Date: 20100225
Docket: T-2223-07
Citation: 2010 FC 228
BETWEEN:
SHIELDS
FUELS INC.
Plaintiff
and
MORE MARINE LTD.
MORECORP HOLDINGS LTD.
KERRY MORRIS, THE M.V. “GULF RANGER”,
AND THE BARGE “MM ORCA”
Defendants
ASSESSMENT OF
COSTS - REASONS
Charles E. Stinson
Assessment Officer
[1]
The
Plaintiff sued on December 20, 2007 for breach of contract concerning the
transport of fuel and also sought to enjoin the Defendants from the
conversion of fuel allegedly owned by the Plaintiff and which was being
carried on the Defendant barge. Production of documents, discoveries, pre-trial
conferences and amendment of pleadings occurred after the filing of a Statement
of Defence and Counterclaim. On October 20, 2009, the Court ordered that the
trial of the main action and of the counterclaim commence on December
1, 2009, and set out four issues for determination, i.e. whether conversion
occurred, the damages recoverable by the Plaintiff, whether arrest of the barge
constituted abuse of process and bad faith, and if so, the damages recoverable
by the Defendants.
[2]
Further
to a pre-trial conference, the Court ordered on November 13, 2009 that this
matter continue as a simplified action and gave leave for amended pleadings and
fresh discovery further to the Plaintiff’s additional allegations of conversion
by the Defendants of the subject fuel.
[3]
On
November 24, 2009, the Defendants’ counsel wrote to the Court:
On Monday, November 23, 2009, on behalf
of the Defendants, I wrote to counsel for the Plaintiff providing him with
payment of his client’s claim with interest and advising him that my
client had instructed me to state on their behalf that he would pay the
Plaintiff’s taxable costs and disbursements either as agreed by the parties or
on taxation by the Court.
The payment of the claim and agreement to
pay the costs and disbursements of the Plaintiff obviates the need for a trial
of this matter.
However, I just received an email from
the counsel for the Plaintiff that the payment of the claim, which counsel took
as a settlement offer which it was not, was rejected and that any other offers
to settle were revoked. In addition, counsel advised that he was returning the
payment cheque to me.
The payment cheque was for the sum of
$1,800.00 and was calculated based on the sworn evidence of one of the
Plaintiff’s witnesses.
I urgently request a pre-trial conference
to resolve the issue of proceeding to trial when the Defendants have paid the
claim and have agreed to pay the Plaintiff’s costs.
In my submission, proceeding on a two day
trial when the claim has been paid is an improper use of the Court’s time and
expense.
The Plaintiff’s counsel responded:
We
have received a copy of the letter of today’s date from Mr. Perrett to the
Court. With the greatest of respect, Mr. Perrett is incorrect when he
suggested that settlement of the Plaintiff’s claim would obviate the
necessity of a trial. The Defendants have an outstanding counter-claim and have
commenced proceedings in the Supreme Court of British Columbia for a very
substantial amount of damages based on the alleged wrongful arrest of the
“MM Orca”. Therefore, unless the Defendants are prepared to consent to a
dismissal of the counter-claim as if after a trial on the merits, and to provide
a Release of all claims in respect of the arrest of the “MM Orca”, and
particularly the claims commenced in the Supreme Court of British Columbia, the
settlement of the Plaintiff’s claim alone would not obviate the need for a
trial.
Further to a pre-trial conference, the
Court on November 30, 2009 granted a consent judgment of $1,800 against
the Defendants, dismissed the Defendants’ counterclaim as if after a trial on
the merits and awarded the Plaintiff costs of the action and counterclaim at
the middle of Column IV (the default provision under Rule 407 being Column III)
of Tariff B payable forthwith.
[4]
On
December 18, 2009, the Plaintiff’s counsel took out a Notice of Appointment
returnable January 7, 2010, for the assessment of his client’s costs. On
December 30, 2009, the Defendant Kerry Morris (the Morris Defendant) filed a
Notice of Intention to Act in Person (already served on his former
solicitor of record and on the Plaintiff’s solicitor) which stated that he
intended “to act in person and on behalf of the Defendants More
Marine Ltd. and Morecorp Holdings Ltd.”
[5]
On
December 31, 2009, the Morris Defendant (who is not a lawyer) filed a notice of
motion returnable on January 11, 2010 (the first available motion day after the
Christmas recess) for leave under Rule 120 to act on behalf of himself and the corporate
Defendants and for a direction adjourning the assessment of the Plaintiff’s
costs until the week of January 25, 2010. Three of the grounds urged in support
were that the Defendants had already paid the damages, that they had already
released a partial payment of $6,757.33 for the Plaintiff’s costs, and that the
Morris Defendant would be unable to appear before me on January 7 because he
could not reschedule other court hearings already set.
[6]
On
December 31, 2009, the Morris Defendant requested, by letter, an adjournment of
the assessment of costs and suggested its disposition in writing both as a more
efficient alternative to an oral hearing and to better suit his needs as a
lay litigant. By letter dated January 4, 2010, the Plaintiff’s solicitor
refused to agree to an adjournment because the court matter allegedly
precluding attendance on January 7 had, in fact, been heard thereby removing
any impediment to attendance by the Morris Defendant before me. By letter dated
January 5, 2010, the Morris Defendant asserted that not granting the
adjournment would render his motion moot and continued to urge written
disposition of the assessment of costs. By letter dated January 5, 2010,
the Plaintiff’s solicitor asserted that the Morris Defendant had effectively
admitted his availability for January 7, that the latter could make any
representations he wished on January 7, thereby completing the assessment of
costs process and that therefore the presence of the Corporate Defendants and
the outstanding Rule 120 motion were irrelevant.
[7]
On
January 6, 2010, I issued directions:
… Mr. Stinson would not necessarily agree
with the term “admits” used by Mr. McEwen in his letter dated January 5, 2010
to assert that Mr. Morris in his letter dated January 5, 2010 has admitted
his availability for January 7th, but Mr. Stinson does note
that the respective materials in the court record do not establish an
impediment for attendance tomorrow before him by Mr. Morris in his personal
capacity. Therefore, Mr. Stinson has directed that the assessment of costs
will proceed as scheduled tomorrow in… the Registry at Vancouver BC, but confined to issues
between the Plaintiff and the Defendant, Kerry Morris.
Mr.
Stinson has also directed that should the application by Mr. Morris for
leave to represent the corporate Defendants be successful, a timetable of
additional submissions in written form relative to only the corporate
Defendants will issue. On the assumption that Mr. Morris would prepare such written
materials, said timetable for the purpose of economy of approach would require
that he identify and explain why each issue of assessment of costs between the
Plaintiff and the corporate Defendants is or is not common to the issues
between the Plaintiff and Mr. Morris. If the application by Mr. Morris is not
successful, the assessment of costs tomorrow… shall be final and will have
unfolded as indicated in Mr. McEwen’s letter dated January 5, 2010: Mr.
Morris to speak on his own behalf and no one to speak on behalf of the
corporate Defendants.
[8]
On
January 7, 2010, at the beginning of the assessment of costs, I permitted the
Plaintiff’s solicitor to tender an amended bill of costs as he had used $120
per unit for counsel fees instead of the current $130 per unit. As well, I drew
the attention of the Morris Defendant to Rule 119 which provides that he could
“act in person” for himself. That is, he did not need leave of the Court to do
so.
[9]
Before
me, the Plaintiff’s solicitor led brief submissions to the effect that the
Defendants by their conduct had turned a simple case into a complicated one. He
noted two binders of documents comprising 131 tabs and over 500 pages most of
which were irrelevant, but all of which had to be reviewed and evaluated. A
trial affidavit by the Morris Defendant contained 135 paragraphs and
48 exhibits most of which were irrelevant. The Court of its own volition
directed Column IV costs because of the Defendants’ conduct. The Plaintiff’s
amended bill of costs is limited to $25,419.67 as compared to the actual
solicitor-client costs of $77,869. The Plaintiff’s solicitor relied on Tariff
B1(4) which provides that “the solicitor appearing on the assessment” can
prove, as an alternative to affidavit proof, the reasonableness of disbursements
and filed before me a bundle of receipts in support of the claimed
disbursements of $5,601.02 plus taxes.
[10]
The
Morris Defendant asserted before me that he had attempted to comply with the
Plaintiff’s requirement for full disclosure and that the Defendants did not
deliberately turn this matter from the simple case it was into the admittedly
complex one that it became. He then filed a document entitled “Submissions of
the Defendant Kerry Morris” (the Submissions) the first two paragraphs of which
read:
1. Applicability of the
Assessment for Costs as determined should not be applied against Kerry Morris
as there was never any corporate liability that could or would have flowed
through to Kerry Morris personally. The Plaintiff’s claim to this extent is based
solely on an agreement dated July 18th 2007 wherein the Plaintiff
sought to force the Defendant to sell its 50% share interest in Shields Fuels
Inc. (SFI), without acceptance of which, the Plaintiff threatened to shut down
that company (SFI) which company they eventually agreed to purchase from the
Plaintiff at a value far in excess of $1,400,000….
2. Upon acceptance and completion
of the August 2nd 2007 Agreement, the July 18th 2007
letter agreement was extinguished in accordance with clause 24 of the August 2nd
2007 Agreement and so none of the costs of either a decision in this matter,
nor of the Assessment of costs would ever under any circumstances have been the
responsibility of the Defendant Kerry Morris….
[11]
The
Morris Defendant asserted that he relied on Rule 400(1) which provides that the
“Court shall have full discretionary power over … costs.” I intervened to note
that I am not the “Court” as that term applies in Rule 400(1) and that he may
have misunderstood or misconceived the purpose of an assessment of costs and
the jurisdiction of an assessment officer: see Sander Holdings Ltd. v.
Canada (Minister of Agriculture), [2009] F.C.J. No. 720 (A.O.) and Marshall
v. Canada, [2006] F.C.J. No. 1282 (A.O.). Specifically, I noted that I do
not have the jurisdiction to apportion costs as contemplated by his paragraphs
1 and 2: see Milliken & Co. v. Interface Flooring Systems (Canada) Inc., [2003]
F.C.J. No. 1586 (A.O.) and paras. 23 – 57 and 280 of Halford v. Seed Hawk
Inc., (2009) 69 C.P.R. (4th) 1, [2006] F.C.J. No. 629 (A.O.) [Halford].
I discount most of the Submissions as the Plaintiff’s solicitor correctly noted
that they essentially re-argued the substantive issues of this litigation,
including the matter of costs, all of which were rendered res judicata by
the consent judgment.
[12]
The
Submissions requested that the lowest unit value in each range for counsel fee
items be assessed given unjust enrichment on the part of the Plaintiff. I
discount this position because the consent judgment has already set mid-range
Column IV values.
[13]
The
Submissions asserted that Vida Friesen’s trip from Port Hardy to Vancouver to prepare
her evidence was made as an employee of the Plaintiff addressing its business
generally and not this litigation specifically, and therefore travel claims of
$491.64 (mileage) and $144.60 (ferry) should be disallowed. It was not
necessary to bring Captain Sidney Stewart to Vancouver as the
Plaintiff was able to use a law firm in Kitimat to execute his affidavit. The
Plaintiff could have used a similar and cheaper approach for Ms. Friesen. The
Submissions asserted generally that the bill of costs should be discounted
given the complete absence of supporting evidence.
[14]
The
Plaintiff’s counsel noted that it became apparent only after some two years
into this litigation that the Morris Defendant had perjured himself. The
respective evidence of Ms. Friesen and Captain Stewart would have been
essential for that area of the Plaintiff’s case, i.e. the issue of conversion
of fuel. A local Kitimat law firm was used for Captain Stewart as his evidence
was more straightforward than that of Ms. Friesen. The Plaintiff’s counsel
decided that he had to meet with her personally as her evidence was more
complex. The rate of $0.51 per kilometre (964 kilometres) used by Ms. Friesen
is the standard in the industry, but the Plaintiff’s counsel conceded that a
lower rate might apply if required by the Tariff. The Plaintiff’s counsel noted
in response to my concern about the photocopy rate that $0.30 per page was
charged to his client. I am satisfied that the circumstances here permit
recovery of the cost of witnesses, i.e. Captain Stewart and Visa Friesen,
prepared but not ultimately called at trial: see para. 41 of Mercury Launch
& Tug Ltd., v. Texada Quarrying Ltd., [2009] F.C.J. No. 390 (A.O.) [Mercury
Launch].
[15]
I
noted in paragraph 60 of Aventis Pharma Inc. v. Apotex Inc., [2009]
F.C.J. No. 56 (A.O.) (Aventis 2009) the limits posed by the principle of
partial indemnity relative to a disbursement at a full solicitor-client rate for
work assigned by the supervising solicitor of record to an independent
solicitor. I do not think the circumstances here of an expenditure of $113.55
to use a Kitimat law firm to execute Captain Stewart’s affidavit as opposed to
the likely higher disbursement to bring him to Vancouver for a direct
meeting with supervising counsel falls within those limits and I therefore
allow said amount.
[16]
My
findings in Halford above, Biovail Corp. v. Canada (Minister of
National Health and Welfare) (2007), 61 C.P.R. (4th) 33,
[2007] F.C.J. No. 1018 (A.O.), aff’d (2008), 64 C.P.R. (4th) 475, [2008]
F.C.J. No. 342 (F.C.) [Biovail] and Abbott Laboratories v. Canada (Minister of
Health)
(2008), 66 C.P.R. (4th) 301, [2008] F.C.J. No. 870 (A.O.) [Abbott]
(under appeal) set out my views on the threshold of proof for categories of
costs and approach to their assessment. Paragraphs 68 to 72 inclusive of Abbott
above summarize the subjective elements and the notion of rough justice in
assessments of costs. In paragraphs 38 to 40 of Aventis 2009, I
reinforced my view that an assessment of costs should reflect the reality of
the demands of litigation. Paragraph 14 of Merck & Co. v. Apotex Inc.
(2009), 73 C.P.R. (4th) 423, [2008] F.C.J. No. 1656 (F.C.A.) held
that “in view of the limited material available to assessment officers,
determining what expenses are “reasonable” is often likely to do no more than
rough justice between the parties and inevitably involves the exercise of a
substantial degree of discretion on the part of assessment officers.”
[17]
Tariff
A3(1) provides that “a witness is entitled to be paid by the party who arranged
for or subpoenaed his or her attendance $20 per day plus reasonable travel
expenses, or the amount permitted in similar circumstances in the superior
court of the province where the witness appears, whichever is the greater.”
Appendix C, Schedule 3 (Fees Payable to Witnesses), paragraph 2(a) of the British
Columbia Supreme Court Rules (the BC Rules) provides for $0.30 per
kilometre for distances between eight (8) and 200 kilometres. Paragraph 2(b) of
the BC Rules provides for return airfare for distances over 200 kilometres plus
$0.30 per kilometre to and from the departure and arrival airports. Paragraph 3
of the BC Rules provides for reasonable allowances for meals and accommodation.
Appendix C, Schedule 2 (Fees Payable to Sheriff), paragraph 8 provides $0.45
per kilometre (except for service of process on an individual). My practice
has been to assess the travel costs incurred by potential witnesses during
hearing preparation activities at the tariff mileage rates specified for
witnesses ultimately appearing at the hearing. As such, I reduce the rate of
$0.51 per kilometre used for Ms. Friesen to $0.30 per kilometre.
[18]
As
noted above, the submissions from the Morris Defendant are of minimal
assistance, but I perceive them as general opposition to the bill of
costs. Effectively, these circumstances are as if the Morris
Defendant had advanced no materials given the general absence of relevant
representations which could have assisted me in identifying issues and making a
decision. My view, often expressed in comparable circumstances, is that the Federal
Courts Rules do not contemplate a litigant benefiting by having an
assessment officer step away from a neutral position to act as
the litigant’s advocate in challenging given items in a bill of costs.
However, the assessment officer cannot certify unlawful items, i.e. those
outside the authority of the judgment and the tariff. I examined each item
claimed in the bill of costs and the supporting materials within those
parameters. Certain items warrant my intervention.
[19]
The
total cost for Ms. Friesen was $636.24 consisting of $491.64 (964 kilometres x
$0.51 per kilometre) plus $144.60 (ferry). The Plaintiff’s law firm coded the
$636.24 as $612.83 plus $23.41 GST. GST at 5% would have to be applied to
$468.20 to give $23.41. The sum of $468.20 + $23.41 is $491.61. The sum of
$468.20 + $144.60 is $612.80. I would think that the official ferry receipts in
the record already include any taxes, yet the bill of costs still claims GST on
their amounts ($72.30 each). As I am unclear from the bill of costs on tax
payable on either mileage or the final amount on a ferry ticket, I have
excluded these amounts from the GST calculation. I do not think based
on the material before me and the submissions that any further GST exclusion
calculation additional to the simple one I endorsed on the amended bill of
costs consistent with the above considerations is warranted: see Abbott
above, Aventis 2009 (paras. 72-73) and Aventis Pharma Inc. v. Apotex
Inc., [2008] F.C.J. No. 1238 (A.O.) (para. 31).
[20]
Paragraph
65 of Abbott above summarized my practice for photocopies including the
need “to strike the appropriate balance between the right of a successful
litigant to be indemnified for its reasonably necessary costs and the right of
an unsuccessful litigant to be shielded from excessive or unnecessary costs.”
The proof here was less than absolute. I allow the 3,592 pages claimed for
photocopies, but at the reduced rate of $0.25 per page. The balance of the claimed
disbursements for various services such as bailiffs, verbatim reporters,
searches, couriers etc. are allowed as presented.
[21]
I
indicated to the Plaintiff’s counsel that the consent judgment for mid-Column
IV costs could not purport to vary the disposition of interlocutory awards of
costs unless the latter contained express provisions to so permit: see para. 2
of Martselos v. Poitras, [2009] F.C.J. No. 1205 (A.O.). However, I also
indicated that I might leave the claimed mid-Column IV counsel fees unchanged
as there is some overlap between Column IV values and the default Column III
values prescribed by Rule 407. The Court has in the past directed mid-level or
mid-range costs which the parties and the assessment officer, in for example Aventis
2009 and Mercury Launch above, have construed as permitting
fractions of units. Here, there were no such directions in the interlocutory
awards of costs. I have, except in one instance, simply removed the fraction
from a claimed amount leaving the whole number falling within the overlap of
Columns IV and III. For fee item 6 (appearance of 2 hours at 2.5 units per hour
for the motion for delivery of a supplemental affidavit of documents),
I leave the claimed 5 units untouched as I have previously held that when
I think that the available choices of for example 1, 2 or 3 units per hour do
not adequately reflect the appropriate indemnification, I apportion them (here,
my allowance being 2 and 3 units per hour respectively for the two hours):
see para. 8 of Inter-Church Uranium Committee Educational Co-Operative v. Canada (Atomic
Energy Control Board), [2006] F.C.J. No. 1204 (A.O.) and para. 10 of Biovail
above.
[22]
As
I raised my concerns in turn with the Plaintiff’s counsel, the Morris Defendant
was of no assistance in their resolution. In International
Taekwon-Do Federation v. Choi, [2008] F.C.J. No. 1402 (A.O.), I
considered the allowability of certain items in the absence of a full canvass
as here of their associated issues. I indicated to the Plaintiff’s counsel
that some might argue that the claim here under counsel fee item 12 (notice to
admit facts or notice for production) for the Statement of Agreed Facts should
be disallowed because such work is already subsumed in fee item 13
(preparation for trial). Counsel argued that it was an essential document and
involved work common to the sort of work under fee item 12. I accept that
submission in these limited circumstances and allow it as presented.
[23]
The
Plaintiff claimed a fee item 27 (such other services as the assessment officer
may allow) respectively for work relating to arrest of the barge “MM Orca”, to demanding
and obtaining particulars to counterclaim and to obtaining security and to
consenting to release of said barge. In paragraphs 12 to 15 of Mitchell
v. Canada (M.N.R.), [2004] 1 C.T.C. 149, [2003] F.C.J. No. 1530 (A.O.), I
held that fee item 27 addresses the professional services of counsel not
already addressed by fee items 1 to 26 and that it can be claimed more than
once. Paragraph 10 of Gardner v. Canada (A.G.), [2008]
F.C.J. No. 284 (A.O.) is my more recent consideration of fee item 27 in a
similar vein.
[24]
I
think that admiralty litigation involves unique process at certain stages
distinct from other types of litigation. I therefore allow a fee item 27 for
each of the arrest and release services in these circumstances of the absence
of a full and reasoned canvass. I think that an argument could be made that the
nature of work to obtain particulars is distinct from that to draft a pleading,
i.e. fee item 2 for the defence to counterclaim, but I would prefer a fuller
canvass of the implications and therefore disallow the fee item 27 claim for
particulars.
[25]
On
January 8, 2010, the Morris Defendant served and filed a Notice of Abandonment
of his Rule 120 motion. The Plaintiff’s counsel that same day claimed
costs of the abandoned motion further to Rules 402 and 411. I issued a
timetable calling for written submissions.
[26]
The
Plaintiff’s counsel argued that 6.5 units (mid-Column IV) should be allowed for
fee item 5 (preparation for a contested motion) because the abandonment was
subject to the consent judgment. I held above that a judgment on the merits
cannot purport to vary the terms of an interlocutory award of costs. Similarly,
a judgment on the merits cannot purport to vary the default Column III costs
framed by Rules 402 and 407. The Plaintiff’s counsel had to prepare and serve a
reply motion record. I allow 6 units from the available Column III range of 3 –
7 units. I am satisfied that the claimed amount of $104 for photocopies (at
$0.25 per page) should be allowed as presented.
[27]
In
all other respects, I find the Plaintiff’s costs in order. The Plaintiff’s
amended bill of costs, presented at $25,419.67, is assessed and allowed at
$25,324.44.
“Charles
E. Stinson”
Vancouver,
BC
February
25, 2010
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