Date: 20000731
Docket: T-1381-99
BETWEEN:
ACCPAC INTERNATIONAL, INC.
Plaintiff
-and-
SOFTRAK SYSTEMS, INC.
Defendant
REASONS FOR ORDER AND ORDER
LAFRENIÈRE P.
[1] This is a motion by the Defendant for an order that the Plaintiff pay its costs forthwith fixed in the amount of $75,000 in respect of the Plaintiff's motion for an interlocutory injunction which was abandoned on February 11, 2000. Alternatively, the Defendant seeks an order directing an assessment of its cost on a solicitor and client basis.
BACKGROUND
[2] On July 30, 1999, the Plaintiff instituted an action seeking to permanently enjoin the Defendant from producing its "Adagio" suite of accounting programs following unsuccessful talks to resolve claims of infringement of their product. One of the grounds cited by the Plaintiff for seeking an injunction was that the look and feel of the Defendant's product infringed its accounting software program copyright.
[3] The statement of claim as well as a motion for interlocutory injunction were served on the Defendant in Vancouver on August 3, 1999. The motion was made returnable six days later in Toronto.
[4] On August 5, 1999, the Defendant sought the Plaintiff's consent for a two-week adjournment of the motion on terms to be agreed. It appears that the parties were unable to agree since they subsequently appeared before Lemieux, J. on August 9, 1999 to speak to a contested adjournment. In the interim, the Defendant"s counsel in Vancouver and its solicitors in Toronto expended substantial time and resources to review the Plaintiff"s pleadings, draft responding materials and prepare for the hearing of the motion.
[5] The Plaintiff took the position before the motions judge that the parties had agreed on specific terms for an adjournment. The Defendant disputed this. As a condition of any adjournment, the Plaintiff asked for an interim injunction prohibiting the launch and promotion of the Defendant's software, but the relief was denied by Lemieux, J. He adjourned the motion, set a timetable for the delivery of affidavits and cross-examinations and ordered the parties to file their motions records by September 10.
[6] Following the adjournment, the Plaintiff exchanged further material and conducted extensive cross-examinations in Vancouver. In September 1999, the hearing of the interlocutory motion was fixed by the Court for February 21 and 22, 2000. The Plaintiff "wholly" abandoned its motion on February 11, 2000, approximately one week before the hearing. The Defendant subsequently brought this motion seeking an assessment of its costs.
POSITION OF THE PARTIES
[7] The Defendant submits that the Plaintiff"s actions in moving for interim and interlocutory injunctive relief have made it incur substantial and unnecessary expense. The Defendant alleges that the Plaintiff acted in bad faith in serving the statement of claim and notice of motion at its registered corporate address, knowing full well its business address. It is also suspicious that the service of the motion was timed to coincide with the president"s holidays and thereby cause major disruption. It further contends that the affidavit evidence of Mr. Goossen in support of the Plaintiff"s motion for injunctive relief was obtained in bad faith. Having entirely succeeded in defending the motion, the Defendant asserts it is entitled to complete indemnification of its costs on a solicitor and client basis.
[8] The Plaintiff cautions that the abandonment of a motion does not necessarily mean it was without merit. Moreover, it submits that the discontinuance or settlement of proceedings should be encouraged rather than penalized. The Plaintiff takes issue with the assessment of costs on a solicitor and client scale which it argues should be limited to rare and exceptional circumstances. Moreover, it disputes the reasonableness of certain fees and disbursements claimed by the Defendant in its draft Bill of Costs. The Plaintiff acknowledges nevertheless that the Defendant was successful in defending the motion and that costs should be awarded in its favour at a fixed amount not to exceed $20,000.00.
ANALYSIS
[9] Rule 402 of the Federal Court Rules, 1998 provides that a party against whom a motion has been abandoned is entitled to costs forthwith, unless otherwise ordered by the Court or agreed by the parties. Rule 400 sets out the factors that the Court may consider when dealing with the question of costs. These include the result of the proceeding, the importance and complexity of the proceedings, any written offer to settle, the amount of work and whether any step was improper, vexatious or unnecessary.
[10] As stated earlier, the Plaintiff does not dispute that the Defendant was successful in defending the motion. The activities sought to be enjoined by the Plaintiff were the Defendant's primary business and its only source of revenue since 1984. The interlocutory injunction, if granted, would have put the Defendant out of business. In fact, the Plaintiff would have obtained significant litigation leverage.
[11] Notice of the motion provided by the Plaintiff, even if more generous than the time provided under Rule 364(3) of the Federal Court Rules, 1998, was relatively short in light of the difficult and complex issues of fact and law involved. This resulted in the Defendant incurring substantial legal costs to marshal its evidence in response in a hurried fashion.
[12] The choice of venue of Toronto rather than Vancouver also increased the Defendant's costs substantially. A Vancouver solicitor, Mr. Szibbo, had to be retained immediately to provide advice to the Defendant and to hire counsel in Toronto. Relevant documents had to be located, an expert witness retained, interviews conducted and affidavits prepared. Since all the witnesses of both parties resided in the Vancouver area, the Defendant was also required to pay the travel expenses of litigation counsel from Toronto.
[13] The Plaintiff submits that not all of the Defendant's costs on the Plaintiff's motion were thrown away since the Defendant spent time reviewing the claim of copyright infringement and preparing the Defendant's defence to the action. As well, the material generated by the Defendant in response to the motion for injunctive relief was of benefit in drafting and commencing a complaint against the Plaintiff in California. I cannot agree with this submission.
[14] I observe first of all that the detailed draft Bill of Costs submitted by the Defendant is restricted to counsel fees incurred in preparation for and appearance on the motion. Any work performed to draft the statement of defence was excluded. Secondly, the issues on a motion for an interlocutory injunction are different than those at trial. Irreparable harm and balance of convenience are the main issues on an interlocutory injunction application but are not issues for trial. Even though the Defendant may obtain a collateral benefit from the research and preparation for the motion, it had no choice but to incur the legal costs as a result of the actions of the Plaintiff. In any event, the Defendant will be precluded from seeking double indemnification should it be successful at trial.
[15] The Plaintiff submits that it would not be appropriate to make an award of costs payable forthwith. I find however that the Plaintiff has failed to displace the presumption contained in Rule 402. As indicated earlier, the issues on the abandoned motion are not the same as at trial.
[16] In AIC Ltd. v. Infinity Investment Counsel Ltd. et al. 1, Rothstein, J. (as he then was) recognized that the law of costs was evolving and that there was a rationale for awarding costs on a motion irrespective of the outcome of trial. He cited with approval the following reasons of Henry, J. in Apotex Inc. v. Egis Pharmaceuticals 2:
| The issue on the motion is discrete - it is whether to grant an interlocutory injunction. That issue is not the issue at trial and the decision made on the motion does not fetter the judge at trial. The motions judge is concerned only to assess whether the plaintiff (in this case) has a claim or a right that the court ought to protect until trial (the substantive issue), and that the choice of remedy (an injunction) as a matter of justice or convenience ought to be granted by a court of equity in the circumstances. It is my opinion that this is a discrete issue and one to which rule 57.03 can apply as can the judicial policy mentioned. This is particularly so when the remedy is granted or refused regardless of the outcome at trial, as in most cases the issue there will be tried on perfected evidence and on the basis of credibility of conflicting testimony. |
[17] An injunction is an extraordinary remedy that should be sought only most cautiously and sparingly. Had the Plaintiff obtained an injunction, it would have had an immediate remedy. The Defendant should not be required to wait to recover its reasonable costs of the Plaintiff"s failed motion.
[18] The Defendant has been put to considerable expense to both prepare and defend the interlocutory injunction motion. The Plaintiff does not seriously dispute the amount of work performed, but takes issue with the number of counsel involved and certain disbursements claimed. I accept that the Plaintiff should not be burdened with paying all expenses, but only those reasonably incurred.
[19] I am of the view that costs should be assessed in a fixed amount based roughly on the Defendant"s Bill of Costs. The costs of Mr. MacFarlane will be allowed on a solicitor and client basis throughout. I would allow half the costs of Ms. Pallotta throughout except for the initial review which I would allow in full. I would also allow the costs of Mr. Szibbo in full for the initial review. Half the costs associated with the articling student and law student will be allowed. Disbursements will be allowed subject to excluding certain deductions which the Defendant properly concedes are not claimable.
[20] For the above reasons, I am prepared to make an award of reasonable costs in favour of the Defendant on a solicitor and client scale, payable forthwith.
ORDER
[21] The Plaintiff shall pay to the Defendant its costs, on a solicitor and client scale, in respect of the abandoned motion for an interlocutory injunction fixed in the amount of $89,550.00 (being $65,000.00 for fees, $20,000.00 for disbursements and $4,550.00 in goods and services tax assessable on the fees) forthwith.
[22] The Plaintiff shall pay to the Defendant its costs of this motion on a party and party scale fixed in the amount of $3,700.00 (being $3,000.00 for fees and $700.00 for disbursements) forthwith.
"Roger R. Lafrenière"
Prothonotary
Toronto, Ontario
July 31, 2000
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
| STYLE OF CAUSE: ACCPAC INTERNATIONAL, INC. |
- and -
| DATE OF HEARING: MONDAY, JUNE 5, 2000, AND |
MONDAY, JUNE 19, 2000
| PLACE OF HEARING: TORONTO, ONTARIO |
REASONS FOR ORDER
| AND ORDER BY: LAFRENIÈRE P. |
DATED: MONDAY, JULY 31, 2000
| APPEARANCES BY: Mr. Rod Hinton |
| For the Plaintiff, June 5, 2000 |
| For the Defendant, June 5, 2000 |
Mr. Rod Hinton
For the Plaintiff, June 19, 2000
Ms. Jennifer McKenzie
For the Defendant, June 19, 2000
| SOLICITORS OF RECORD: Bereskin & Parr |
Barristers & Solicitors
Box 401, Suite 4000
40 King Street West
Toronto, Ontario
M5H 3Y2
Roderic Hinton
Barrister & Solicitor
2100-25 King St. W.
PO Box 254
Stn. Commerce Court
Toronto, Ontario
M5L 1G3
For the Plaintiff
FEDERAL COURT OF CANADA
Date: 20000731
Docket: T-1381-99
BETWEEN:
| ACCPAC INTERNATIONAL, INC. |
Plaintiff
- and -
SOFTRAK SYSTEMS, INC.
Defendant
AND ORDER
__________________
1 (1998), 148 F.T.R. 240 at 242 (T.D.)
2 (1990), 32 C.O.R. 559 (Ont. Gen. Div.) at page 571
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