices, not redacted but in full, a detailed, at least with some detail, description of the services the expert performed, the amount of time the expert worked, the expert’s hourly rate and with respect to expert travel, a breakdown of airfare and hotels and an indication when meetings were held and where and with whom. [36] There are two reasons for that sort of detail: so the opposing party can assess and react to the claim, and so the Court can make a determination whether they’re reasonable. In this case I agree with the defendants that there is essential information absent with respect to the categories of disbursements for travel, mileage and meals, experts, transcripts, newspapers and subscriptions – I am dealing primarily though with the travel and the experts. I gave direction in September 2012 - I was not as specific as I am being today. I did not feel it was my role in September to tell the plaintiffs how to present their claim, but I do agree with the defendants that information is necessary, they are entitled to it in order to respond to the claim and I need it to determine the reasonableness. [37] Now with respect to the plaintiffs’ position, they claim the information sought is protected by litigation privilege and that they should not be obliged to reveal information about their litigation strategy to the defendants. They say that to give the information requested would impinge on their privilege, it would show how they have gone about preparing a case which is yet to be heard on the merits, and provide too much information about what they were doing and their interaction with experts. I respect that position. In saying that, I am not making a finding that all the information sought by the defendants is subject to litigation privilege. I would not make that sort of a ruling without detailed submissions from the parties and so on. But to argue that point at this stage would only add..it would add costs, it would add disbursements and in my view it would be counterproductive. [38] So I am left with a situation where I respect the defendants’ request for information; I think it’s reasonable, I find they’re entitled to it before disbursement recovery is ordered against them. Without deciding the extent to which it may apply, I also accept the plaintiffs’ right to claim the information is protected by litigation privilege. [39] The result: the plaintiffs cannot recover the disbursements without proof they are properly incurred. That would be unfairly prejudicial to the defendants – just to say that because there’s litigation privilege the defendants are not entitled to the detail but they have to pay anyway - in my view that would be very unfair. [40] On the other hand, the plaintiffs have clearly spent the money and a significant portion of the disputed disbursements, maybe all I don’t know, but certainly a significant portion is recoverable, particularly for travel and experts. The defendants have acknowledged that in their briefs. In my view it would be unfair to do what the defendants suggest – to just completely disallow the items for which litigation privilege is claimed, or as the Attorney General of Canada suggests, pick a random number. [41] The solution if that is the right word, my decision in any event is as follows. I am going to postpone again the determination of the disbursement categories that I have referred to which I haven’t awarded today: that’s the travel, the agents’ fees, the transcripts and the newspaper and subscriptions, until the litigation is over. Litigation privilege, unlike solicitor-client privilege which is not claimed here, litigation privilege expires when the litigation ends. Once the lawsuit is over the plaintiffs have no basis to maintain the information requested by the defendants, to which I find the defendants are entitled, is protected by litigation privilege. [42] So not without some reluctance, I adjourn determination of the balance of the travel claim still claimed by the plaintiffs and that’s after deducting the $18,126 from the earlier claim; and the balance of the expert fees after deducting the $23,000 until this litigation is ended – and by that, I mean dealing with the merits, not just certification. I do cap the travel expense at $59,544.24 and that’s travel, mileage and meals, and I cap the expert expense at $228,979.48 - by cap I mean that is the maximum the plaintiffs are entitled to claim - it’s not what I’m awarding. [43] I will stay seized of the issue involving disbursements with respect to certification, and whatever I ultimately determine to be recoverable as certification disbursements will be recoverable by the plaintiffs in any event of the outcome of the merits of the main action, unless of course the appeal with respect to certification succeeds and that would be a very different scenario. But assuming there is a hearing on the merits (and I do not mean to be presumptuous in assuming that, but assuming there is), no matter how that turns out, the plaintiffs will be entitled to their disbursements with respect to certification once I determine their reasonableness – that’s subject of course to appeal of the certification order. [44] With respect to the transcripts – the litigation privilege argument ‑ I cannot see how that can apply to the transcripts and certainly not to the same extent as it may apply to the other items, ‑ but the defendants are entitled to details of the transcript expense, especially as it was a moving number without backup during the various submissions. As the plaintiffs’ submissions progressed, so did the amount claimed for transcripts. So without detail, I am not in a position to assess it and to keep things simple, I am going to adjourn that item until the litigation ends and it will be dealt with at the same time and on the same terms as the travel and expert matters. [45] Similarly for newspapers and subscriptions, the plaintiffs have paid the amounts and they may be recoverable if they are reasonable - I cannot determine that now. I do not know, I do not have the details; neither do the defendants so regretfully I will have to adjourn that as well and we’ll deal with it at the same time as the other items once litigation is concluded. [46] So the plaintiffs will have recovery now of disbursements at this stage subject to appealing the certification on the same principle as the costs order, in the amount of $9,595.47. Determination of additional certification disbursements of $299,076.72 is postponed until litigation on the merits of the case is complete. I am seized with that issue and I will stay seized with it and I will address it after conclusion of the case irrespective of who the trial judge is. [47] I can say though and this goes (I guess it’s not necessary to say this) at any stage if the plaintiffs are prepared to waive its claim for litigation privilege, the matter of these disbursements can be addressed sooner once the additional evidence is provided; and the parties can also resolve it among themselves any time they want. [48] Finally with respect to costs, costs at this stage, the plaintiffs have advanced a claim seeking substantial disbursements and the defendants have successfully argued that the information provided was inadequate. The plaintiffs could have chosen not to seek disbursements at this time, but they did make the claim and then invoked litigation privilege in response to reasonable requests for information. As I say, the plaintiffs could have chosen not to seek disbursements until litigation privilege wasn’t an issue. They made a choice to seek it at this time without providing the information; it required the defendants to make extensive response and to seek information that they were reasonably entitled to. The defendants in their briefs sought costs; given the result, I do not know if they continue to seek costs. If so, I will address it - we can take a minute if they want to think about it. My preference would be to address it now, but we can deal with it otherwise if necessary. I can give you a few minutes if you want to think about it, I am not going to force anybody to do anything quickly. MS MACNEIL: We would like it addressed now because it looks like we’ll be returning to refresh the argument again at a later date, and it would be the third or fourth round at this point. MS GREEN: I agree, My Lord, I’d rather have it dealt with now. THE COURT: Okay, well, are you prepared to deal with it now, Mr. Wagner? MR WAGNER: That’s fine, My Lord. [49] Okay, I’ll hear from each of the defendants. I think I understand the basis on which you’re claiming it, but I would like you to give me some indication of the quantum you’re seeking. [COUNSEL ADDRESS COURT RE COURT COSTS..] [50] I think $1,500 each is reasonable - what I’m inclined to do (you can suggest otherwise) I’m inclined to award $1,500 each not payable now, but the $1,500 each will be deducted from whatever disbursement amount I award at the end of the day. If the Court of Appeal overturns the certification order, then I guess the costs..I’ll leave it to the parties to work that out if that happens. Technically, I guess, the Attorneys General would be entitled to their costs at that time, but they might be sufficiently pleased with the result that $1,500 wouldn’t be a deal breaker, so I’ll hear from the Attorneys General if you want to argue that they be payable at this time, but it’d be an uphill fight. MS MACNEIL: I have no submissions on that, My Lord. MS GREEN: Payable in the cause is fine with me...(inaudible) THE COURT: Okay, well payable..just to clarify.. MS GREEN: Deducted from it.. [51] Because we are dealing with a confined issue here, they’ll be payable at the end of the day as a setoff against disbursements ultimately awarded for the items that have been postponed. So they’re not deducted from the current $9,595 is what I’m saying. And, you know, I will indicate I would very much like to have brought this to a conclusion; I couldn’t find what I considered to be a fair way to do it at this time. I respect litigation privilege, but the defendants are certainly entitled to more detail, so that’s where we are. Thank you. MR WAGNER: Thank you, My Lord. THE COURT: Ms. MacNeil? MS MACNEIL: I was just going to inquire as to whether the disbursements were payable on the same terms as the fees that were...(inaudible) [52] Yes they are, I..if I didn’t say that, I intended to. Now I don’t know if somebody wants to do an order reflecting that. One of my concerns here is I don’t know whether the fees are part of the appeal that’s being heard on certification, if the costs award is also being appealed and maybe..the disbursements are..whether today is part of that - if it is I’ll give you an order right away, if you want to have it dealt with all by the Court of Appeal. The last thing I want to do is hold up any determination there of anything you’re doing, but I didn’t know whether the costs issue is under appeal, other than as a tie-on to the..obviously it’s under appeal as part of the general appeal, but I don’t know if there’s a separate issue on the appeal of the costs being unreasonable if the appeal doesn’t succeed. I don’t want to do anything to frustrate having everything dealt with at once. MR WAGNER: As far as I know..at least my understanding is that there’s no complaint in the Court of Appeal with respect to the costs order having made to date. I would suggest that we just wait..we can deal with counsel unless counsel feel that it’s necessary to do an interim order, that we have the final order with respect to.. [53] Well they may want an order to justify paying the $9,500 at this point. In any event, if there’s no urgency, certainly..perhaps, who wants to do the order, defendants? MS MACNEIL: We’ll do the order. [Discussion..] [MS MACNEIL WILL SUBMIT ORDER..] [MS MACNEIL REQUESTS WRITTEN DECISION RE COSTS AND DISBURSEMENTS] Murphy J.