Halford v. Seed Hawk Inc., 2004 FC 1259

Date: 20040916

Docket: T-2406-93

Citation: 2004 FC 1259

OTTAWA, ONTARIO, THIS 16^th DAY OF SEPTEMBER 2004

Present:           THE HONOURABLE MR. JUSTICE PELLETIER                                  

BETWEEN:

                                    JAMES W. HALFORD and VALE FARMS LTD.

                                                                                                                                             Plaintiffs

                                                                           and

                                               SEED HAWK INC., PAT BEAUJOT,

                                          NORBERT BEAUJOT, BRIAN KENT and

                                                   SIMPLOT CANADA LIMITED

                                                                                                                                         Defendants

                                            REASONS FOR ORDER AND ORDER

INTRODUCTION

[1]                In 1992, the plaintiffs James Halford and Vale Farms Ltd sued the defendants Seed Hawk Inc., Norbert Beaujot, Pat Beaujot and Brian Kent (the Seed Hawk defendants) alleging that they had infringed the plaintiffs' patent. The plaintiffs also sued Simplot Canada Limited (Simplot) alleging it had induced the infringement by offering financial incentives to the Seed Hawk defendants to infringe the plaintiffs' patent. The infringement claim eventually met with a counterclaim alleging invalidity of the patent. After a trial of some seven and one half weeks spread over four years, I dismissed both the action against all defendants as well as the counterclaim.

[2]                Now comes the time to pay the piper. I have before me motions from the Seed Hawk defendants and Simplot seeking either a lump sum award of costs or directions with respect to the assessment of costs. I also have a motion from the plaintiffs seeking directions as to the assessment of costs with respect to those matters where they were awarded costs in any event of the cause. The plaintiffs also argue that they are entitled to the costs of the defence of the counterclaim as to invalidity, as well as the costs of certain steps within the proceedings where they say the defendants have disentitled themselves to costs.

[3]                I propose to deal with all three motions at once with one set of reasons. For the sake of simplicity, I will deal with the issues as they are raised in each of the parties' written representations. I begin with the issues raised by the Seed Hawk defendants.

THE EFFECT OF RULE 420 AS TO OFFERS TO SETTLE

[4]                The Seed Hawk defendants claim to be entitled to double their party and party costs on the basis of seven offers to settle which they made in the course of the litigation. The plaintiffs point out that none of the offers made remained open to the date of judgment and therefore do not come within Rule 420.

[5]                The rule as to double costs reads as follows:

[6]                There are two requirements which an offer of settlement must satisfy before it can give rise to double costs. It must be made in writing and it must not be revoked. The seven offers upon which the Seed Hawk defendants rely are the following:

1-         A handwritten offer of settlement made on or about December 21, 1992, in which the Seed Hawk defendants offered to pay a 3% royalty on the wholesale price of opener assemblies. It was not time limited and was never revoked. The plaintiffs did not respond to this offer.

2-         An offer of settlement in the amount of $100,000 made May 11, 2000 which, lapsed on May 24, 2000. The offer was not accepted.

3-         An oral offer of settlement in the course of mediation proceedings before Prothonotary Lafrenière in the period preceding the opening of the trial of this matter. The plaintiffs made a counter-offer which the Seed Hawk defendants were not prepared to accept.

4-         A written offer to settle in the amount of $122,000 made on or about October 4, 2001. The offer remained open till one minute after the opening of the trial on October 15, 2001 and was not accepted by the plaintiffs.

5-         An oral offer of settlement in the amount of $350, 000 made on October 15, 2001. That offer was rejected.

6-         A letter dated January 22, 2002 in which the Seed Hawk defendants canvassed the potential for settlement. They received no response.

7-         An unauthorized oral offer of settlement made by Pat Beaujot in the course of the trial to Mr. Halford's daughter in the amount of $850,000, $500,000 of which was payable over a period of five years. This offer was rejected.

[7]                It can be seen that one of the offers referred to by the Seed Hawk defendants is not an offer at all but simply an inquiry as to the possibility of settlement. It can also be seen that some of the offers were not made in writing, specifically the offer made in the course of mediation, the offer made on October 15, 2001, and the offer made by Pat Beaujot in the course of the trial. Of the remaining offers, three were made in writing: that of December 21, 1992, which was not limited in time and to which no response was received, that of May 11, 2000, which was withdrawn on May 24, 2000, and that of October 24, 2001, which lapsed one minute after the opening of the trial. On the face of it, the only written offer which was not revoked is the offer of December 21, 1992.

[8]                In his concurring reasons in Francosteel Canada Inc. v. African Cape (The) (C.A.), [2003] 4 F.C. 284, 2003 FCA 119 (Francosteel Canada Inc.), Létourneau J.A. noted that Rule 420(2) requires a written offer of settlement to be held open until judgment, failing which the party making the offer loses the benefit of the Rule. Gibson J. came to the same conclusion in 671905 Alberta Inc. v. Q'Max Solutions Inc. (2002), 225 F.T.R. 300, 2002 FCT 1293 at para. 13. In Monsanto Canada Inc. v. Schmeiser (2002), 220 F.T.R. 60, 2002 FCT 439, MacKay J. held that an offer of settlement which remained open only to the commencement of the trial complied with Rule 420(2). While I understand the logic of having an offer of settlement lapse immediately following the commencement of the trial, one is still left with the plain language of Rule 420(2) which requires a written offer "that is not revoked". I conclude that the rule requires that an offer must remain open until the date of judgment in order to trigger double costs.

[9]                The plaintiffs argue that the December 21, 1992 offer must be treated as having been revoked by subsequent offers. They cite the decision of Rothstein J. (as he then was) in Canadian Pacific Forest Products Ltd. v. Termar Navigation Co. (1998), 146 F.T.R. 72 (F.C.T.D.) in which the learned judge comments that "... The only revocation of offers by the plaintiffs was by way of making subsequent offers." (para. 16). The Seed Hawk defendants do not agree and rely on the decision of the British Columbia Court of Appeal in Mackenzie v. Brooks, [1999] B.C.J. No. 2411 (Mackenzie). In that case, a defendant who had made a formal written offer of settlement in the amount of $15,000 made a subsequent verbal offer of $18,000. The trial judge held that the informal verbal offer revoked the prior formal offer because there could not be two offers outstanding at the same time. The Court of Appeal reversed the trial judge but, in doing so, relied upon the distinction between formal and informal offers:

[27] In our view, this approach is not inconsistent with the decision of this Court in Bains v. Indo-Canadian Times Inc. (1995), 38 C.P.C. (3d) 53, in which this Court held that there could not be two formal offers outstanding at any one time since the opposite party would not know to which offer he or she should respond. In those circumstances, this Court held that the second offer would revoke the first. We are not persuaded that there would be similar confusion with respect to outstanding formal and informal offers. Counsel well know that the acceptance or rejection of a formal offer sounds in costs in the event that the action proceeds to trial. They also know that the acceptance or rejection of an informal offer made during the course of settlement discussions does not sound in costs (unless made in the form of a Calderbank letter). If both formal and informal offers are outstanding at any one time, it is open to the opposing party to accept either of them. Acceptance of either brings the action to an end. We fail to see any potential for confusion.

[10]            In my view, the question of revocation arises rather differently on these facts. It is not a question of a formal versus an informal offer. It is significant that the offer of December 21, 1992 was made before the Statement of Claim was issued. It is not clear whether an offer made prior to the issuance of the statement of claim qualifies as an offer of settlement for purposes of Rule 420(2), given that the rule requires that the offer be made by a defendant. Prior to the issuance of the statement of claim, there is no defendant. As the question was not argued before me, I will assume, for the purposes of these motions, that an offer made before the issuance of the statement of claim is an offer which comes within Rule 420(2).

[11]            MacKenzie illustrates the point that whether a subsequent offer revokes a prior offer is a matter of intention. For example, when the second offer is lower than the first, a reasonable bystander might well conclude that the intention was to revoke the first offer. When the second offer is higher than the first, a reasonable bystander might conclude that the first offer was not revoked but subsumed into the second. As the British Columbia Court of Appeal points out in Mackenzie, the rules as to offers of settlement are not necessarily to be read in the light of traditional contract theory. That is why the Court found that a formal offer of settlement could co-exist with an informal offer.

[12]            The December 21, 1992 offer was an offer to pay a royalty at the rate of 3 per cent of the wholesale price for each opener assembly sold. Licensing arrangements were mentioned in subsequent offers, notably the offer made in the course of mediation and the offer of October 4, 2001. In both cases, the defendants were to receive a royalty free license in return for a lump sum payment. The question of whether this was more or less favourable than the original offer is difficult in the sense that the amounts payable by the defendants under the first offer were unknown, even though one could do calculations which estimated the ultimate cost to the defendants. In my view, in making the offers of lump sum payments in return for a royalty free license, the defendants had decided against a continuing financial relationship with the plaintiffs and had impliedly revoked their first offer. Consequently, Rule 420(2) does not apply on the facts of this case.

[13]            Counsel for Seed Hawk defendants attempted to argue that even if an offer does not comply with Rule 420(2), double costs can still be awarded through the exercise of the court's discretion in dealing with the factors identified in Rule 400. Counsel argued that I should follow the reasoning of cases such as Champion International Corp. v. Sabina (The) (2003), 227 F.T.R. 107, 2003 FCT 39 (F.C.T.D.) (Champion International Corp.) and Stewart v. Canada (Attorney General), 2003 FCA 264, [2003] F.C.J. No. 947 (Stewart). These are both cases in which offers of settlement which did not comply with Rule 420(2) resulted in a doubling of the costs awarded to the successful party.

[14]            In Champion International Corp., the plaintiff made two offers of settlement - one in the amount of US $45, 795 plus interest and costs - which lapsed one day before trial, and another - in the amount of US $25,442.20 plus interest and costs - which was revoked at the start of the trial. At trial, the plaintiff obtained judgment for US $50,844.39 plus interest and costs. Blais J. found that the settlement offers were clear and unequivocal, leaving the other party to decide only whether to accept either one of them. He also found that the offers contained an element of compromise. Finally, in reliance on Feherguard Products Ltd v. Rocky's of B.C. Leisure Ltd. (1994), 72 F.T.R. 297, he found that since the offers in question were clear and unequivocal and contained an element of compromise, they had the automatic effect of triggering the doubling of costs "as per the language of rule 420".

[15]            Stewart is another case where an offer which had been revoked was used to double the successful party's costs on the ground that offer contained an incentive to accept. In that case, the plaintiff's offer was for a fixed amount which was to be revoked once it had incurred the expense of transporting its witness to the site of the trial. The defendants argued that the doubling rule did not apply because the offer contained no element of compromise. The Taxing Officer held that the incentive to accept resided in the fact the defendant could, by accepting the offer, eliminate the risk of having to pay those travel disbursements as well as the risk of an award of double costs under Rule 420(2). The Taxing Officer therefore doubled the plaintiff's costs.

[16]            I do not believe that these cases support the Seed Hawk defendants' position. My reading of the cases suggests that the decision-makers assumed that Rule 420(2) applied, notwithstanding the revocation of the offers in question. Secondly, the "automatic triggering" which is discussed has to do with the assessment officer's ability to double costs on his or her own initiative without referring the matter to a judge. It is not a reference to the conditions under which Rule 420(2) or any other doubling rule applies.

[17]            However, a more fundamental objection is that doubling costs under Rule 400 has the effect of allowing parties to escape the burden, imposed by Rule 420(2), of leaving an offer of settlement open to judgment but gives those parties the same benefit as if they had. In those circumstances, no one would leave an offer of settlement open till judgment. It may be that Rule 420(2) is itself deeply flawed as Létourneau J.A. pointed out in Francosteel Canada Inc.:

[30] As drafted, paragraph 420(2)(a) has a serious potential for unfairness. As the present instance shows, if the offer is revoked, even if only a day before the case is taken under advisement or before judgment is rendered, a defendant loses the benefit of the rule and is [page294] left to rely upon an almost unfettered exercise of jurisdiction under rule 400. As I can see in the case at bar, there is no guarantee that, even with the best of intents, the discretion will be exercised judicially. In addition, a respondent bears the heavy and difficult burden of proving an improper exercise of jurisdiction.

That flaw, if the Rule is in fact flawed, is a matter for the Rules Committee. It cannot be remedied by effectively reading out the requirement of non-revocation which appears in Rule 420(2) by resorting to Rule 400.

[18]            In saying this, I do not dispute that Rule 400 allows the Court to take written settlement offers into account when dealing with the issue of costs. I am simply saying that Rule 400 cannot be used as a less onerous version of Rule 420(2) because this would effectively deprive Rule 420(2) of any effect.

[19]            In the end, I am not persuaded that this is a case for double costs.

THE APPROPRIATE SCALE OF COSTS

[20]            Rule 407 provides that unless the Court orders otherwise, party-and-party costs shall be assessed in accordance with column III of the table to Tariff B. This is the default position, the departure from which must be justified. In support of their claim for assessment of their costs in column V of Tariff B, the defendants invoke the following:

-           the naming of the corporate directors as personal defendants unnecessarily extended the time of the trial by requiring the examination and cross-examination of witnesses whose testimony did not bear on the core issues.

-           the duration of the trial;

-           the amount of work necessitated by the volume of the plaintiffs' expert evidence;

-           the exclusion of significant portions of the plaintiffs' expert evidence;

-           the fact that large portions of the trial time were taken up dealing with the deficiencies of the plaintiffs' expert affidavits

-           the shortening of the trial by the Seed Hawk defendants by not calling one witness and withdrawing five of their expert's affidavits.

-           the plaintiffs' outrageous monetary demands at the mediation before Prothonotary Lafrenière;

-           service of three of the plaintiffs' expert affidavits consisting of more than a thousand pages less than two weeks prior to the commencement of trial.

-           the amount of work that went into preparing for trial and in the preparation of written submissions;

-           the number of motions which arose in the course of the trial which required rapid research and the preparation of detailed written submissions;

-           the fact that what was originally scheduled as a three-week trial was heard in four sittings spread over four calendar years.

[21]            Needless to say, the plaintiffs do not agree. And, for the most part, neither do I. Apotex Inc v. Syntex Pharmaceuticals International Ltd. (1999), 176 F.T.R. 142 (F.C.T.D.) is authority for the proposition that an increase in complexity justifies an increase above column III (para. 9). On the other hand, the Court of Appeal had this to say about complexity in relation to costs in patent litigation:

[58] In my view, an increase in costs of the appeal on the basis of the complexity of the issues is not justified. This is a patent case as was the case of TRW Inc., supra. In dealing with an application for an increase of costs pursuant to Rule 344(6) and (7) in TRW Inc. v. Walbar of Canada Inc. (1992), 43 C.P.R.(3d) 449, I had the following to say, at pages 456-457, for declining to allow increased costs on the basis of the complexity of the issues:

Apart from the fact that patent litigation, by its nature, is often difficult as compared with other types of litigation, the action and counterclaim in this case centred on infringement and validity, both of which are rather commonplace in litigation of this kind. Doubtless the technology was complex...but it is the complexity of legal issues raised by the litigation rather than the technology involved that the court is to consider under Rule 344(3)(j).

Here, as in that case, I am not persuaded that there should be allowed an increase of costs on the appeal based upon complexity of the issues.

(Unilever PLC et al. v. Procter & Gamble Inc. et al. (1995), 98 F.T.R. 80.)

[22]            The technology in question here was relatively straightforward. The legal issues raised were more complex. The fact that many issues arose mid-trial and required adjournments for research and argument added to the burden on counsel. These issues were not trivial, as appears from the fact that an electronic search discloses that six of these interlocutory motions were reported in series dedicated to intellectual property litigation. Since these issues arose at the instance of both plaintiffs and defendants, any increase in the tariff should apply to both sides for those matters for which they are entitled to costs.

[23]            I attribute no significance to the various allegations relating to the production, volume or evidentiary value of the various affidavits produced by the parties at various times. The equities, in relation to these matters are equally divided. As for the striking of various parts of the plaintiffs' affidavits, this has already been considered under the heading of legal complexity as a good number of the interlocutory motions had to do with these very issues. Furthermore, where liability for costs depends primarily upon success in the action, I can see no reason for reaching into the trial itself so as to use success on interlocutory proceedings as a basis for increasing (or decreasing) costs.

[24]            Similarly, I am not disposed to increase costs by reason of the Seed Hawk defendants' decision not to lead certain evidence. It is bad enough that the plaintiffs were put to the trouble of preparing to meet that evidence, the cost of which is essentially thrown away, without asking them, in addition, to pay increased costs for evidence not led.

[25]            I do not believe that the plaintiffs' decision to name the individual directors as defendants ought to affect the assessment of costs. The law in this area is complex. There were circumstances which could have justified findings of facts which would have supported the plaintiffs' allegations. The fact that I did not draw the conclusions which the plaintiffs urged upon me does not mean that they acted improperly in adding the directors as defendants.

[26]            In their submissions, the plaintiffs argue that the defendants have disentitled themselves to costs with respect to various elements of evidence for reasons not dissimilar to those invoked by the Seed Hawk defendants in favour of increased costs. As indicated earlier, I am not inclined to treat motions decided in the course of the trial separately from the trial itself. Nor am I disposed to engage in an ex post facto assessment of the conduct of the trial by any party's counsel, in the absence of some egregious abuse of the process. In my view, counsel for the plaintiffs and for the Seed Hawk defendants did their duty as they saw it and while the process may have been less than surgically precise, it did not depart significantly from what one might expect in the circumstances.

[27]            Taking into account the nature of the litigation, the complexity of the legal issues, I would be prepared to depart modestly from the default position by awarding the Seed Hawk defendants their costs at the bottom end of column IV of Tariff B.

[28]            This leaves only the question as to whether there should be a further adjustment by reason of the various settlement proposals made by the Seed Hawk defendants. The fact that I have found that they do not justify a doubling of costs does not mean that these offers are of no consequence in terms of setting the scale of costs. Rule 400(3)(e) specifically identifies written settlement proposals as a factor to be taken into account in the fixing of costs.

[29]            I am not inclined to modify my position as to costs on the basis of offers of settlement involving payment of a given sum of money. The assessment of past and future business losses arising from patent infringement is not an exact science. Reasonable persons may have substantial disagreements on such questions. I do not believe that it would be fair to increase costs because the plaintiffs did not value their claim as I might value it. There are no doubt exceptions to this principle but they are not present here.

[30]            However, the Seed Hawk defendants' December 21, 1992 offer to enter into a licence agreement stands on a different footing. The fact that it would have provided the plaintiffs with a revenue stream is of less significance than the fact that it constituted recognition of the applicability and validity of the plaintiffs' patent. To the extent that the litigation was designed to protect the plaintiffs' patent, a settlement proposal which recognized the validity of that patent and its applicability to the Seed Hawk seeder, as well as paying the plaintiffs for the use of their patented technology, should have received more consideration than it did. The plaintiffs cannot argue that the proposed royalty was too low for they never responded to the offer. Had the plaintiffs accepted this offer, they would have confirmed their patent monopoly, obtained a not insignificant financial advantage, and avoided a ruinously expensive trial which they ultimately lost. The plaintiffs' failure to respond to, let alone accept, this offer is a sufficient reason to increase costs. For that reason, there will be an order that the Seed Hawk defendants are entitled to have their costs against the plaintiffs assessed at the high end of column IV of Tariff B.

FEES FOR SECOND COUNSEL

[31]            The Seed Hawk defendants ask to be allowed the fees of junior counsel in addition to the fees for senior counsel. During the course of the trial of this matter, the plaintiffs were represented by one senior and one junior counsel (assisted by an articling student who received his call to the Manitoba Bar near the end of the trial) while the Seed Hawk defendants were represented by one senior and two junior counsel, except for the opening days of the trial when they were represented by a single counsel. The nature of the action, the volume of the documentary evidence, the frequent objections by both parties to the admissibility of evidence satisfy me that this is an appropriate case for allowing fees for junior counsel for the trial portion of the action at the rate of 50 per cent of the fees allowed for senior counsel.

ASSESSMENT OF COSTS NOTWITHSTANDING THE PENDING APPEAL

[32]            The Seed Hawk defendants claim to be entitled to have their costs assessed and paid notwithstanding the fact that an appeal is pending with respect to the trial judgment. The plaintiffs argue that the assessment is premature in that it will simply have to be repeated if the appeal is successful. Furthermore, given the sums of money involved, the payment of costs now will, in the event of a successful appeal, leave the plaintiffs with a formidable collection problem, in that they would be seeking to recover not only the costs of the trial and the appeal, but also the recovery of the amounts they have paid under any order which I might make.

[33]            Counsel for the plaintiffs relies upon Smith & Nephew Inc. v. Glen Oak Inc. (1995), 64 C.P.R. (3d) 452 (F.C.T.D.), a decision of Mr. Justice Marc Noël dealing with two interlocutory decisions (see para. 1). We are obviously past the point of dealing with costs in respect of interlocutory motions. The issue before me is the assessment following trial. The plaintiffs also rely upon the decisions in Cives Corp. v. Everest Equipment Inc., 2003 FCT 919, [2003] F.C.J. No. 1174, and Vidéotron Ltée v. Netstar Communications Inc., 2003 FCA 314, [2003] F.C.J. No. 1204, both of which dealt with interlocutory matters.

[34]            Another case involving taxation of interlocutory orders is Casden v. Cooper Enterprises Ltd., [1991] 3 F.C. 281 (F.C.T.D.) (Casden), a decision of Stinson, Taxing Officer. That case involved an assessment of costs of three post-trial motions in a case in which the trial judgment, which ordered each party to bear their own costs, was under appeal. Even though the decision concerns interlocutory motions, Assessment Officer Stinson expressed his conclusion in broader terms (at p. 299):

... With all due respect to the authority carried by a judgment of the Trial Division, I cannot conclude that said authority should supersede or vary the established and, in my view, practical principle that one taxation of costs should occur in relation to the cause of an action. That is, the Taxing Officer should have, in assessing accounts, the benefit of the final (by that, I mean that decision not subject to any further appeal) conclusion on the substantive issues generated by the action.

[35]            Casden was applied to an order for costs following trial inGerald's Machine Shop Ltd. v. Melina & Keith II (The), [1997] F.C.J. No. 1308, but, for the most part, it is relied upon in the case of interlocutory orders.

[36]            Against this is a line of cases which proceeds on the basis that the filing of a notice of appeal does not operate as a stay of execution of the judgment under appeal. On that basis, the fact of filing an appeal does not preclude the assessment of the costs of the proceedings in the trial division. See Mennes v. Canada (Correctional Service), [1999] F.C.J. No. 664 (Assessment Officer), Hasan v. Canada (Attorney General), [1999] F.C.J. No. 28 (Assessment Officer) and Canada (Minister of National Revenue - M.N.R.) v. Duchesnay, 2002 FCTD 70, (2002) D.T.C. 6811 (Assessment Officer). See also Almecon Industries Ltd. v. Anchortek Ltd., 2003 FCT 127, [2003] F.C.J. No. 182.

[37]            While I recognize the potential for multiple assessments in the event of a successful appeal, I believe that the better view is that a final order of the Court must be given effect, unless it is stayed. As a result, an order dismissing a proceeding with costs to be assessed authorizes the assessment of those costs, as well as the collection of those costs, unless a stay of execution is granted. Any other conclusion puts the validity of a final order into question any time a notice of appeal is filed. Clearly, that is not the law.

[38]            In this case, the order says that the claims against all defendants are dismissed "with costs, costs to be spoken to by Notice of Motion". Consequently, there is no order for costs to be assessed. The question as to when costs are to be assessed and paid is therefore an open question, notwithstanding the plaintiffs' suggestion that this question may already have been decided, as a result of a comment I made at the conclusion of the trial. It is clear from the context that the comment is one about my understanding of the law at the time, and not an order in relation to this case. If it were an order, the defendants could justifiably complain that they were not given an opportunity to address the matter.

[39]            In the circumstances of this case, I see no reason to make an order which would amount to a stay of execution with respect to the costs awarded to the defendants. There is a final order of the Court in relation to the merits of the case. The matter of costs should also be dealt with on the basis of a final order. Consequently, the assessment of costs is to proceed without awaiting the outcome of the appeal, and the amounts certified by the assessment officer are payable upon certification.

ASSESSMENT OR LUMP SUM ORDER

[40]            It is implicit in the ruling as to the timing of assessment and payment of costs that I have decided against making a lump sum order of costs. My reason for declining to do so is that there are numerous issues to be decided in relation to the disbursements. An assessment before the assessment officer is the proper forum for the parties to sort out those issues. The directions which I provide with respect to the assessment of fees should simplify that process so that it does not consume an inordinate amount of time. Thereafter the parties can deal with the issue of disbursements.

PLAINTIFFS' COSTS: COSTS OF THE COUNTERCLAIM

[41]            This disposes of the issues raised by the Seed Hawk defendants. I now turn to the plaintiffs' motion record with respect to the costs awarded to them. While it does not appear first in the material which they have filed, the most substantial claim which they advance is their claim for the successful defence of the counterclaim alleging invalidity of their patent.             Mr. Halford has reviewed the transcript and, in his opinion, roughly the same amount of time was spent dealing with invalidity as was spent on issues of infringement. The concluding paragraph of his affidavit provides as follows:

36. The general practice with respect to costs is that they are awarded in the cause. As a result of the court's findings with respect to the validity of the patent, the plaintiffs submit that they should be entitled to their costs associated with their successful defence of the allegation of that the patent in suit was invalid, a position advanced at trial by both the Seed Hawk defendants and Simplot.

[42]            This case is on all fours with Illinois Tool Works Inc. v. Cobra Anchors Co. (2003), 312 N.R. 184, 2003 FCA 358 (F.C.A.) (Illinois Tool Works Inc.) in which the successful defendant appealed from an order that each party bear their own costs. As in this case, a claim for infringement was met with a defence of invalidity as well as a counterclaim for invalidity. The claim for infringement was dismissed, as was the counterclaim for invalidity. The trial judge considered that it was a case of divided success and held that each party should bear their own costs. The Federal Court of Appeal allowed the appeal from the order as to costs in the following terms:

[10] The facts of the present instance bring to light the following sequence of events. The respondent was sued for patent infringement by the plaintiffs/appellants. In response to the lawsuit, the respondent raised a defence which, as is often the case in these matters, had two components: first, it submitted that its products did not infringe the plaintiffs' patent and, second, that the plaintiffs' patent was in any event invalid. The respondent's defence did not have to be accepted in its entirety for the lawsuit to be dismissed. It needed to success on only one of its two components in order to achieve that result and it did: as previously mentioned, the trial judge found that the respondent's products do not infringe the plaintiffs' patent. Therefore, the plaintiffs' action was dismissed.

[11] On the facts of this case, we cannot understand how and why the dismissal of the plaintiffs' lawsuit can amount to, result in, or become a divided success. With respect, the trial judge did not properly take into consideration the end result of the proceedings before him, as required by Rule 400(3)(a)...

[43]            If, in those circumstances, it was an error to consider that the plaintiffs in Illinois Tool Works Inc. had achieved success with respect to the counterclaim for invalidity, I cannot see how it would not be an error to come to the same conclusion with respect to the plaintiffs' defence of the counterclaim. Consequently, the plaintiffs are not entitled to any costs with respect to the defence of the counterclaim.

COSTS OF OTHER PROCEEDINGS

[44]            The considerations which led me to conclude that the appropriate scale for the Seed Hawk defendants' costs, prior to consideration of the issue of offers of settlement, was the bottom end of column IV lead me to the same conclusion with respect to the plaintiffs' costs. Consequently, for those matters with respect to which the plaintiffs are entitled to costs, those costs shall be assessed at the bottom end of column IV of Tariff B.

[45]            By way of clarification, and to avoid any confusion, the plaintiffs are only entitled to the costs of those matters with respect to which they were awarded their costs in any event of the cause. Motions and other proceedings within the trial are all to be treated as costs in the cause unless a specific order or direction to the contrary was made. I have already indicated my view that the equities are evenly divided as between the parties in terms of the conduct of the action. Consequently, I decline to intervene to deny or reduce the costs to which the defendants are entitled, or to increase the costs to which the plaintiffs are entitled, on the basis of the plaintiffs' allegations of delay or other misconduct. Now that the trial is done, everyone can think of ways in which it could have been conducted differently. As it was unfolding however, everyone did what they thought they had to do to protect their position. While there are things which could have been done differently, I find no egregious abuse of the process which would justify departing from the ordinary course.

[46]            I now turn to the costs incurred as a result of the adjournment of November 2000. At the time of the adjournment, counsel for the plaintiffs argued that the adjournment should be without any additional costs to his clients. There is already an order awarding the plaintiffs the costs of amendments to the pleadings and the costs thrown away resulting from those amendments. The plaintiffs have detailed those costs in their memorandum. I leave it to the assessment officer to decide which of the items claimed are recoverable.

[47]            As for any further consideration by way of costs in relation to the adjournment of November 2000, the record discloses that the then counsel for the Seed Hawk defendants was served with a large volume of material within two weeks of the commencement of the trial. Counsel brought a motion for an adjournment which the plaintiffs opposed, as they were perfectly entitled to do. The motion for an adjournment was refused, the trial proceeded and counsel collapsed under the strain of attempting to deal with the experts' affidavits while conducting the trial itself. I find no fault with the plaintiffs for standing on their rights but the defendants, having succeeded at trial, now stand on their rights to costs. Both positions are equally valid. As a result, I can see no reason to curtail the Seed Hawk defendants' costs as a result of the adjournment of November 2000. In other words, the assessment officer shall not, by reason of the adjournment of November 2000, reduce the fees and disbursements to which the defendants would otherwise be entitled.

[48]            For the same reasons as I identified in relation to the Seed Hawk defendants, the costs to which the plaintiffs are entitled shall be assessed without awaiting the outcome of the pending appeal of the trial decision and are payable upon being assessed.

SIMPLOT'S COSTS: RULE 420(2)

[49]            Simplot seeks a doubling of its costs as a result of settlement proposals made in the course of the litigation. These include:

-           an exchange of letters between April 5, 1993 to September 20, 1993 containing exchanges of offers, the last of which lapsed on October 4, 1993.

-           a written offer dated December 29, 1993 which was revoked by a letter dated December 16, 1994. (The letter refers to an offer of "December 23, 1993" but there is no such offer in the material. I take this to be a reference to the offer dated December 29, 1993.)

-           a written offer contained in the same letter dated December 16, 1994 which was not time-limited and which was not revoked.

-           a written offer dated October 10, 2000 which lapsed on October 16, 2000

-           a written offer on behalf of all defendants dated October 4, 2001 which lapsed one minute after the opening of the trial on October 15, 2001.

-           a written offer dated October 9, 2001 which lapsed one minute after the opening of the trial on October 15, 2001.

[50]            In accordance with my earlier analysis of the requirements of Rule 420(2), the fact that none of these offers were left open till judgment, with the possible exception of the offer of December 16, 1994, means that the rule does not apply so as to result in double costs from the date of any of those offers. The issue with respect to the offer of December 16, 1994 is whether it is deemed to have been revoked by the subsequent offers.

[51]            The terms of the offer of December 16, 1994 are as follows:

-           Simplot would pay $20,000 to the plaintiffs upon production of a marketable Conserva-Pak seeder designed for the application of liquid fertilizer. The seeder would have to be priced competitively with the existing Conserva-Pak seeder and would have to be produced within one year of the acceptance of the offer.

-           Upon production of the seeder, Simplot would develop advertising material showing liquid fertilizer being applied by the seeder, display pictures of the seeder applying liquid fertilizer at its display at various trade shows, and feature the seeder in an article in its newsletter.

-           In return, the plaintiffs would discontinue their action against Simplot without costs.

[52]            The subsequent offers made to the plaintiffs all offered to pay an amount greater than $20,000 and without any obligation to produce a seeder. The offer of October 10, 2000 included an offer of specific marketing assistance but none of the other offers contained such a term. All subsequent offers required the plaintiffs to provide Simplot with a release of all existing or future claims. Once again, the question is whether the subsequent offers were intended to revoke the offer of December 16, 1994. In my view, the fact that subsequent offers made no further mention of the development of a seeder designed to use liquid fertilizer by the plaintiffs is an indication that Simplot was no longer interested in this form of collaboration with the plaintiffs. It was simply interested in putting an end to the litigation and the attendant expense. I therefore conclude that the subsequent offers were intended to revoke the offer of December 16, 1994. As a result, Rule 420(2) does not apply as no offer remained unrevoked until the date of judgment.

THE PROPER SCALE AT WHICH TO ASSESS SIMPLOT'S COSTS

[53]            For the reasons identified in relation to the other parties, the starting point for the assessment of Simplot's costs is the bottom end of column IV. The question which arises in relation to Simplot is whether there should be an increase in the scale by reason of the offers of settlement already considered in relation to Rule 420(2). Counsel for Simplot argued that his client was entitled to a doubling of its fees under Rule 400(3)(e) where revocation was not an issue.

[54]            The evidence discloses that Simplot took an early and active role in attempting to resolve the dispute with the plaintiffs. It made a number of settlement proposals, all of which were reasonable. However, because it considered that its relationship with Seed Hawk was designed to sell fertilizer as opposed to seeders, it rejected the plaintiffs' repeated demands that it cease "promoting" Seed Hawk seeders. However, in its offer of December 29, 1993, it did agree to cease promoting Seed Hawk seeders "until such time as a court of competent jurisdiction rules that the Seed Hawk Inc. device does not infringe the [Halford] patent ...". This offer was substantially the same as the offer made to Simplot by the plaintiffs on December 8, 1993 except that the plaintiffs' offer required the payment of $75,000 whereas Simplot's offer was in the amount of $20,000 and was tied to the development of a liquid fertilizer attachment for the plaintiffs' seeder, as their contribution to the Seed Hawk defendants had been.

[55]            In my view, the plaintiffs were entitled to stand on their position that Simplot ought not to assist in the promotion of a device which they believed infringed their patent. When Simplot agreed to cease supporting the Seed Hawk device until the issue of infringement had been resolved, as it did in its December 29, 1993 offer, the plaintiffs had achieved what they always claimed was their primary objective: the protection of their patent. On the basis of the material before me, it does not appear that the plaintiffs responded to this proposal. It is true that this offer fell below the plaintiffs' monetary expectations but they were being offered essentially the same terms as Simplot had given Seed Hawk. Simplot's offer represented as much compromise as one could achieve without total capitulation. It was worthy of a response. Had they accepted it, the plaintiffs would have achieved an important objective and would have saved themselves and Simplot significant sums of money. The failure to respond to such a proposal is a sufficient reason to increase the scale upon which Simplot's costs are to be taxed.

[56]            Accordingly, in reliance upon Rule 400(3)(e), I award Simplot its costs throughout at the top end of column IV, save for those motions brought by other parties where Simplot either simply kept a watching brief or adopted the position advanced by the Seed Hawk defendants. Without disputing that Simplot was entitled to take part in those proceedings, the plaintiffs should not have to pay a premium for attendances which represent a certain amount of duplication. In respect of those motions, Simplot's costs will be taxed at the midpoint of column III. To avoid any confusion as to the scope of this exception, it does not include motions made in the course of the trial.

[57]            For the same reasons as I identified in relation to the other parties, Simplot's costs are to be assessed without awaiting the outcome of the appeal of the trial decision, and are payable upon being assessed.

PRE-JUDGMENT AND POST-JUDGMENT INTEREST ON COSTS

[58]            All parties have requested pre-judgment and post-judgment interest on the costs awarded to them, but unfortunately none provided me with any guidance as to the basis on which such awards might be made. Pre-judgment and post-judgment interest are dealt with in the Federal Courts Act, R.S.C. 1985, c. F-7:

[59]            While the trial of this matter took place in Manitoba the events which were alleged to constitute the plaintiffs' cause of action all occurred in the province of Saskatchewan. Accordingly, the law of the province of Saskatchewan would apply with respect to pre-judgment interest on costs. The Pre-judgment Interest Act, S.S. 1984-85-86, c. P-22.2, provides as follows in relation to pre-judgment interest on costs:

5. (1) The court shall award interest on a judgment for damages or for the recovery of a debt calculated in accordance with this Act.

5. (2) The court shall not award interest:

...

(d) on an award of costs in the action;

[60]            Accordingly, there will be no award of pre-judgment interest with respect to costs.

[61]            Section 37 makes the law of Saskatchewan applicable to post-judgment interest on judgments given in respect of causes of action arising in Saskatchewan. Section 77 of the Queen's Bench Act, 1998, S.S. 1998, c. Q-1.01, provides as follows:

77. Unless otherwise ordered, a verdict or judgment bears interest from the time the verdict is rendered or judgment is given, notwithstanding that entry of the judgment is suspended by any proceeding in the action, including an appeal.

[62]            The parties have not provided me with any guidance as to the rate of judgment interest in Saskatchewan. As a result, I rule that the parties are entitled to judgment interest on the orders for costs but the rate shall be fixed by the assessment officer on the basis of the material put before him as to the judgment interest rate in Saskatchewan. The jurisprudence and the practice in this court are to the effect that interest on costs runs from the date of judgment even if costs remain to be assessed. See Canada (Minister of National Revenue - M.N.R.) v. Bethlehem Copper Corp., [1977] 1 F.C. 577 (F.C.A.). As no one has filed any material suggesting that the Saskatchewan practice is different, I rule that judgment interest on the costs awarded runs from the date of judgment and not from the date of assessment.

CONCLUSION

[63]            An order will issue with respect to each of the motions for costs, incorporating the terms of these reasons. As for the costs of these motions, I fix the costs of the Seek Hawk defendants and Simplot at $7,500 in respect of their motions. I order that each party shall bear their own costs in relation to the plaintiffs' motion for their costs.

        Order with respect to the Seed Hawk defendants' costs

IT IS HEREBY ORDERED that:

1- The defendants Seed Hawk Inc., Pat Beaujot, Norbert Beaujot, and Brian Kent shall have their costs assessed by an assessment officer according to the following directions:

a)         there shall be only one order for costs in respect of all the defendants;

b)         the defendants' costs shall be assessed at the high end of column IV of Tariff B;

c)         there is to be no reduction in the costs assessed by reason of any allegation of misconduct on the part of the defendants, or any increase in costs by reason of any allegation of misconduct on the part of the plaintiffs;

d)         there shall be no doubling of costs under Rule 420(2).

2- Costs are to be assessed without awaiting the outcome of the appeal of the judgment rendered after trial, and are payable upon being assessed.

3- Cost assessed against the plaintiffs shall bear interest at the judgment interest rate for the province of Saskatchewan from the date of judgment dismissing the plaintiffs' claim.

4- The defendants are awarded the costs of this motion in the amount of $7,500 plus disbursements.

5- The assessment officer shall dispose of the costs of the assessment in his or her discretion in accordance with Rule 408(3).

                    Order with respect to the plaintiffs' costs

IT IS HEREBY ORDERED that:

1- The plaintiffs shall have assessed by an assessment officer the costs of proceedings in respect of which they were awarded their costs in any event of the cause in accordance with the following directions:

a)         there shall be only one order for costs in respect of all the plaintiffs;

b)         the plaintiffs' costs shall be assessed at the low end of column IV of Tariff B;

c)         there is to be no reduction in the costs assessed by reason of any allegation of misconduct on the part of the plaintiffs, or any increase in costs by reason of any allegation of misconduct on the part of the defendants.

2- Costs are to be assessed without awaiting the outcome of the appeal of the judgment rendered after trial, and are payable upon being assessed.

3- Costs assessed against the defendants shall bear interest at the judgment interest rate for the province of Saskatchewan from the date of judgment dismissing the plaintiffs' claim.

4- Each party shall bear their own costs of this motion.

5- The assessment officer shall dispose of the costs of the assessment in his discretion in accordance with Rule 408(3).

            Order with respect to the defendant Simplot's costs

IT IS HEREBY ORDERED that:

1- The defendant Simplot Canada Limited shall have its costs assessed by an assessment officer in accordance with the following directions:

a)         the defendant's costs shall be assessed at the high end of column IV of Tariff B save for motions or other interlocutory proceedings which did not occur in the course of the trial of this matter brought by other parties and in which the defendant in substance merely adopted the position of the other defendants, which motions or other interlocutory proceedings shall be assessed at the midpoint of column III of Tariff B;

b)         there is to be no reduction in the costs assessed by reason of any allegation of misconduct on the part of the defendant, or any increase in costs by reason of any allegation of misconduct on the part of the plaintiffs;

c)         there shall be no doubling of costs under Rule 420(2).

2- Costs are to be assessed without awaiting the outcome of the appeal of the judgment rendered after trial, and are payable upon being assessed.

3- Costs assessed against the plaintiffs shall bear interest at the judgment interest rate for the province of Saskatchewan from the date of judgment dismissing the plaintiffs' claim.

4- The defendant is awarded its costs of this motion in the amount of $7,500 plus disbursements.

5- The assessment officer shall dispose of the costs of the assessment in his or her discretion in accordance with Rule 408(3).

                                                                            "J.D. Denis Pelletier"               

                                                                                               Judge

                                     FEDERAL COURT

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                               T-2406-93

STYLE OF CAUSE: James W. Hafford and Vale Farms Ltd., v. Seed Hawk Inc., Pat Badged, Norberto Badged, Brian Kent and Simplot Canada Limited

PLACE OF HEARING:         Winnipeg, Manitoba

DATES OF HEARINGS:       November 6, 2000, resumption October 15, 2001, resumption June                                         17, 2002, resumption February 3, 2003

REASONS FOR ORDER:    The Honourable Mr. Justice Pelletier.

DATED:                                 September 16, 2004

APPEARANCES:

Steven Raber                             FOR PLAINTIFFS

Dean Giles

Edward Herman

Alexander Macklin                    FOR DEFENDANT- Seed Hawk

Doak Horne

Irene Bridger

Wolfgang Riedel                        FOR DEFENDANT- Simplot

SOLICITORS OF RECORD:

Fillmore Riley                FOR PLAINTIFFS

1700 Commodity Exchange Tower

360 Main Street

Winnipeg, MB, R3C 3Z3

Gowlings                                   FOR DEFENDANT- Seed Hawk

Suite 1400

700 - 2^nd Street S.W.

Calgary, AB, T2P 4V5

Meighen, Haddad & Co.           FOR DEFENDANT- Simplot

Barristers & Solicitors

P.O. Box 22105

110 - 11^th Street

Brandon, MB, R7A 6Y9