Azar v Strada Crush Limited: The Importance of a Suitable Indemnity Agreement for Adverse Costs for the Representative Plaintiff in a Class Action

  • August 03, 2021
  • Peter W. Kryworuk and Jacqueline M. Palef, Lerners LLP

In the recent Ontario Superior Court of Justice decision, Azar v Strada Crush Limited,[1] the plaintiffs brought a motion to re-certify a class action involving overtime and holiday pay claims. Of particular note are the court’s comments on a representative plaintiff’s potential exposure to adverse cost awards, and the importance of having an indemnity for costs in place for the representative plaintiff, whether that is addressed in the retainer agreement by class counsel agreeing to indemnify the representative plaintiff, or by securing a third party indemnity for costs from the Class Proceedings Fund (the “CPF”) or a third-party funding company.

Cost Awards in Ontario

In Ontario, the unsuccessful party usually pays a portion of the legal costs of the successful litigant. Depending on the particular litigation, adverse cost awards can range from many hundreds to even millions of dollars. The risk of an adverse cost award is a very real concern for a representative plaintiff considering proceeding with a class action, and may discourage a representative plaintiff from proceeding without an indemnity in place.

Ontario is distinct from many other provinces in its approach to cost awards in a class action. Ontario follows the “loser pays principle”, which means the unsuccessful party in the litigation, in most cases, is ordered to pay a significant portion of the successful party’s (or parties’) costs. Costs include legal fees and disbursements.