Director, Review Services and Counsel
October 25, 2023
A recent decision of the Ontario Superior Court of Justice illustrates the advantage of having eDiscovery counsel assist parties to understand costs implications and how to claim and oppose eDiscovery costs. In Bellsam Contracting Limited v. Torgerson, 2023 ONSC 5652 (CanLII), the defendants sought to recover certain of their eDiscovery-related costs and costs of preparing those costs submissions.
With respect to the eDiscovery costs, the defendants sought partial indemnity for time spent by an “eDiscovery Specialist” who downloaded the plaintiff’s productions, managed the production load files, added documents to the eDiscovery database, and performed quality control checks. Associate Justice Robinson did not find these costs to be recoverable in the circumstances and stated:
it is not clear to me why this work, which on its face appears to be administrative in nature, should be viewed as recoverable litigation costs. Administrative work is not typically recoverable separate from the legal fees charged for lawyers, law clerks, and students-at-law. No case law has been tendered and no argument advanced for recovery of time spent by an eDiscovery Specialist.
In the current age of eDiscovery, I am aware that many law firms have hired specialists who are neither lawyer nor law clerk to manage production databases and support legal teams. I do not find that such time is never recoverable as litigation costs.
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Costs awards indemnify the cost of legal services. What constitutes legal services and the services that may be provided by law clerks and students-at-law are set out in the Law Society Act, RSO 1990, c L.8, its regulations, and the by-laws of the Law Society of Ontario. In my view, since eDiscovery specialists (or other non-legal individuals) are not contemplated by the Rules as persons whose services may be considered in awarding costs, parties wishing to claim recoverable time for them must make submissions on the nature of their services and the appropriateness of awarding costs for their time in the circumstances of the case before the court. That has not been done here, so I am not allowing the time as recoverable costs for this trial.
While this case deals with the issue of eDiscovery costs as recoverable litigation costs in the absence of supporting submissions, it is worth noting that there are several decisions across Canada allowing recovery of eDiscovery disbursements. In LeRoy v Timberwest Forest Corp., 2021 BCSC 2346 (CanLII), the court allowed the defendant’s claim for $216,000 in eDiscovery costs in full, noting that:
The need for e-discovery services arose inherently and directly from the issues and allegations arising within the proceeding. The cost was directly related to the direction, management, or control of the litigation in order to prove a claim or defense.
Leroy cites the Ontario decisions of Harris v. Leikin Group, 2011 ONSC 5474 (CanLII) and Inzola Group Limited v. City of Brampton, 2019 ONSC 3490 (CanLII), and the Alberta decision of PM&C Specialist Contractors Inc v Horton CBI Limited, 2018 ABQB 842 (CanLII) as precedent for the recovery of eDiscovery costs as disbursements.
In Harris, Justice Brown considered the issue of whether eDiscovery costs are recoverable disbursements and concluded:
In my view, disbursements made to a third party, or billed to a client, for electronic document management should now be regarded as a standard “disbursement reasonably necessary for the conduct of the proceeding” and, as a matter of course, a party should be entitled to recover a reasonable amount for such a disbursement when receiving an award of costs.
In Inzola, Justice Sproat found the defendant’s claim for $430,203 for eDiscovery Services to be recoverable:
Obviously counsel made the judgment the e-discovery services would be cost effective. At the conclusion of the trial I took away 20 banker’s boxes of paper documents. While I appreciate that not all witnesses needed access to all documents, it remains that it would have been very expensive to prepare multiple paper briefs. While the e-discovery disbursement is a large amount, I accept that it is reasonable and recoverable.
In PM&C Specialist Contractors Inc., $165,000 in further security for costs of eDiscovery was allowed by the court. In this case, the plaintiff argued that the eDiscovery costs should be considered part of the cost of litigation and thus not recoverable as a disbursement. The court stated:
I conclude then on this application much as before, that there is some authority in Alberta and elsewhere in favour of recoverable third-party disbursements for e-discovery. This decision adds to it. No authority squarely against it was brought to my attention. (The issue of recoverable law firm disbursements for e-discovery, though addressed favourably in Harris v Leikin Group Inc, above, does not arise in this case.)
Switching forums, earlier this year, the Competition Tribunal allowed a claim for almost $2 million in eDiscovery costs. In Canada (Commissioner of Competition) v Rogers Communications Inc and Shaw Communications Inc, 2023 Comp Trib 03, the Commissioner asserted that Shaw’s claim for eDiscovery costs was excessive, particularly as the Commissioner claimed no reimbursement for his associated disbursements. The Tribunal found:
This is essentially a bald assertion. Shaw cannot be faulted or penalized for having retained a third party to assist with the e-discovery process, including managing document review and providing technical support services to Shaw. Electronic document discovery is increasingly becoming a necessity. With the Tribunal’s shift to using electronic records during its hearings, the same is true for electronic document management and technical support services: Commissioner of Competition v Vancouver Airport Authority, 2019 Comp Trib 6 at para 823.
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In the absence of any demonstrated shortcoming in the allegedly excessive nature of Shaw’s claims in respect of its disbursements for e-discovery, I am reluctant to disallow what appears to be a legitimate claim on its face. Stated differently, the Commissioner has not demonstrated that Shaw’s claim is unreasonable, having regard to the volume of documents.
A possible take away from Bellsam Contracting Limited decision, pending further comments from the courts on the issue, is that parties looking to maximize the opportunity to recover the cost of eDiscovery services should familiarize themselves with the caselaw and make appropriate submissions.
