Date: 20011123
Docket: T-2057-85
Neutral citation: 2001 FCT 1286
BETWEEN:
PORTO SEGURO COMPANHIA DE SEGUROS GERAIS
Plaintiff
- and -
BELCAN S.A.
FEDNAV LIMITED
UBEM S.A.
THE OWNERS AND ALL OTHERS INTERESTED IN
THE VESSEL "FEDERAL DANUBE"
AND THE VESSEL "FEDERAL DANUBE"
Defendants
REASONS FOR SECOND COST AWARD
LEMIEUX J.:
INTRODUCTION
[1] The defendants have requested, pursuant to subsection 400(4) of the Federal Court Rules, 1998, (the "Rules") a lump sum award in lieu of assessed taxable costs or, in the alternative, an award of taxable fees calculated at the maximum level of units in Column V of Tariff B plus disbursements and expert fees in accordance with a pro forma bill of costs filed.
[2] The lump sum award sought consists of:
(1) $150,000 in lieu of taxable costs;
(2) taxable disbursements of $22,308.96; and
(3) fees paid to three (3) experts totalling $80,838.51.
[3] In a previous cost order, I determined that the defendants were entitled to the taxed costs of the original trial.
BACKGROUND
[4] On January 31, 2001, I dismissed with costs the plaintiff's action against the defendants. In that action, the plaintiff sought damages against the defendants on account of a collision on December 11, 1984, between two large ocean-going bulk carriers -- The M/V. Federal Danube and the M/V Beograd in Lac St-Louis, located in the St-Lawrence River, west of Montreal, near the Beauharnois Locks.
[5] The proceeding before me was a new trial ordered by the Supreme Court of Canada in its judgment Porto Seguro Companhia de Seguros Gerais v. Belcan S.A. et al., [1997] 3 S.C.R. 1278.
[6] The evidence lead at the new trial which took eight days was of two kinds:
(1) The transcripts and exhibits of the evidence of those on board the ships the night of the collision who had testified during the first trial; and
(2) the viva voce evidence, based on reports, by experts, three on each side. In addition, the plaintiff's experts filed six additional reports rebutting the defendants' experts.
[7] The amount of damages, in principal only, was $4,400,867.84 which with accrued interest I was advised now totals approximately $10,000,000.00.
[8] In support of the lump sum award requested, the solicitors to the defendants provided me with affidavit evidence, which was not cross-examined upon, as to the following amounts:
(1) fees billed to the defendants by the law firm at $224,596.60;
(2) a pro forma bill of costs based on the maximum scale of units now valued at $110.00 per unit since April 1, 2001, for taxable services under Column V of Tariff B of the Rule yields taxed costs of $88,467.50;
(3) a pro forma bill of costs based on the maximum number of units for taxable services under Column III of Tariff B of the Rules yields $51,562.50;
(4) total disbursements including fees paid to experts in the amount of $103,147.47.
DISCUSSION AND CONCLUSIONS
[9] In Apotex Inc. v. Wellcome Foundation Ltd. (1998), 159 F.T.R. 233, a patent infringement case, Justice Wetston was faced with several requests for special directions as to costs, under Tariff B as it is now structured incorporating, since 1995, various columns with a range of units for taxable services to be selected in the discretion of the Court or the taxing officer.
[10] Justice Wetston recognized the Rules conferred upon the Court full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid. He referred to Rule 400(3) spelling out the factors which may be considered by the Court in the exercise of its discretion.
[11] He expressed the view Tariff B was formulated so as to reflect the philosophy that party and party costs should bear a reasonable relationship to the actual cost of litigation, while preserving the discretion of the Court and the assessment officer as that discretion is permitted under the Rules. He said costs should neither be punitive nor extravagant and the present Tariff B in place strives to accomplish that balance. According to Justice Wetston, an important principle underlying costs is that an award of costs represents a compromise between compensating a successful party and not unduly burdening an unsuccessful one.
[12] In Apotex Inc. v. Syntex Pharmaceuticals International Ltd. et al. (1999), 176 F.T.R. 142, Justice Reed noted the purpose of awarding costs to a successful party had two aspects: to discourage unmeritorious litigation and to partially indemnify the successful party for the costs incurred in defending or prosecuting an action as the case may be. She noted the 1995 amendments to the Federal Court Rules introduced a new flexible scale of costs and conferred on the Court a broad discretion to direct additional costs beyond the amounts described in the Tariff in appropriate cases reflecting a philosophy, as expressed by Justice Wetston in Apotex v. Wellcome, supra, party-party costs should bear a reasonable relationship to the actual cost of litigation.
[13] In terms of the scale of costs, Justice Reed stated that Column III level costs are designed to address a case of average complexity. (I note Rule 407 provides, unless otherwise ordered by the Court, costs shall be taxed in accordance with Column III.) In the case before her, Justice Reed directed the assessment officer to assess costs at trial at the maximum end of Column V of the table to Tariff B and to allow counsel fee for two senior and one junior counsel. The Federal Court of Appeal maintained Justice Reed in her Column V award. (See, Apotex Inc. v. Syntex Pharmaceuticals International Inc., [2001] F.C.A. 137.)
[14] Counsel for the defendants justify their request for a lump sum award of $150,000, equivalent to approximately sixty percent (60%) of the solicitor-client costs, principally on the following subsection 400(3) factors:
(a) the result of the proceedings;
(c) the importance and complexity of the issues;
(g) the amount of work;
(i) any conduct of a party that tended to shorten or unnecessarily lengthen the duration of the proceedings;
(k) whether any step in the proceeding was improper or unnecessary.
[15] Clearly, the defendants were completely successful at trial. They were absolved of any liability. Moreover, the amounts involved were important. These are two factors in favour of moving beyond Column III. (See, two decisions of Rothstein J, then of the Trial Division, in Canadian Pacific Forest Products Ltd. v. Termar Navigation (1998), 146 F.T.R. 72 and AIC Ltd. v. Infinity Investment Counsel Ltd. et al (1998), 148 F.T.R. 240.)
[16] In terms of complexity, the legal issues were not complex and were dependent upon a finding of fact whether the Federal Danube was at anchor when the collision occurred. However, to arrive at that factual determination, a host of technical maritime navigational and naval architectural issues had to be considered weighing the testimony of six experts was not easy.
[17] However, I must have regard to what Mr. Justice Stone said about the matter in TRW Inc. v. Walbar of Canada (1992), 43 C.P.R. (3d) 449 (F.C.A.). In TRW, supra, Justice Stone emphasized it was the complexity of the legal issues in the litigation rather than the technology involved that the Court should consider in increasing the scale of costs.
[18] I am satisfied the nature of the expert factual evidence on navigational and naval architectural issues as well as the structure of the new trial itself generated volumes of work in trial preparation, during trial and post-trial justifying moving beyond Column III. I note in TRW, supra, it was the volume of work required that warranted an increase in the amounts allowed by Tariff B.
[19] On the other hand, I am not persuaded the defendants made out any case for an increase based on the conduct of the plaintiff. As I see it, the defendants' conduct in lengthening the trial was a factor which weighed heavily in Justice Reed's mind in Apotex, supra, in fixing costs to the plaintiff at the maximum end of Column V. Plaintiff's conduct was the ground retained by Justice Tremblay-Lamer in the original trial of this action when she awarded the defendants an additional lump sum of $20,000. (See, Porto Seguro v. Belcan S.A. (1995), 91 F.T.R. 278.
[20] Counsel for the defendants levelled a number of criticisms of the plaintiff's conduct in this trial:
(1) for the new trial, the plaintiff chose not to rely on the original expert reports prepared for in the first trial but rather produced new expert reports including six rebuttal reports;
(2) the plaintiff's experts put forth theories which unnecessarily complicated the case;
(3) the plaintiff's experts contradicted themselves on several points including on the principal question whether The Federal Danube was at anchor when the collision occurred;
(4) the plaintiff should have realized it had no case.
[21] I do not think the defendants criticisms are justified. New expert reports had to be filed to take into account the testimony of the navigators at the original trial. Rebuttal reports are permissible. The clashing theories of the plaintiff's experts, highlighted during cross-examination, did not assist the plaintiff's case but, in weighing the evidence, this factor was not material to the decision and, in my view, in and of itself cannot justify an increase. Lastly, I do not agree the plaintiff had no case.
[22] In Apotex Inc. v. Wellcome Foundation Ltd., supra, Justice Wetston refused to fix costs as a percentage of the plaintiff's solicitor-client costs. In that case, the increase sought was only in respect of counsel fees whereas in the case before me the increase sought is across the board for all items. Justice Wetston was of the view granting costs at two-thirds of solicitor-client costs would be an unwarranted extension of solicitor-client costs, albeit to a lesser degree in quantitative terms. I adopt Justice Wetston's reasoning to refuse the plaintiff's request for a lump sum award of $150,000 which is approximately double a taxed bill of costs based on the maximum level under Column V of Tariff B.
[23] Justice Wetston also refused Glaxo's request for an award of costs above the amount provided for in Tariff B. He was of the view that it was in the most exceptional case that the Court should depart from Tariff B in an award of party and party costs. I agree and refuse the defendants' request for a lump sum amount beyond Tariff B.
[24] Justice Wetston in Apotex and Wellcome, supra, increased the scale of costs to the upper end of Column IV of Tariff B. He did this taking into account four main factors: the volume of work involved, the importance and complexity of the legal issues, the nature of the work involved and the fact that party and party costs should bear a reasonable relationship to the actual costs of litigation.
[25] In the case before me, I would fix the defendants' bill of costs also at the upper end of Column IV of Tariff B relying on the following factors: the amount involved, the complexity of the factual issues, the nature of the work involved and the fact the party and party costs should bear a reasonable relationship to the actual costs of the litigation.
[26] I deal with two remaining issues, namely, taxable disbursements and expert fees. As to the first item, counsel for the plaintiff did not raise any objections to the amount sought by the defendants. As to expert fees, counsel for the plaintiff did not put any evidence before me that such fees were unreasonable. In addition, counsel for the plaintiff did not substantiate the allegation that it was unnecessary to go abroad to retain experts. As a result, I accept the expert fees proposed by counsel for the defendants.
DISPOSITION
[27] I fix at the upper end of Column IV of Tariff B, the items proposed in the defendants' draft bill of costs. I fix disbursements at $22,308.96 and honorarium paid to the defendants' three experts at $80,838.51. No costs are awarded for this motion. I invite counsel for the defendants, with the consent of counsel to the plaintiff, to submit a bill of costs based on these reasons for my signature.
"François Lemieux"
J U D G E
OTTAWA, ONTARIO
NOVEMBER 23, 2001
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