Date: 20030127
Docket: T-1684-99
Neutral Citation: 2003 FCT 80
Ottawa, Ontario, January 27, 2003
Present: The Honourable Mr. Justice Blais
ACTION IN REM
BETWEEN:
KIRGAN HOLDING S.A.
Plaintiff
and
THE OWNERS AND ALL THOSE INTERESTED IN
THE SHIP "PANAMAX LEADER"(EX "PACIFIC PEARL")
Defendants
REASONS FOR ORDER AND ORDER PURSUANT TO COSTS
[1] I have reviewed the written submissions of both parties on costs.
FACTS
[2] On October 4, 2002, the plaintiff made an offer to settle to the defendants, pursuant to subsection 420(1) of the Federal Court Rules, 1998 [Rules] in the amount of Cdn $98,988.50 in full and final settlement of this matter in principal, interest and costs. The offer was still open for the defendants' acceptance on the eve of trial, i.e. October 15, 2002.
[3] By way of Order dated December 4, 2002, the plaintiff's claim was granted in the amount of Cdn $82,139.76 with interest at the prime rate charged by Canadian chartered banks on March 31, 1999, plus 2% per annum.
[4] The average interest rate since March 31, 1999, was agreed at 6.75%. At the rate of 8.75% (6.75%+2%), the total interest on the judgment of Cdn $82,139.76 amounts to Cdn $26,348.38 as of November 30, 2002, i.e.:
- three years and 8 months (3 2/3rd years) x 8.75=32.0775%;
- 32.0775% x Cdn $82,139.76=Cdn $26,348.38.
[5] Therefore, as of November 30, 2002, and leaving aside the issue of costs, the plaintiff is entitled to Cnd $108,488.14, representing the amount awarded by this Court and the additional interest component.
RELEVANT LEGISLATION
Rule 400 of the Rules - Awarding of Costs Between Parties
| 400. (1) The Court shall have full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid.
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400. (1) La Cour a entière discrétion pour déterminer le montant des dépens, les répartir et désigner les personnes qui doivent les payer.
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[6] Subsection 400(3) constitutes the substance of rule 400 in that it outlines the many factors to be taken into account by this Court when awarding costs:
| 400(3) In exercising its discretion under subsection (1), the Court may consider
(a) the result of the proceeding;
(b) the amounts claimed and the amounts recovered;
...
(e) any written offer to settle;
...
(o) any other matter that it considers relevant.
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400(3) Dans l'exercice de son pouvoir discrétionnaire en application du paragraphe (1), la Cour peut tenir compte de l'un ou l'autre des facteurs suivants :
a) le résultat de l'instance;
b) les sommes réclamées et les sommes recouvrées;
[...]
e) toute offre écrite de règlement;
[...]
o) toute autre question qu'elle juge pertinente.
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[7] The notes under rule 400 read as follows:
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Rule 400(3) particularizes the Court's discretion by listing 14 factors which the Court may wish to consider in exercising its discretion. Rule 400(3) is not restrictive: the Court may consider any other matter that it considers relevant: rule 400(3)(o).
...
Paragraph (e) of rule 400(3) indicates that the Court may consider any written offer to settle. It is open to the Court to take a written offer to settle into account whether or not that offer has triggered "double costs" under rules 419 and 420.
Costs awarded may be fixed by the Court or left to be assessed. ...
Rule 420 of the Rules - Offer to Settle
[8] Subsection 420(1) provides for the consequences of failure to accept the plaintiff's offer:
| 420. (1) Unless otherwise ordered by the Court, where a plaintiff makes a written offer to settle that is not revoked, and obtains a judgment as favourable or more favourable than the terms of the offer to settle, the plaintiff shall be entitled to party-and-party costs to the date of service of the offer and double such costs, excluding disbursements, after that date.
[emphasis added]
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420(1) Sauf ordonnance contraire de la Cour, le demandeur qui présente par écrit une offre de règlement qui n'est pas révoquée et qui obtient un jugement aussi avantageux ou plus avantageux que les conditions de l'offre a droit aux dépens partie-partie jusqu'à la date de signification de l'offre et, par la suite, au double de ces dépens, à l'exclusion des débours.
[nos italiques]
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[9] The notes relevant to rule 420 read as follows:
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The Court may depart from the consequences prescribed under rules 420 and 421. As well, whether or not those rules are triggered, it is open to the Court to take a written offer to settle into account in exercising its general discretion as to costs: rule 400(3)(e). It is also a factor the assessment officer may consider: rules 409 and 400(3)(e).
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Rule 405 of the Rules - Assessments of Costs
| 405. Costs shall be assessed by an assessment officer.
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405. Les dépens sont taxés par l'officier taxateur.
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ISSUE
[10] Does the plaintiff's offer to settle constitute a valid one with respect to the Rules, therefore entitling it to the doubling of costs?
ANALYSIS
Does the plaintiff's offer to settle constitute a valid one with respect to the Rules, therefore entitling it to the doubling of costs?
[11] In Monsanto Canada Inc. v. Schmeiser, (2002) 19 C.P.R. (4th) 524, [2002] F.C.J. No. 566, MacKay J. sheds some light as to rule 420:
[para. 12] This rule is discussed in recent decisions of this Court: see Canadian Olympic Association v. Olymel, Société en commandite, (2000), 195 F.T.R. 261, per Lemieux J; Mediterranean Shipping Company S.A. Geneva v. Sipco Inc., [2001] F.C. 1227, [2001] F.C.J. No. 1676 (QL) (T.D.), per Blais J. and Apotex Inc. v. Syntax Pharmaceuticals Int. Ltd., (2001), 273 N.R. 217 (F.C.A.). In this case the offer to settle by Monsanto was clear and unequivocal, leaving the defendants to decide whether or not to accept it. The offer, in my opinion, contained elements of compromise when compared with the plaintiffs' claims outstanding at March 30, 2000. ...
[emphasis added]
[12] In the case at hand, the plaintiff's settlement offer was clear and unequivocal requiring but a response from the defendants. Also, it demonstrated an ingredient of compromise as it allowed for a slackening of interest and costs should it be accepted.
[13] In Feherguard Products Ltd. v. Rocky's of B.C. Leisure Ltd., (1994) 53 C.P.R. (3d) 417, [1994] F.C.J. No. 2012, Stinson (Taxing Officer) stated that there is an automatic triggering effect of a valid offer to settle that does not require the Court's intervention (former rule 344.1 being similar to current rule 420):
[para 9] ... [W]ritten settlement offers made on four separate occasions were never withdrawn. They meet the threshold of Rule 344.1 and, as Rule 344 does not require an Order triggering Rule 344.1, the Taxing Officer has the authority to permit doubling. If Rule 344.1 was not automatic or mandatory, there would have been express language to that effect. If I conclude otherwise, I should refer this issue to the Court for the appropriate direction rather than simply disallow the doubling outright.
[para 10] ... In any event, I think that an explicit and visible exercise of the Court's authority under Rule 344(1) is not necessary to trigger Rule 344.1. ...
[14] Rule 420 specifies the consequences of an offer. However, the Court always has the authority to depart from the prescribed circumstances.
[15] Indeed, in Algoma Central Corp. v. The "PRESTIGIOUS", (1994) 84 F.T.R. 1, [1994] F.C.J. No. 960, Strayer J. only awarded 150% of party-and-party costs from the date of the offer:
[para. 5] The plaintiff has called for a doubling of the party and party costs after that date. In the circumstances I think this somewhat excessive because the offer was made only some five to six weeks before the trial was to commence and it is obvious that much of the expense of preparation would have been incurred by the defendants by that time. They had several expert witnesses and those witnesses' reports would have been prepared by that time and probably filed. The main expenses which would have been saved by accepting the offer at that point would have been the cost of bringing the witnesses to Montreal, and their cost and the cost of counsel during the trial itself. While this would have represented a very considerable saving to both parties a somewhat earlier offer would have had an even greater effect. I do believe, however, that this is a case for increasing costs after the offer because in my view the offer was very reasonable and should have so appeared to the defendants by that time. I am therefore providing for full party and party costs of the plaintiff to be paid by the defendants up to December 6, 1993 and disbursements plus 150 per cent of party and party costs thereafter.
[emphasis added]
[16] In Sanmammas Compania Maritima S.A. v. The "Netuno", (1995) 102 F.T.R. 181, [1995] F.C.J. No. 1442, Tremblay-Lamer J. followed the reasoning of the "PRESTIGIOUS", supra, and decided that a doubling of costs would be excessive since the settlement offer was made only six days before trial, thereby awarding costs from the date of the offer at 150%.
[17] In Monsanto, supra, MacKay J. followed a similar pattern:
[para. 14] While the plaintiffs' offer to settle appears to qualify within Rule 420(1), in my opinion this is a case where the Court should rule otherwise than directing the doubling of party-and-party costs after March 30, 2000. Here, prior to and throughout the trial there was a difference in the evidence from samples gathered and tested by the plaintiffs and that derived by the defendants' experts from some of those samples. Thus, until resolved by trial, there was conflicting evidence, and views of the significance of, the presence of the patented cells or genes in the defendants' crop. Further, by the nature of the invention, in my view the investigative process to establish its use by the defendant was more elaborate and required more human and other resources than many other sorts of inventions might require. The higher costs of establishing that evidence, including its presentation at trial, so far as they are reflected in the plaintiffs' costs after March 30, ought not to be doubled, in my opinion.
[para. 15] In these circumstances, if I were to issue special directions concerning costs after March 30, 2000, in view of the unaccepted offer to settle, it would be that costs after that date, excluding disbursements, be awarded at 1.33 units, or 133 percent, of the units for party-and-party costs prior to that date.
[emphasis added]
[18] The defendants concede that the plaintiff's offer was one which would normally entitle it to double costs pursuant to rule 420, "but only if it had been made in a timely fashion". The offer was made on October 4, 2002 while the trial began on October 15. The defendants rely upon the "PRESTIGIOUS" and Sanmammas, supra, to strengthen its position.
[19] The first case, the "PRESTIGIOUS", supra, differs from the present one in that the latter was not extremely long and complicated nor did it require evidence from several expert witnesses. However, I do agree with the defendants' assertion that, alike the "PRESTIGIOUS", a large portion of trial preparation had been done before the settlement offer. In the present case, such pre-trial preparation related in great part to the conflict of expert opinions on relevant U.S. maritime law.
[20] The second case the defendants rely upon is Sanmammas, supra, wherein the plaintiffs made an offer to settle six days before the trial date. As stated previously, Tremblay-Lamer J. considered that in those circumstances, doubling the costs would be excessive. In the case at bar, an offer to settle was made exactly 11 days before trial.
[21] The plaintiff's expert affidavit and supplemental affidavit were filed on August 15, 2002, almost two months prior to the settlement offer. The defendants' expert affidavit and supplemental affidavit were filed on September 13, 2002, a few weeks prior to the offer. Furthermore, it is clear that the bulk of the pre-trial preparation was completed well in advance of the settlement offer, since the defendants' expert affidavit was signed on October 4, 1999 and the plaintiff's expert affidavit was signed on January 18, 2000. As a result, in my opinion, it would be excessive to order a double costs award.
[22] I therefore find myself bound by the reasoning of both the "PRESTIGIOUS" and Sanmammas, supra. Although the plaintiff's offer does constitute a valid one with respect to the Rules, I am of the opinion that a clear-cut application of rule 420 would be excessive in the circumstances. In their written representations on costs, the defendants themselves submit that the plaintiff should only be entitled to 150% of party-and-party costs from the date of the offer.
O R D E R
[1] Therefore, the plaintiff should be entitled to party-and-party costs to the date of service of the settlement offer, i.e. October 4, 2002 and 150% of party-and-party costs thereafter, excluding disbursements, after that date.
[2] The task of determining the reasonableness of the expenses in the plaintiff's bill of costs and the calculation of the application of rule 420, as mentioned previously, is left to the assessment officer.
"Pierre Blais"
J.F.C.C.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1684-99
STYLE OF CAUSE: Kirgan Holding S.A. v. The Owners and all those interested in the ship "Panamax Leader" (Ex "Pacific Pearl)
MOTION DEALT WITH IN WRITING WITHOUT THE APPEARANCE OF PARTIES
REASONS AND ORDER PURSUANT TO COSTS OF THE HONOURABLE MR. JUSTICE BLAIS
DATED: January 27, 2003
WRITTEN REPRESENTATIONS BY:
Victor DeMarco FOR PLAINTIFF
Mr. Sean J. Harrington FOR DEFENDANT
SOLICITORS OF RECORD:
Brisset Bishop FOR PLAINTIFF
Montreal, Quebec
Borden Ladner Gervais FOR DEFENDANT
Montreal, Quebec
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