Macaronies Hair Club and Laser Center Inc v. BofA Canada Bank, 2021 ABQB 106

Court of Queen’s Bench of Alberta Citation: Macaronies Hair Club and Laser Center Inc v.

BofA Canada Bank, 2021 ABQB 106 Date: 20210210 Docket: 1203 18531 Registry: Edmonton Between: Macaronies Hair Club and Laser Center Inc., Operating As Fuze Salon Plaintiff - and - BofA Canada Bank, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Capital One Bank (Canada Branch) Citigroup Inc., Federation Des Caisses Desjardins Du Quebec, MasterCard International Incorporated, National Bank of Canada Inc., Royal Bank of Canada, Toronto-Dominion Bank and Visa Canada Corporation Defendants _______________________________________________________ Reasons for Judgment of the Associate Chief Justice J.D.

Rooke _______________________________________________________ Introduction

[ 1 ] The Defendants, Mastercard International Incorporated (Mastercard) and Visa Canada Corporation (Visa) seek costs against Home Depot of Canada Inc. (Home Depot) and Wal-Mart Canada Corp. (Wal-Mart) on a scale of 5 times Column 5 of

Schedule C of the Alberta Rules of Court, following their application for the approval of a settlement agreement between the Plaintiffs and the National Bank of Canada Inc., Mastercard and Visa (the MNV Settlement).

The Application for which these costs are sought is memorialized in two decisions of this Court: Macaronies Hair Club and Laser Center Inc v BofA Canada Bank , 2019 ABQB 181 (Macaronies 2019) and Macaronies Hair Club and Laser Center Inc. v BofA Canada Bank , 2018 ABQB 633 (Macaronies 2018). [ 2 ] In the alternative, the Defendants seek costs in favour of Mastercard and Visa against each of Wal-Mart and Home Depot in amounts or on a scale the Court deems appropriate.

Background [ 3 ] The particulars of the MNV Settlement are set out in the Reasons for Judgment of Weatherill J. in Coburn and Watson’s Metropolitan Home v BMO Financial Group , 2018 BCSC 1183 (Coburn 2018). Home Depot and Wal-Mart are members of the plaintiff class in the underlying proceeding and they objected to the approval of the MNV Settlement before Weatherill J. on the basis that the releases and other provisions curtailing the legal rights of class members were too broad and prejudicial to them. Weatherill J. rejected those objections: Coburn 2018, at paras.61, 62, 66 and 69.

Because this is a multijurisdictional class proceeding, it was necessary for the MNV Settlement to be approved by Courts in other jurisdictions, including Alberta (per s.35 of the Class Proceedings Act , SA 2003 c C-16.5 .) ( CPA ). On August 30, 2018, I approved the MNV Settlement (Macaronies 2018) with detailed reasons to follow (Macaronies 2019).

By the time of those later detailed reasons, the MNV Settlement had been approved not only by Courts in British Columbia and Alberta, but also in Ontario ( Bancroft-Snell v Visa Canada Corporation , 2018 ONSC 5166 ), Saskatchewan ( Hello Baby Equipment Inc. v BofA Canada Bank , 2018 SKQB 276 ), and Quebec ( 9085-4886 Quebec Inc. v Visa Canada Corporation , 2018 QCCS 4872 ).

In those jurisdictions, the MNV Settlement was approved over the same objections raised by Wal-Mart and Home Depot as were raised before me, as Mastercard and Visa note in their brief, at para.6. [ 4 ] Wal-Mart and Home Depot have made 12 unsuccessful attempts across Canada opposing the settlements: 5 unsuccessful oppositions to the applications for settlement approval, 4 unsuccessful appeals from settlement approval decisions [1] , and 3 unsuccessful applications for leave to appeal to the Supreme Court of Canada. [ 5 ]

Section 37 of the CPA speaks to applications for costs in class proceedings, and provides: With respect to any proceeding or other matter under this Act, the Court may award costs as provided for under the Rules of Court. [ 6 ] Rules 10.29 and 10.32 of the Alberta Rules of Court provide: 10.29(1) A successful party to an application, a proceeding or an action is entitled to a costs award against the unsuccessful party, and the unsuccessful party must pay the costs forthwith, notwithstanding the final determination of the application, proceeding or action, subject to

a) the Court’s general discretion under rule 10.31,

b) the assessment officer’s discretion under rule 10.41,

c) particular rules governing who is to pay costs in particular circumstances,

d) an enactment governing who is to pay costs in particular circumstances, and

e) subrule (2). ... 10.32 In a proceeding under the Class Proceedings Act or in a representative action, the Court, in determining whether a costs award should be made against the unsuccessful representative party, may take into account one or more of the following factors, in addition to any other factors the Court considers appropriate:

a) the public interest;

b) whether the action involved a novel point of law;

c) whether the proceeding or action was a test case;

d) access to justice considerations. Analysis [ 7 ] Home Depot and Wal-Mart cite three reasons why costs should not be awarded against them:

a) the settlement approval was a required proceeding under s.35 of the CPA;

b) there has been inordinate delay in bringing this Application; and

c) the issues raised were in the public interest, novel, and implicate access to justice. [ 8 ] They further argue that the multipliers sought by Visa and Mastercard are unreasonable. 1. Required Proceeding [ 9 ] The approval hearing was mandated by s.35 of the CPA. Wal-Mart and Home Depot were entitled to raise the same objections to the MNV Settlement that they raised in Coburn 2018.

As Perell J. noted in Bancroft-Snell , at para.115, “...each court has an independent and solemn obligation to review a settlement, to consider any objections, and to make a determination of whether it is fair and reasonable and in the best interests of the class.” [ 10 ] Having said that, I am not convinced that, having been mandated by statute, the hearing necessarily falls outside of the general principle that the successful party is entitled to costs.

Wal-Mart and Home Depot were certainly entitled to bring the same objections that had failed in British Columbia to the Alberta hearing, but they were not required to do so, and in raising those objections again they required the Applicants to marshal the legal resources necessary to contest them again. The position taken by Wal-Mart and Home Depot made it necessary for the Applicants to incur significant legal costs. The general rule is that a party who takes a position that

a) requires the other party to incur legal costs, and

b) is ultimately held to be without merit, will be required to compensate the other side for their costs. In my view, this principle holds regardless of whether the hearing itself was mandated by statute or not. 2. Delay [ 11 ] In Macaronies 2018, I wrote at para.7, “Costs against Wal-Mart and Home Depot in favour of the Plaintiffs and Settling Defendants are reserved and can be spoken to at the instigation of the latter parties.” Counsel for the Applicants approached the Court in June, 2020, about pursuing an application for costs.

Wal-Mart and Home Depot point to the considerable period of time that had elapsed. They refer to Rule 10.29, which provides that the unsuccessful party is required to pay costs “forthwith, notwithstanding the final determination of the application, proceeding or action.” They argue that there is no reasonable basis for the delay in bringing this Application. [ 12 ] I agree with the Applicants that the timing of this Application should be considered in the broader context of the multijurisdictional proceedings.

My initial approval of the MNV Settlement as set out in Macaronies 2018 occurred on August 30, 2018; the Order was filed on September 24, 2018, and my further reasons for decision (Macaronies 2019) did not issue until March, 2019. The approvals in other jurisdictions were made in September 2018 (Ontario and Saskatchewan) and November 2018 (Quebec). Wal-Mart and Home Depot brought appeals to the Quebec Court of Appeal, the British Columbia Court of Appeal, the Ontario Court of Appeal and to the Saskatchewan Court of Appeal in May, June, September and December 2019, respectively.

Any contrary decision issuing out of any one of these Courts would have had a significant impact on the litigation on the whole that might reasonably have been taken into account in this Application. I do not think it was unreasonable for the Applicants to have waited to see how these other proceedings and appeals developed before taking this action on costs. [ 13 ] Moreover, I agree with the Applicants that Wal-Mart and Home Depot have provided no evidence that the delay in bringing this Application has caused Wal-Mart or Home Depot to suffer any prejudice. 3.

Public Interest, Novel and Implicates Access to Justice [ 14 ] In objecting to the MNV Settlement in Alberta, Wal-Mart and Home Depot argued that the releases were too broad because they contained a release of claims based on continuing or future conduct. This issue was addressed in Coburn 2018, at para.56: Neither Wal-Mart nor Home Depot provided any authority for the proposition that a release of continuing future conduct is inappropriate. Indeed, the case law is to the contrary.

Numerous courts have found that it is not unfair to bar claims that are a continuation of the conduct giving rise to the existing claims that are the subject-matter of the proceeding… [ 15 ] In Macaronies 2019, I relied upon this reasoning, as well as the reasoning of Perell J. in Bancroft-Snell , where at para.127, he pointed out that he had previously approved a settlement involving the release of future claims in 2038724 Ontario Ltd. v. Quizno’s Canada Restaurant Corp., 2014 ONSC 5812 .

In short, I do not find that the question of the release of future claims was of such import and novelty as to take this matter outside of the general proposition that the successful party is entitled to costs. 4. Costs Column and Multiplier [ 16 ] Rule 10.31(3)(

b) of the Rules of Court allows the Court to order payment of costs equal to a multiple of an amount set out in any column of

Schedule C. In Kent v Law Society of Alberta , 2015 ABQB 432 , at para.18, the Court noted that while full indemnity costs are a rarity, enhanced costs are not, and can be awarded in circumstances where the conduct of one of the parties falls far short of what is expected from a responsible litigant. In Stewart Estate v TAQA North Ltd , 2016 ABCA 144 , the Alberta Court of Appeal held that, when basing costs on

Schedule C, a multiplier is typically awarded:

a) when the complexity of the action warrants it;

b) when the amount in dispute exceeds the monetary threshold for Column 5; or

c) where the conduct of the parties warrants a multiplier.

[ 17 ] I would not characterize the application for the approval of the MNV Settlement as extraordinarily complex. I agree with the Applicants, however, that the amount in dispute is significantly in excess of the threshold for Column 5.

The value of the MNV Settlement is at least $45 million, with a potential to be higher based on the number of class members that choose to apply a surcharge to credit card transactions as part of the implementation of the MNV Settlement. [ 18 ] With respect to the question of whether the conduct of Wal-Mart and Home Depot warrants a multiplier, while I am mindful that the approval application was mandated by s.34 of the CPA, and I agree with Perell J. (as cited in para. 9, above) that each Court has an independent obligation to review a settlement, I agree with the Applicants that Home Depot and Wal-Mart’s strategy of pursuing objections and appeals in British Columbia, Alberta, Saskatchewan, Ontario and Quebec, including a pending fourth application for leave to appeal to the Supreme Court of Canada, has caused significant delay and increased costs to the class members. [ 19 ] I do not agree that the conduct of Wal-Mart and Home Depot warrants a penalty as significant as the multiple of five that the Applicants seek.

However, because of the significant amount in dispute, and the conduct of Wal-Mart and Home Depot as described, an award of costs in accordance with Column 5 of

Schedule C of the Alberta Rules of Court, with a multiplier of three is appropriate, including the costs of this cost hearing. Conclusion [ 20 ] In the result, I award a multiplier of 3 times Column 5 of

Schedule C to recognize the forgoing principles, applicable to the steps that led to this point, as I said, including the costs of this cost hearing. The Applicants for costs, MasterCard and Visa, can perfect their cost schedules along with an Order that reflects these Reasons, and present them, for approval as to form, to Wal-Mart and Home Depot, and then to me for execution. Although there has been no concern about individual items of costs raised on the record, to my knowledge, alternatively, any such matters may be assessed by the Assessment Officer, before the aforementioned steps are taken.

Dated at the City of Calgary, Alberta this 10 th day of February, 2021. J.D. Rooke A.C.J.C.Q.B.A. Appearances: Reidar Mogerman Jen Winstanley Chelsea Hermanson for the Plaintiff Robert Kwinter Jeffrey Simpson James Musgrove Sean Griffin Antoine Brylowski Danielle Royal for the Defendants