CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 FC 1760

Date: 20041221

Docket: T-1618-93, T-1619-93, T-1620-93

Citation: 2004 FC 1760

BETWEEN:                                                                                                                T-1618-93

                                                     CCH CANADIAN LIMITED

Plaintiff

                                                                         - and -

                                         THE LAW SOCIETY OF UPPER CANADA

Defendant

                                                                         - and -

BETWEEN:                                                                                                                T-1619-93

                                        THOMSON CANADA LIMITED C.O.B. AS

                            CARSWELL THOMSON PROFESSIONAL PUBLISHING

Plaintiff

                                                                         - and-

                                         THE LAW SOCIETY OF UPPER CANADA

Defendant

                                                                         - and -

BETWEEN:                                                                                                                T-1620-93

                                                      CANADA LAW BOOK INC.

Plaintiff

                                                                         - and -

                                         THE LAW SOCIETY OF UPPER CANADA

Defendant

                                                        REASONS FOR ORDER

GIBSON J.:

INTRODUCTION

[1]                By motion filed the 20^th of May, 2004, the Defendant, the Law Society of Upper Canada (the "Law Society") seeks the following relief against the Plaintiffs in each of the foregoing actions (collectively, the "Law Publishers"):

1.             If necessary, an Order extending the period provided by Rule 403(1)(a) of the Rules for the filing of this Notice of Motion.

2.             An Order that the Law Society's costs and disbursements in this Court be fixed and ordered payable forthwith in the amount of $600,910.03 (Cdn.), which sum represents two-thirds of the Law Society's actual costs plus reasonable disbursements.

3.             In the alternative to paragraph 2. above, an Order for special directions to the assessment officer, directing that:

(a)            the Law Society's costs in this Court be assessed at the maximum rate provided under Column V of Tariff B of the Rules;

(b)           the Law Society be awarded the full expert fees for its witness Mr. Stephen Cole;

©)            the Law Society be awarded the full travel expenses for its witness Mr. Sylvano Carlesso;

(d)           the Law Society be awarded counsel fees for two counsel and one student throughout; and

(e)            the Law Society's disbursements be fixed in the amount of $57,536.18 (Cdn.).

4.             An Order awarding the Law Society post-judgment interest on its costs, or directing the assessment officer to allow post-judgment interest on the Law Society's costs, as applicable in the circumstances.

5.             Costs of this motion, ordered fixed and payable forthwith in the sum of $5,000.00 (Cdn.).

6.             Such further and other relief as this Court may deem just.

[2]                The extension of time for filing of the motion has been granted with the consent of the Law Publishers.

[3]                The motion came on for hearing before this judge at Toronto on Thursday the 12^th of August, 2004. Following the completion of the hearing that day, the Court issued an Order as just referred to, extending the time for filing the motion, and further providing:

2.             In all other respects, following the extensive submissions of counsel heard this day, the motion is adjourned sine die to be brought back on by informal request to the Registry at Toronto by counsel for either party, with notice to counsel opposite, on a date that is convenient to counsel and the Court.

[4]                The foregoing order was issued in the knowledge that an equivalent motion before the Federal Court of Appeal was scheduled to be heard the following day, that is to say, Friday the 13^th of August, 2004, and that the outcome of the motion in that Court would provide useful guidance in the determination of the motion before this Court.

[5]                Reasons for Order issued from the Federal Court of Appeal on the 25^th of August, 2004.

[6]                The Court communicated with counsel by letters dated the 8^th of September, 2004 inviting counsel to advise the Court whether, on the basis of the principles and outcome emanating from the Court of Appeal, the hearing on the increased costs motion should be resumed, should be closed without resumption or whether the matter might settle on the basis of the outcome in the Court of Appeal. Counsel responded with written submissions reflecting on the reasoning of the Court of Appeal and the outcome in that Court. While the correspondence from counsel for the Law Society contemplated resumption of the hearing, counsel for the Law Publishers expressed no view in that regard.

[7]                By further communication to counsel dated the 7^th of October, the Court advised:

It is the Court's view that, based on the pre-August 12^th written submissions of counsel, the oral submissions of counsel at hearing on the 12^th of August, the related reasons of the Court of Appeal and the submissions reflected in [correspondence from counsel just referred to] the Court has sufficient information on which to conclude these matters without resumption of the hearing.

If counsel, in writing, on or before the 15^th of October, 2004, jointly request resumption of the hearing on costs, a date for resumption that is convenient to counsel and the Court will be found. In the absence of such a joint request, the Court will treat the hearing on costs as closed and will proceed to the issuance of an Order, with reasons if considered necessary.   

Counsel for the Law Society advised the Court by letter dated the 15^th of October, 2004 as follows:

Given that the Court has indicated that it has sufficient information on which to conclude these matters, without resumption of the hearing, the Law Society is of the view that its position is adequately stated in the materials already filed, including its letter dated September 30, 2004.

By letter dated the 18^th of October, 2004, counsel for the Law Publishers advised that his clients were content that this judge "...deal with this matter in regard to the submissions made at the oral hearing and subsequent exchange of correspondence." These reasons follow without resumption of the hearing held on the 12^th of August, which the Court now deems to be closed.

JUDICIAL HISTORY

[8]                The Federal Court of Appeal, in its reasons following the equivalent motion before it, earlier referred to, succinctly outlined the judicial history of these proceedings in the following terms:

This matter originated in the Federal Court, Trial Division (as it then was), as an action by the publishers against the Law Society for copyright infringement. The publishers asserted that in providing copies of reported judicial decisions and other legal works to members of the Law Society, or in permitting patrons of the Great Library in Toronto to make photocopies of such works, the Law Society was infringing or authorizing the infringement of their copyright in those works.

The Trial Judge found that copyright subsisted in certain materials, but not in reported judicial decisions. In respect of those works in which he found copyright to subsist, he determined that by photocopying those works and distributing them, the Law Society infringed the publishers' copyright. However, he declined to grant the publishers request for a permanent injunction against the Law Society. Ultimately, he did not make an award of costs to any party.

The publishers appealed and the Law Society cross-appealed. In this Court, copyright was found to subsist in all the publishers' works in evidence, including reported judicial decisions. The Law Society was found to have infringed the publishers' copyright in providing photocopies of those works to its members and to have authorized copyright infringement by allowing patrons at the Great Library to copy those works. However, the Court rejected the argument of the publishers for a permanent injunction against the Law Society.

In the Court's reasons, the parties were invited to make submissions as to costs before the Court issued its judgment. The Law Society requested costs at the maximum end of Column IV of Tariff B. Following the submissions, the Court issued its judgment on July 8, 2002, ordering, inter alia, that, because of the importance and complexity of the issues, the absence of established principles on some of the issues and the divided success on the appeal and cross-appeal, each party was to bear its own costs.

The Law Society appealed and the publishers cross-appealed to the Supreme Court of Canada, which allowed the appeal and dismissed the cross-appeal. The Supreme Court issued a declaration that the Law Society does not infringe the publishers' copyright when a single copy of a reported judicial decision or other legal work is made and that

the Law Society does not authorize copyright infringement by allowing photocopies of such works to be made in the Great Library. Given its success on the appeal and cross-appeal, the Law Society was awarded "costs throughout."

THE LAW SOCIETY'S REQUEST FOR INCREASED COSTS

[9]                The Law Society returned to this Court to ask for a lump sum award of costs of $543,449.22 for fees and $57,460.81 for disbursements, for a total of $600,910.03.

[10]            To put the matter for increased costs into perspective, the Law Society has provided information as to its solicitor-and-client fees and disbursements and its calculation of the amount of party-and-party costs that would be awarded under Tariff B to the Federal Court Rules, 1998, Columns III and V. The following table is drawn from the written representations of the Law Society:^[1]

The figures shown are inclusive of Goods and Services Tax.

[11]            In written submissions dated the 30^th of September, 2004, counsel for the Law Society, after analysing the reasons of the Federal Court of Appeal, adjusts its request for a lump sum award of costs to $315,000 calculated as follows:

Column V Fees ($119,500) x 2 :           $239,000

plus $82,500 in disbursements :        +$ 82,500

$321,500

less 10% reducing factor on

disbursements to reflect

imperfect supporting documents:      -$      8,250

$313,250 (ROUNDED TO $315,000 AWARD)

THE LAW PUBLISHERS' RESPONSE

[12]            In extensive and detailed submissions filed the 5^th of July, 2004, counsel for the Law Publishers concludes with a submission that the fees of the Law Society should be taxed at the middle of Column III of Tariff B in the amount of $45,679.37, inclusive of GST and that reasonable disbursements should be taxed in the amount of $9,493.29, inclusive of GST resulting in a total award of $55,172.66.

[13]            Following consideration of the reasons of the Federal Court of Appeal, by letter dated the 28^th of September, 2004, counsel for the Law Publishers wrote:

In the Trial Division the Law Society asked for approximately $625,000.00, being costs together with disbursements. If we take the Judgment of the Federal Court of Appeal as being instructive, it will be noted that the Law Society asked for costs (together with disbursements) in the sum of $288,000.00 in round figures and were [sic] given $80,000.00. This is a factor of 0.278.

Applying the factor of 0.278 to the sum that the Law Society requested ($625,000.00), this would come out to roughly $173,750.00.

In effect, counsel urged a purely mathematical application of the conclusions of the Federal Court of Appeal.

[14]            In reply submissions following consideration of the 30^th of September submissions on behalf of the Law Society, counsel for the Law Publishers wrote:

In all, the Law Society was awarded [in the Federal Court of Appeal] in affect [sic], a $20,000.00 premium for the costs and disbursements that would have otherwise been awarded if the matter had been taxed at the level that the Law Society had urged namely, the high end of Column IV.

In this the Trial Division proceeding, the costs that would have been awarded to the Law Society at the high end of Column IV, would have been $94,990.57...which would include disbursements. Rounding that off and giving a $20,000.00 premium, that would come to approximately $115,000.00.

In awarding costs, having in mind the Court of Appeals'[sic] direction therefor, the Court should keep in mind:

1.             Costs are intended to defrays [sic] some of the legal bills and most of the provable disbursements of the winning party;

2.             Costs are not intended to be punitive;

3.             The award of costs must be tempered by the Law Society's own submission that Column IV, at the high end, was appropriate;

4.             The Court of Appeal awarded a $20,000.00 premium.

The Court is not to take a "shot in the dark". Costs must be determined on a principaled [sic] basis having regard to the above factors.

[15]            Counsel for the parties made submissions with regard to post-judgment interest, an issue also addressed by the Federal Court of Appeal. I will briefly turn to that subject later in these reasons.

THE REASONS IN THE FEDERAL COURT OF APPEAL

[16]            The Federal Court of Appeal first addressed the issue of its discretion to award increased costs, particularly in light of the judgment of the Supreme Court of Canada awarding "costs throughout". The Court concluded that it had jurisdiction to consider the Law Society's application for increased costs. More particularly, it wrote:

In my view, when the Supreme Court makes an award of "costs throughout," the direction to this Court is neutral, in the sense that, as long as costs are awarded, the Supreme Court is leaving it to this Court to decide on the appropriate amount of costs. Under such a direction, when the matter of costs is remitted to this Court, costs are to be assessed in accordance with the Rules of this Court which allow for the awarding of increased costs (see rules 400(1) and (4)).

[17]            I am satisfied that the foregoing conclusion of the Federal Court of Appeal is directly applicable in this Court.

[18]            The Federal Court of Appeal then turned to the issue of considerations in the awarding of increased costs. It wrote at paragraph [20] of its reasons:

I turn to the factors to consider in awarding increased costs. This was a copyright case involving sophisticated clients. There is no suggestion that the parties do not have reasonable financial resources. Both parties retained highly experienced and specialized counsel. The matter was of a high degree of complexity, with numerous interconnected issues, many of which had not been considered in Canada. The argument in this Court took three days (most appeals are heard in no more than half a day). The record and the written arguments were much longer than in most appeals,

as was the judgment of this Court (some 140 pages, including concurring reasons). This case was important, as evidenced by the granting of leave to appeal by the Supreme Court as well as the five interventions permitted by the Supreme Court of Canada. There was much work involved and time spent. The Law Society, which did not initiate the litigation but was defending itself from claims by the publishers, was entirely successful. These factors, in my view, justify an award of increased costs.

[19]            I am satisfied that the factors mentioned by the Federal Court of Appeal are all equally applicable in this Court. All of the issues that were before the Court of Appeal were before this Court. Written submissions and supporting materials were extensive, well researched and very helpful to the Court. The Court heard the evidence of a long and impressive list of witnesses. Submissions of counsel were well focussed, and of great assistance to the Court. The Court's reasons, as originally distributed by the Court, extended to 142 pages plus a schedule and index. As was concluded by the Federal Court of Appeal, I am satisfied that the factors it identified and the foregoing comments justify an award of increased costs.

[20]            With regard to disbursements, the Federal Court of Appeal concluded:

While the Law Society could have made a somewhat greater effort to provide evidence of the necessity and reasonableness of its disbursements, I do not think the level of detail which the publishers argue for is required. On the other hand, when disbursements are challenged, a party has an obligation to provide some evidence to show that the disbursements were justified.

[21]            As before the Federal Court of Appeal, counsel for the Law Publishers took issue with the Law Society's claim for disbursements before this Court. Counsel for the Law Publishers, in written submissions, minutely dissected the claimed disbursements. I am satisfied that they were quite successful in their critical analysis.

[22]            Finally, the Federal Court of Appeal turned to the issue of post-judgment interest, claimed by the Law Society. The Federal Court of Appeal's reasons in this regard are somewhat extensive. They are reproduced as a Schedule to these reasons. I adopt the reasoning and conclusion of the Federal Court of Appeal in this regard.

[23]            In the end result, the Federal Court of Appeal awarded the Law Society party-and-party costs of $80,000 including fees, disbursements and GST, with interest at 4% per annum from the date of its judgment to the date of payment. While the Federal Court of Appeal undoubtedly arrived at the costs amount fixed by it by reference to all of the factors considered in its reasons for order, it provided no specific analysis as to how the amount fixed by it was impacted by those factors and as to how the amount was divided between fees and disbursements.

SUMMARY AND CONCLUSIONS AS TO COSTS

[24]            In the post-Federal Court of Appeal decision submissions on behalf of the Law Society, counsel modified the chart which appears at paragraph [10] of these reasons by increasing the lump sum requested for disbursements by approximately $25,000. No explanation was provided for this adjustment but reference to earlier written submission of the Law Publishers^[2] discloses that it accords quite closely with the full expert fees for its witness at trial, Mr. Stephen Cole, and the full travel and living expenses and attendance fees for its witnesses at trial, Mr. Sylvano Carlesso and Mr. Simon Chester. The amounts in respect of Messrs. Cole and Carlesso are claimed by the Law Society, as reflected in sub-paragraphs 3(b) and (c) quoted in paragraph [1] of these reasons and are not reflected in the table in paragraph [10] of these reasons. In earlier reasons in these matters on the subject of costs, dated the 21^st of January, 2000, I wrote at paragraph [15]:

As noted earlier, I am satisfied that it was not unreasonable for the plaintiffs to put the defendant to its proof of the fact that its custom photocopy service was operated on a cost-recovery basis only and not for profit. Thus, I would provide no special direction regarding the expert fees paid to the witness Mr. Stephen Cole. Similarly, it was in no sense unreasonable to put the defendant in the position where it felt obliged to ensure the attendance of Mr. Sylvano Carlesso as a witness. I would provide no special direction regarding Mr. Carlesso's full travel expenses.

Given the foregoing, I am satisfied that it was entirely reasonable for counsel for the Law Society to increase the base amount of disbursements in this regard. I note that counsel for the Law Publishers took no objection to this increase.

[25]            Having regard to the costs award from the Federal Court of Appeal, counsel for the Law Society, as earlier noted, urged that a lump sum award of $315,000 for fees, disbursements and Goods and Services Tax would be appropriate, reflecting a discount on disbursements by reason of imperfect supporting documentation. By contrast, also as earlier noted, counsel for the Law Publishers urged an award of $115,000. Neither amount is in the same relationship to the amount requested in this Court as is the amount awarded in the Court of Appeal in relation to the amount there requested. That being said, costs in this Court, particularly when expert fees and travel and living expenses and attendance fees of Messrs. Cole, Carlesso and Chester are taken into account, are substantially higher in this Court than they were in the Federal Court of Appeal and, on balance, I am not satisfied that those expert fees, travel and living expenses and attendance fees should be significantly discounted.

[26]            I am conscious of the caveat provided by counsel for the Law Publishers and quoted earlier in these reasons that "The Court is not to take a "shot in the dark"." That being said, and taking into account all of the considerations that the Federal Court of Appeal considered appropriate, it is plain and obvious that counsel interpreted the outcome in the Federal Court of Appeal very differently and I am sympathetic to the reality that the outcome in that Court left substantial room for different interpretations.

[27]            In the result, taking into account the extensive submissions of counsel, my concerns regarding the disbursements submissions on behalf of the Law Society and the outcome in the Federal Court of Appeal, I award the Law Society party-and-party costs in the amount of $190,000, including fees, disbursements, which include an amount in respect of the expert fees of Mr. Stephen Cole and travel expenses and attendance fees of Messrs. Sylvano Carlesso and Simon Chester, and GST.

POST-JUDGMENT INTEREST

[28]            As noted by the Federal Court of Appeal^[3], counsel before it were in agreement that the law of Ontario relating to interest on judgments^[4] is the law applicable to this case. Further, counsel were in agreement that the appropriate rate of interest on costs in the Federal Court of Appeal should be 4% per annum.

[29]            In submissions on behalf of the Law Society dated the 30^th of September, 2004, counsel wrote:

Regardless of [the costs award considered appropriate for fees and disbursements in this Court], the post-judgment interest on such award should run at 6% per annum from the date of Mr. Justice Gibson's award of costs at trial (January 21,2000) to the date of payment.

...

The appropriate rate of post-judgment interest is determined with reference to section 129 of the Courts of Justice Act and commentary,... . As can be seen, the rate of interest to be applied varies depending on the quarter of the year in which the order in question was made. For an order made in the first quarter of the year 2000, a rate of 6% is to be applied.

A rate of 4% for costs was applied in the Court of Appeal, which was correct in light of the fact that the judgment in question in that court was rendered in the 3^rd quarter of 2002, for which rate of 4% is prescribed by the Courts of Justice Act.                                                                                                                             [emphasis in original]

[30]            Counsel for the Law Publishers provided no submissions in response to the foregoing. On the basis of the foregoing, the Law Society will be awarded interest at 6% per annum from the 21^st of January, 2000, to the date of payment, on the costs award in this Court.

COSTS OF THE MOTION

[31]            On the equivalent motion before the Federal Court of Appeal, that Court noted that success on the motion before it was divided. In the result, it awarded no costs on the motion. The same result will follow before this Court. No costs of this motion will be awarded.

__________________________________

J.F.C.

December 21, 2004

Ottawa, Ontario

                                            SCHEDULE

INTEREST

[26]          The Law Society claims post-judgment interest from the date of this Court's judgment, July 8, 2002, until the date of payment. The publishers say that interest should only run from the date this Court makes its order for costs in accordance with the direction of the Supreme Court.

[27]          Mercifully, at least the parties are agreed on two issues:

1.              the rate of interest should be four percent per annum; and

2.             the law of Ontario relating to interest on judgments is the law applicable to this case. (See subsection 37(1) of the Federal Courts Act, R.S.C. 1985, c. F-7.)

[28]         Subsection 129(1) of the Ontario Courts of Justice Act, R.S.O. 1990 c. C.43, provides that money owing under an order, including costs to be assessed by the court, bears interest from the date of the order. Subsection 129(1) provides:

129.(1) Money owing under an order, including costs to be assessed or costs fixed by the court, bears interest at the postjudgment interest rate, calculated from the date of the order.

129. (1) La somme d'argent due aux termes d'une ordonnance, y compris les dépens devant être liquidés ou ceux fixés par le tribunal, porte intérêt au taux d'intérêt postérieur au jugement, à compter de la date de l'ordonnance.

[29]         Subsection 127(1) defines "date of the order" as follows:

127. (1) In this section and sections 128 and 129,

...

"date of the order" means the date the order is made, even if the order is not entered or enforceable on that date, or the order is varied on appeal ...        

127.(1) Les définitions qui suivent s'appliquent au présent article et aux articles 128 et 129.

...

"date de l'ordonnance" Date à laquelle est rendue l'ordonnance, même si elle n'est pas inscrite ou exécutoire ce jour-là , ou si elle est modifiée en appel...

[30]          No authorities interpreting subsection 129(1) were produced before this Court. However, counsel for the publishers relied on Canadian Aero Service Ltd. v. O'Malley (1973), 2 O.R. (2d) 92, a case decided under section 40 of the Judicature Act, R.S.O. 1970, c. 228, a predecessor of subsection 129(1). Grant J. ruled that interest would run only from the date of a taxation of costs.

[31]         In the subsequent case of Houser v. Township of West Lincoln (1984), 46 O.R. (2d) 703, Osborne J. (as he then was) found that when the Court of Appeal varied a trial judgment, interest ran from the date of the trial judgment. The debate between these two interpretations continued after the coming into force of the Courts of Justice Act in 1984.

[32]         In 2003, however, McIsaac J. held that the proper interpretation of subsection 129(1) requires interest on costs to be payable from the date of judgment rather than from the date of assessment (Roberts v. Aasen (2003), 36 C.P.C. (5th) 185 (Ont. Sup. Ct.)). He found support for this interpretation in the decision of the House of Lords in Hunt v. R.M. Douglas (Roofing) Ltd., [1988] 3 All E.R. 823 at 833 in which Lord Ackner held that in the majority of cases, the balance of justice favours awarding interest on costs from the date of judgment. Roberts was followed by Lane J. in Hodgson v. Canadian Newspapers Co., [2004] O.J. No. 537 (Sup. Ct.).

[33]         I agree that the preferred interpretation of subsection 129(1) is more in accord with Houser than Canadian Aero Service. Subsection 129(1) appears to contemplate the circumstance where an order is made with costs to be assessed subsequently. In such case, the costs would bear interest from the date of the order, even though they were not taxed and ascertained until a later date. Applying that approach to this case means that interest would run from the date of the Court's original judgment, July 8, 2002, which, according to the Supreme Court of Canada, should have awarded costs to the Law Society.

[34]         There is a rationale for this approach. Where, as here, an order for costs is made only after an appeal to the Supreme Court of Canada, the successful party is normally out-of-pocket its solicitor-and-client costs for a considerable period of time. Party-and-party costs are intended to be a partial indemnity towards solicitor-and-client costs. Interest recognizes the time value of money. I acknowledge that under paragraph 130(1)(c) of the Courts of Justice Act, the Court has a discretion to allow interest for a period other than that provided under subsection 129(1). However, in usual circumstances, I see no reason why a successful party should have an award of costs eroded by delay simply because it was required to go through a series of appeals and a taxation of costs before obtaining the result to which it was entitled in the first place.

                                    FEDERAL COURT OF CANADA

                                                   TRIAL DIVISION

               NAMES OF COUNSEL AND SOLICITORS OF RECORD

COURT FILE NO.:                           T-1618-93, T-1619-93 and T-1620-93

STYLE OF CAUSE:                                                                               T-1618-93

                                           CCH CANADIAN LIMITED

                                                                                                                         Plaintiff

- and -

THE LAW SOCIETY OF UPPER CANADA

                                                                                                                     Defendant

- and -

BETWEEN:                                                                                                 T-1619-93

THOMSON CANADA LIMITED C.O.B. AS

CARSWELL THOMSON PROFESSIONAL PUBLISHING

                                                                                                                         Plaintiff

- and-

THE LAW SOCIETY OF UPPER CANADA

                                                                                                                     Defendant

- and -

BETWEEN:                                                                                                 T-1620-93

                                                CANADA LAW BOOK INC.

                                                                                                                         Plaintiff

                                                             - and -

                              THE LAW SOCIETY OF UPPER CANADA

                                                                                                                     Defendant

PLACE OF HEARING:                        Toronto, Ontario

DATE OF HEARING:                       August 12, 2004;    written submissions:September 28 and 30 and October 1, 2004

REASONS FOR ORDER:                The Honourable Mr. Justice Gibson

DATED:                                              December 21, 2004                             

APPEARANCES:

Mr. Roger T. Hughes, Q.C..                                                                  for the Plaintiffs

Ms. Jeilah A. Chan

Mr. A. Kelly Gill                                                                                 for the Defendant

Mr. Kevin Sartorio

SOLICITORS OF RECORD:

Sim, Hughes, Ashton and McKay LLP                                          for the Plaintiffs

330 University Avenue, 6^th Floor

Toronto, Ontario, M5G 1R7

Gowling Lafleur Henderson LLP                                                for the Defendant

Barristers & Solicitors

Commerce Court West, Suite 4900

Toronto, Ontario, M5L 1J3