Date:
20121029
Docket:
T-299-05
Citation:
2012 FC 1257
Ottawa, Ontario,
October 29, 2012
PRESENT: The
Honourable Mr. Justice Scott
BETWEEN:
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CATHERINE LEUTHOLD
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Plaintiff
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and
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CANADIAN
BROADCASTING CORPORATION
and
JERRY MCINTOSH
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Defendants
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REASONS FOR
ORDER AND ORDER
I. Introduction
[1]
Further
to this Court’s judgment rendered on June 14th, 2012 (Leuthold v
Canadian Broadcasting Corporation, 2012 FC 748) [Leuthold], the
Defendants bring this motion pursuant to Rule 403 of the Federal Court Rules,
SOR/98-106 [Rules], requesting that an order be made containing
directions to the assessment officer with respect to costs.
II. Relief
Sought
[2]
More
particularly the motion, in its conclusion, seeks:
[translation]
1. An
order that the costs be awarded in their favour as of August 9, 2005, at double
the tariff set out and in accordance with the upper scale of column IV of
Tariff B;
2. That
the Court give directions to the assessment officer allowing assessment of
costs for:
a)
a
second attorney for all stages of proceedings, including the hearing;
b)
the
fees and disbursements of the experts heard at the hearing;
c)
all
disbursements, including travel expenses for witnesses, photocopy fees, online
research fees, transcript fees for examinations for discovery and the hearing,
long distance fees, fax fees, postage and courier fees and other administrative
fees;
d)
interest
on fees and disbursements since June 14, 2012;
e)
costs
for this motion;
f)
any
other order that this Honourable Court could consider fair and reasonable.
[3]
For
the following reasons, the Defendants’ motion is granted in part.
III. Facts
[4]
On
February 18th, 2005, the Plaintiff, Catherine Leuthold, began her
action for copyright infringement, claiming at that
time recovery of her damages on the basis of 3,080.71 CAD (2,500.00 USD)
for each unauthorized reproduction of the Stills and each broadcast of the
Stills, against the Defendants, the Canadian Broadcasting Corporation [CBC] and
Jerry McIntosh (the Defendants).
[5]
On August 9th, 2005, the Defendants served an offer to
settle (offer) to the Plaintiff for an amount of thirty seven thousand five
hundred dollars US (37 500 USD) plus interest. The offer also included the
costs of the action up to the date of the offer on a party and party basis.
[6]
The
Defendants’ offer contained no admission of liability for infringements and was
rejected by the Plaintiff.
[7]
Plaintiff
made three offers to settle.
[8]
The
Defendants conduct led to approximately two additional years of proceedings.
[9]
The
Plaintiff’s taxable income in 2006 was 20,661 USD.
[10]
The
trial began on February 6th, 2012.
[11]
The
Plaintiff sought exemplary damages against Defendant CBC, for 25,000 CAD,
and against Defendant McIntosh, for 10,000 CAD.
[12]
The
Plaintiff had also been asking for 15, 000 CAD in punitive damages but
abandoned that portion of her claim at the trial.
[13]
The
Plaintiff also asked for an accounting for profits.
[14]
The
Defendants admitted infringement for six communications to the public.
[15]
The
Defendants refused to admit any infringement of the Plaintiff’s rights.
[16]
The
opinion of the Defendants’ expert was not adopted by the Court.
[17]
The
Court refused to order an accounting for profits or an injunction (Leuthold
at paras 147 and 161).
[18]
The
Defendant McIntosh was not held personally responsible for infringement because
his actions were not the result of a deliberate act or any negligence on his
part (Leuthold at para 171).
[19]
The
Court refused to order exemplary damages against the Defendants because the
infringements were the result of honest mistakes (Leuthold at para 159).
[20]
On
June 14th, 2012, the Defendant, CBC, was ordered to pay, jointly and
severally with each Broadcasting Distribution Undertaking [BDU], 19,200.00 USD in damages to the Plaintiff (cf. Leuthold).
[21]
The Court ordered a greater amount per infringement than what was
claimed.
[22]
The CBC was also ordered to pay the Plaintiff an additional 168.74
CAD in generated revenues.
[23]
The Court deferred its decision on costs to a special hearing to
be set after the parties received the Court’s judgment (Leuthold at para
174).
[24]
On July 13th, 2012, the Defendants filed their notice
of motion in accordance with Rule 403 of the Rules.
[25]
On July19th, 2012, the Court set a date for the hearing
of the motion to Thursday, August 23rd, 2012.
[26]
On August 7th, 2012, the Defendants filed their written
representations.
[27]
On August 14th, 2012, the Plaintiff filed her written
representations.
IV. Issues
1.
Are the Defendants entitled to their
costs at double the rate they are assessed at?
2.
Are the Defendants entitled to have
their costs against the Plaintiff assessed at the upper end of column IV of
Tariff B?
V. Relevant
legislation
[28]
The
applicable rules of the Federal Court Rules, SOR/98-106, are appended to
this decision.
VI. Submissions
of the parties on issue 1
1. Are
the Defendants entitled to their costs at double the rate they are assessed at?
A. The
Defendants’ submissions
[29]
The
Defendants argue they are entitled to double their costs from the date they
served their offer. They argue that the two conditions required by Rule 420(2)
of the Rules are met, namely:
(1) The
Plaintiff obtained a judgment less favourable than the offer (the offer was for
37, 500 USD while the Plaintiff obtained a judgment for 19,200 USD plus 168.74
CAD);
(2) The
offer was made at least 14 days before the trial began (the offer was served
August 9th, 2005 and the trial began on February 6th,
2012), and it was not withdrawn and did not expire before the trial began.
[30]
Based
on the above, the Defendants argue that they should receive their costs at
twice the rate decided upon, from the date they served their offer to the date
of judgment. They emphasize that the offer made was nearly double the judgment
received by the Plaintiff. The Defendants also refer the Court to the judgment
of Justice D. Tremblay-Lamer in ITV Technologies Inc v WIC Television Ltd,
2005 CF 744 at para 11.
B. The
Plaintiff’s submissions
[31]
The
Plaintiff does not dispute any of the factual claims above. She does not agree,
however, that based on those facts, the Defendants should receive double their
costs.
[32]
The
Plaintiff submits that the awarding of double costs does not occur
automatically once the conditions of Rule 420(2) are satisfied. Their award is
still subject to the absolute discretion of the Court pursuant to Rule 400. In
deciding how to exercise that discretion, the Plaintiff submits that the Court
should take into account the factors listed in Rule 400(3).
[33]
The
Plaintiff notes firstly that the Defendants’ offer contained no admission of
liability or wrongdoing. The Plaintiff then underlines that the Plaintiff had
herself made three good-faith offers to settle and that, with regards to the
first offer, the Defendants had asked for an extension of the deadline to
accept but then failed to reply by the extended deadline. This, the Plaintiff
asserts, made the extension request appear like nothing more than a delaying
tactic.
[34]
Dealing
next with her refusal of the Defendants’ offer, the Plaintiff asserts that the
Defendants did not provide her with sufficient and reliable information
concerning the Defendants’ advertising and subscription revenues as well as the
number and scope of the infringements. There was also a complete lack of
information as to the BDUs’ revenues. Finally, when the Plaintiff learned of
the hundreds of potential infringements by the BDUs, she claims this justified
refusing the Defendants’ offer.
[35]
The
Plaintiff additionally notes that the lack of financial disclosure is what led
to her request for an accounting of profits.
[36]
The
Plaintiff’s attorney also underlined certain facts related to the length of
time that elapsed before discovery could take place.
[37]
She
then concluded that the Defendants’ conduct led to approximately two additional
years of proceedings.
VII. Analysis
of the first issue
A. General
principles of costs
[38]
The
basic principle in the awarding of costs is that the Court has “full
discretionary power over the amount and allocation of costs” (Rule 400(1) of
the Rules). The Court may consider the factors listed in Rule 400(3) in
exercising that discretion. The case law has added another principle, namely
that the Court’s goal in awarding costs should be “a compromise between compensating a successful party and
not unduly burdening an unsuccessful party” (Apotex Inc v Wellcome Foundation Ltd, 84 CPR (3d) 303, 159 FTR 233,
at para 7).
1. Are
the Defendants entitled to their costs at double the rate they are assessed at?
[39]
The
Defendants are entitled to their costs at double the rate they are assessed at
pursuant to Rule 420(2) of the Rules for the following reasons.
[40]
Firstly,
the Defendants’ offer complies with the conditions required by Rule 420 to
justify being awarded double costs at the rate assessed by the Court, namely:
(1) The
Plaintiff obtained a judgment less favourable than the offer (the offer was for
$37, 500 US while the Plaintiff obtained a judgment for $19 200 US plus $168.74
CAN);
(2) The
offer was made at least 14 days before the trial began (the offer was served
August 9th, 2005 and the trial started on February 6th,
2012), and it was not withdrawn and did not expire before this later date.
[41]
The
Plaintiff acknowledges that the Defendants’ offer met the conditions of Rule
420 of the Rules. She does not, however, agree that double costs should
necessarily be awarded. The Plaintiff reminds the Court that it has absolute
discretion and is not required to award double costs in the face of an offer
that meets all conditions.
[42]
To
support this assertion, the Plaintiff relies on Canwell Enviro-Industries Ltd v Baker Petrolite Corp, 2002 FCA 482 [Baker], which at paragraph 4(b) states:
“As I understand Rule 420(2)(b), where a
defendant makes an offer to a plaintiff which is rejected and the plaintiff
then fails to obtain judgment (which is the case here), the defendant is
automatically entitled to a doubling of the taxable fees thereafter
"unless otherwise ordered by the Court". In this situation there is
no need for the defendant to show that the offer was more generous to the
plaintiff than the outcome. I am inclined to order otherwise than a doubling,
however…”
In that instance the Court of
Appeal then went on to increase the Defendants’ costs by 50% (rather than 100%)
because it believed the offer was not a true compromise (the notion of
"compromise (or incentive to accept)" has since been analyzed as an
essential element of an offer satisfying the conditions of Rule 420(2) (cf. M.K.
Plastics Corp. v Plasticair Inc, 2007 FC 1029 at para 39).
[43]
The
Plaintiff’s argument for refusing double costs can be distinguished from Baker,
however, in that the Plaintiff never argued before us that the Defendants’
offer was not a compromise. When treating the Defendants offer in the context
of Rule 400(3)(e) (“any written offer to settle”), the Plaintiff focuses
more on the fact that she did not have sufficient information to make a
reasoned decision on the offer. This lack of sufficient information, the
Plaintiff argues, was mostly due to the Defendants’ uncooperativeness in
providing information to evaluate her claim. She also underlines the fact that
she made three good-faith offers to the Defendants.
[44]
It
is the Plaintiff’s position that the Court should consider all the Rule 400(3)
factors in exercising its discretion in awarding double costs. The only case
where a Court recognized factors other than those related to the quality of
offer was Monsanto Canada Inc v Schmeiser, 2002 FCT 439 at paras 14-15.
[45]
It
is the Court’s view that it must look primarily at the factors that existed at
the time of the offer when deciding whether to double costs. In Sun
Construction Co. Ltd v Canada, 2001 FCT 447 at para 39, the Court cites Mr.
Justice Orsborn in Burton v Global Benefit Plan Consultants Inc, (1999)
183 Nfld. & P.E.I. 86 at paras 10 and 11 [Burton], on the notion of
offers to settle:
[10] After reviewing decisions
from other jurisdictions I noted, at paras. 21-22:
“It is clear that, across Canada, the imposition of severe and adverse cost consequences is seen as necessary in
order to encourage the making and acceptance of reasonable settlement offers
prior to trial. . . . ”
[11] . . .
“Faced with an offer to settle, a party
must objectively assess the economics of proceeding further. As Pattison
phrased it, this “... is where the substantive and economic analyses of the
value and risk of seeing a lawsuit through to judgment converge”. A party may
decide to accept the offer or to itself make an offer. If, having assessed the
offer, it chooses to do nothing, that choice carries with it the implicit
determination that the party is satisfied that it will achieve a better result
at trial. This is the party's own determination to make - it knows the
strengths and weaknesses of its case. But such a determination also indicates
that the party is willing to accept the risk of proceeding further. There is a
willingness to accept the consequences of being wrong. A party who has offered
to settle should not bear the expense of proceeding to trial because of the
other party's over-optimistic assessment of its case . . . ”
[46]
The
facts in the case at bar show that the Defendants’ offer was for 37,500 USD plus interest
and costs. The Plaintiff had consented to the use of five of her photographs
for 2,500 USD (Leuthold at para 21). Furthermore, Ms. Leuthold, was not
a wealthy person at the time of the offer. The Defendants argue that the
Plaintiff held an “over-optimistic” assessment of her claim and unwisely
refused their reasonable offer.
[47]
The Plaintiff counters by arguing that “it is not in the public
interest to deter litigants from pursuing a reasonable claim
owing principally to a fear of an award of costs”. The Plaintiff insists the
award sought (i.e. 21, 554, 954.25 CAD), while on its face enormous, was based
on a reasonable evaluation of damages per infringement. The amount was large because
of the number of potential infringements, particularly by the BDUs. The issue
of the “number of infringements that result from a transmission by a
programming undertaking to [numerous] BDUs” was important (Plaintiff’s Written
Representations [PWR] at para 27). The resolution of the question required a
careful analysis of sections of the Copyright Act,
RSC 1985, c C-42 [Copyright Act] and the Broadcasting
Act, SC 1991, c 11 [Broadcasting Act], as well as the
testimonies of two expert witnesses. A claim that required such extensive
analysis cannot be easily dismissed as unreasonable. Finally, the Plaintiff
adds that “[t]he importance of the issues in dispute justifies relieving the
Plaintiff of the burden of paying substantial [...] costs” (PWR at para 29).
[48]
The
Court disagrees with the Plaintiff’s argument that the importance of the issue
meant that her decision to litigate the issue was reasonable. Given the offer
from the Defendants, the Plaintiff’s decision to forego the offer and risk
spending large amounts of money litigating a claim is not necessarily
reasonable. As mentioned in the passage taken from Burton, cited above,
a party that refuses a reasonable offer to settle is considered to be confident
that it will be awarded more at trial. If you are not confident, then you
should accept a reasonable offer or be willing to accept the risk of proceeding
further.
VIII. Submissions
of the parties on issue 2
2. Are
the Defendants entitled to have their costs against the Plaintiff assessed at
the upper end of column IV of Tariff B?
A. The
Defendants’ position
[49]
The
Defendants referred the Court to Rule 407 of the Rules that allows the
Court to assess costs at a rate other than column III of the table of Tariff B.
They also underline the Court’s ability to award costs according to a higher
column and its “full discretionary power” as to the amount of costs referred to
in Rule 400(1) of Rules. They cite Novopharm Limited v Sanofi-Aventis
Inc, 2007 FCA 384 at paras 8-10, by way of
confirmation.
[50]
The
Defendants then turned to Rule 400(3) of the Rules that provides a list
of factors to consider. The
Defendants point to the following factors as favouring both the award of costs
according to the upper end of column IV and costs for having a second senior
attorney participate in the proceedings:
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400. (3) In
exercising its discretion under subsection (1), the Court may consider
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400. (3) Dans
l’exercice de son pouvoir discrétionnaire en application du paragraphe (1),
la Cour peut tenir compte de l’un ou l’autre des facteurs suivants :
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(a) the
result of the proceeding;
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a) le
résultat de l’instance;
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(b) the
amounts claimed and the amounts recovered;
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b) les
sommes réclamées et les sommes recouvrées;
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(c) the
importance and complexity of the issues
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c) l’importance
et la complexité des questions en litige
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[51]
The
Defendants concede that the Plaintiff succeeded in her claim for copyright
infringement for six unauthorized transmissions of her work but remind the
Court that these infringements were admitted in the joint book of documents
before the trial started.
[52]
Furthermore,
they submit, the Plaintiff was unsuccessful in the majority of her other
claims, notably, accounting for profits, exemplary damages and an injunction.
The Defendants therefore conclude that the results of the proceedings were
largely in their favour.
B. The
Plaintiff’s position
[53]
The
Plaintiff responds with her own list of claims on which, in addition to the
copyright infringement claim, she was successful, namely a claim for delivery
up, profits of the Defendant CBC, and the destruction of electronic copies of
infringing works. Thus, according to the Plaintiff, she was the more successful
of the two parties.
[54]
The
Plaintiff also insists that the Defendants never admitted to the infringement.
She cites the Defendants’ Re-Amended Defence dated April 3, 2009, as
containing, rather, a number of defences designed to avoid liability for the
infringements.
C. Parties’
respective positions on Rule
400(3)(b) and Rule 400(3)(c)
(1) The
amounts claimed and the amounts recovered
(a) Defendants’
position
[55]
The
Plaintiff’s total claim in damages for copyright infringement against the
Defendants totalled 21, 554,954.25 CAD. The
Defendants submit that the claim was grossly exaggerated as evidenced by the
award granted on June 14th, 2012, which was only equivalent to 0.1%
of the claim.
[56]
As
a result of the amount at stake, further to the amendments introduced by
Plaintiff in 2007, the Defendants submit that the matter became more lengthy
and complex. For example, more than one pre-trial conference was required.
[57]
The
Defendants also argue that the CBC is a public organization and, therefore, a
large amount of taxpayer money was expended due to the outlandish amount of the
claim.
[58]
Lastly,
the Defendants note that had the Plaintiff valued her damages around the amount
that she was awarded (i.e. around 20,000 USD), her action would have been
governed by Rules 292 to 299 of the Rules. Her action would have been
far less costly. This is another factor to be considered under Rule 400(3)(n)
of the Rules.
[59]
For
all these reasons, the Defendants argue that the exaggerated amount of the
Plaintiff’s claim favours an assessment for costs at the upper end of column IV
of Tariff B, as well as for the costs for two attorneys at each step of the
litigation from the date the offer was served.
(b) Plaintiff’s
position
[60]
The
Plaintiff responds that the difference between the amount claimed in damages
from that awarded is the result of the Court’s interpretation of both the
license agreement of October, 2002 and the number of infringements the
Plaintiff alleged.
[61]
Had
the Court ruled in favour of the Plaintiff on those important, non-trivial
issues and awarded the same amount (3,200 USD) that it did for the six
infringements, the total would have been close to the total amount claimed by
the Plaintiff.
[62]
For
these reasons, the Plaintiff argues that her claim cannot be considered
frivolous, unreasonable or exaggerated.
[63]
Additionally,
the Plaintiff reminds the Court that it awarded a higher amount per
infringement than she claimed and rejected the position of the Defendants’
expert as to the value of the photographs or a license of same.
(2) The
importance and complexity of the issues
(a) Defendants’
position
[64]
The
Defendants note firstly that intellectual property cases are generally more
complex than other types of litigation and that it is not unusual for costs to
be assessed at the upper end of column IV of Tariff B. They cite Novopharm
Limited v Eli Lilly and Company, 2010 FC 1154 at paras 5 and 7 [Novopharm
Limited] and Bonds v Suzuki Canada Inc, 2003 FCT 611 at para 33,
in support of those claims.
[65]
They
argue that the case raised a number of difficult questions that required a
close analysis of the Copyright Act and the Broadcasting
Act.
[66]
The Defendants also submit that the case
was long, expensive and required two experts and five ordinary witnesses. The
numerous proceedings that took place before the trial required, according to
them, the presence of two attorneys.
[67]
Finally,
the Defendants point out that the amount of work due to the complexity of the
matter is a factor that justifies costs being assessed at the upper end of
column IV of Tariff B. It also justifies that the costs for two attorneys at
each step of the litigation be awarded.
(b) Plaintiff’s
position
[68]
Due
to its nature and the number of issues and parameters that were dealt with, the
Plaintiff takes the position that the case was important but not very complex.
[69]
The
Plaintiff emphasizes the importance of the issues treated. The case involved,
according to Plaintiff’s counsel, some very important issues of copyright and
broadcasting law, including the interpretation of paragraphs 2.4(1)(c)
and 3(1)(f) of the Copyright Act, as well as the issue of quantum
to be awarded in the context of negotiated licenses.
D. Plaintiff’s
additional Rule 400(3) arguments
[70]
The
Plaintiff also argues that applying a number of other factors in Rule 400(3) of
the Rules to the facts should deter the Court from awarding double costs
at the upper end of column IV of Tariff B.
[71]
The
additional factors to be considered are:
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400. (3) In exercising its discretion under subsection (1),
the Court may consider
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400. (3) Dans l’exercice de son pouvoir discrétionnaire en
application du paragraphe (1), la Cour peut tenir compte de l’un ou l’autre
des facteurs suivants :
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. . .
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[…]
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(d) the
apportionment of liability;
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d) le
partage de la responsabilité;
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. . .
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[…]
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(h) whether
the public interest in having the proceeding litigated justifies a particular
award of costs;
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h) le
fait que l’intérêt public dans la résolution judiciaire de l’instance
justifie une adjudication particulière des dépens;
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(i) any
conduct of a party that tended to shorten or unnecessarily lengthen the
duration of the proceeding;
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i) la
conduite d’une partie qui a eu pour effet d’abréger ou de prolonger
inutilement la durée de l’instance;
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|
. . .
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[…]
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(k) whether
any step in the proceeding was
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k) la
question de savoir si une mesure prise au cours de l’instance, selon le cas :
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(i) improper,
vexatious or unnecessary, or
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(i) était
inappropriée, vexatoire ou inutile,
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(ii) taken
through negligence, mistake or excessive caution;
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(ii) a
été entreprise de manière négligente, par erreur ou avec trop de
circonspection;
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|
. . .
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[…]
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|
(o) any
other matter that it considers relevant
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o) toute
autre question qu’elle juge pertinente.
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(1) The apportionment of liability
[72]
On
this factor, the Plaintiff points out that solely the Defendants were found
liable for both the infringements and the ambiguity in the license.
(2) Whether
the public interest in having the proceeding litigated justifies a particular
award of costs
[73]
The
Plaintiff argues that the issues debated and decided upon in this matter are of
great importance for copyright law, both in Canada and generally in other
Countries. Specifically, the Plaintiff points to 1) the question of the number
of infringements that result from a transmission by a programming undertaking
to multiple BDUs; and 2) the interpretation and use of copyright licenses in
determining the amount awarded for infringement.
[74]
The
Plaintiff argues that had she been deterred by the rules governing costs, these
important issues would never have been litigated. It is in the public interest
not to deter a reasonable and important claim from coming before the courts due
to a fear of costs awards.
(3) Any
conduct of a party that tended to shorten or unnecessarily lengthen the
duration of the proceeding
[75]
The
Plaintiff’s attorney also underlined the following facts:
(1) He
had to send seven letters in order to finally set a date for the examination
for discovery;
(2) Mr.
McIntosh was not in a position to answer the Plaintiff’s questions concerning
the CBC’s intentions regarding the License;
(3) Mr.
McIntosh was unable to answer questions of a technical nature;
(4) Mr.
McIntosh was unable to identify for the Plaintiff an individual who could
answer her questions;
(5) Defendants
refused to provide another witness for discovery;
(6) The
Defendants made 39 undertakings during the examination of Mr. McIntosh, on
December 7, 2005, and took 10 months to fulfill them;
(7) In
the fall of 2007, the Plaintiff, through independent research, discovered the
approximate number of BDUs that carried Newsworld programming and the
fact that the scope of alleged infringements included hundreds of BDUs.
[76]
He
then concluded that the Defendants’ conduct led to approximately two additional
years of proceedings.
[77]
All
in all, the Plaintiff submits that the Defendants’ uncooperative conduct in the
context of examination for discovery led to approximately two additional years
of proceedings. The Plaintiff highlights the independently discovered
information regarding the number of BDUs that carried Newsworld
(information she had requested from the Defendants), which necessitated further
examination, additional proceedings and a Re-Amended Statement of Claim.
(4) Whether
any step in the proceeding was improper, vexatious or unnecessary, or taken
through negligence, mistake or excessive caution
[78]
The
Plaintiff submits that the Defendants’ actions in delaying and being unprepared
for examination for discovery mentioned above is as an example of improper, if
not, vexatious conduct.
[79]
The
Plaintiff also labels the fact that Defendants raised many defences throughout
the seven years of proceedings, only to drop them at trial, as another example
of improper, if not vexatious conduct.
(5) Any
other matter that the Court considers relevant
[80]
The
Plaintiff submits that the Court should consider the relative strength and
resources of the parties under this factor. The Plaintiff had very limited
resources with which to pursue her claim (20,661 USD in 2006) compared to the
Defendants’ resources.
[81]
The
Plaintiff also underlines the fact that the Defendants’ expert’s opinion was
not adopted by the Court as relevant to the awarding of costs for said
expertise.
IX.
Analysis
of the second issue
2. Are
the defendants entitled to have their costs assessed at the upper end of column
IV of Tariff B?
[82]
The
Defendants are not entitled to have their costs assessed at the upper end of
column IV of Tariff B.
[83]
Rule
407 of the Rules specifies that party-and-party costs are assessed
according to column III of the table of Tariff B, unless the Court orders
otherwise. As both parties submit, the factors the Court may consider when
assessing the scale of costs are those found in Rule 400(3).
[84]
The
Defendants highlighted three factors that they believe justify having their
costs assessed at the upper end of column IV of Tariff B, namely, the result of
the proceedings, the amounts claimed and amounts recovered, and the importance
and complexity of the issues.
[85]
With
respect to the complexity factor, the Defendants correctly point out that
intellectual property cases are generally more complex and are often assessed
at the upper end of column IV of Tariff B (the default scale, column III,
usually applying to cases of average complexity). The Defendants cite Novopharm
Limited, cited above, at paras 5 and 7. In Sanofi-Aventis Canada Inc
v Novopharm Ltd, 2009 FC 1139 at para 13, Justice Snider notes:
[13] In my view, the upper end of Column IV is
appropriate, and not simply because this award “splits the difference”. A
review of recent jurisprudence on the issue of awards in intellectual property
trials indicates that this scale recognizes the significance and complexity of
the various issues in such a trial (see, for example, Johnson & Johnson
Inc. v. Boston Scientific Ltd., 2008 FC 817, 2008 FC 817, [2008] F.C.J. No.
1022, at para. 15; Adir Costs, above, at para. 9-11; Kirkbi AG v.
Ritvik Holdings Inc., 2002 FCT 1109, 2002 FCT 1109, [2002] F.C.J. No. 1474,
at para. 10)…
[86]
The
Defendants also cite a copyright case where column IV of Tariff B was applied
on account of “volume and nature of the work involved” (cf. Bonds v Suzuki
Canada Inc, 2003 FCT 611 at para 33).
[87]
Both
parties have submitted, in their representations, that this case involved a
large amount of work and legal analysis.
[88]
The
Defendants also argue that the Plaintiff failed on a number of claims that she
brought, notably, claims for an accounting for profits, exemplary damages and
an injunction. The Plaintiff was nonetheless successful in her central claim
for infringement which, at any rate, was subject to an admission on the part of
the Defendants. The Defendants were thus required to expend time and resources
on a number of claims that were ultimately not accepted by the Court.
[89]
The
Plaintiff rightly asserts that she was not only successful on her infringement
claim but also on her claims for delivery up, profits of the CBC and the
destruction of electronic copies of infringing works. The Plaintiff also
underlines that the Defendants never did admit liability for infringement. In
the Court’s view this last issue is divided.
[90]
The
last factor the Defendants raise is the amounts claimed and amounts recovered
(Rule 400(3)(b)). The Defendants submit that the amount claimed was
completely exaggerated (around 100 times more than what was awarded). It
increased the complexity of the case and required them to devote more time to
litigating it. The Plaintiff, as mentioned above, submits that the award sought
was based on a reasonable evaluation of damages per infringement.
[91]
The
Plaintiff, in turn, lists the following additional factors which the Court
should take into consideration:
(1) the
public interest in having the proceeding litigated (400(3)(h)).
(2) the
Defendants’ unwillingness to cooperate throughout the examination for discovery
(discussed above in section V) (400(3)(i) and (k));
(3) the
relative strength of the parties in terms of resources (400(3)(o));
(4) the
fact that the opinion of Defendants’ expert was not adopted by the Court
(400(3)(o)).
[92]
With
regards to the Defendants’ uncooperative behaviour (Rule 400(3)(i)), the
Court finds that the Defendants’ comportment with respect to the discovery of
Jerry McIntosh bordered on vexatious (cf. Apotex Inc v Sanofi-Aventis,
2012 FC 318 at para 15). On the applicable column of the tariff, the Court
concludes that the appropriate column is column III of tariff B, for the
following reasons. The case did raise some important issues, yet these were not
as complex as the Defendants assert. Firstly, the expert opinions filed dealt
with the scope of the license on the one hand and the value of the photographs
on the other. The opinions had no link to the issue of the number of
infringements and the consequent entitlement to the very significant amount of
damages claimed. Secondly, while it is true that costs in intellectual
property cases are often awarded on column IV, in the majority of such
instances, the Court is faced with patent litigation involving pharmaceuticals
where the amounts at stake and the duration of the cases, discoveries and
procedural incidents far eclipse the five witnesses and two experts heard in
the present case.
[93]
A
final sub-issue on which the parties disagree is whether the Defendants should
receive costs for a second attorney. The Defendants cite Novopharm Limited,
cited above, at para 8, where costs for second counsel were allowed due
to the large amount of work and complex issues litigated. Another guiding
principle behind this practice is “that party and party costs should bear a
reasonable relationship to the actual costs of litigation” (Porto
Seguro Companhia de Seguros Gerais v Belcan SA, 2001 FCT 1286 at para 24),.
[94]
The Plaintiff opposes the awarding
of costs for a second attorney. Having concluded that the case was not of such
complexity as to warrant the allowing of costs under column IV of Tariff B, the
Court fails to see how such a case can warrant granting costs for a second
attorney. For one, the Plaintiff was able to conduct her case with just one
attorney. Additionally, the second attorney’s involvement at trial was limited
to the cross-examination of the Plaintiff’s expert witness. Consequently, the
Court rejects the claim for costs for a second attorney.
ORDER
In light of the
reasons above THIS COURT ORDERS that
(1) the
costs be awarded in their favour as of August 9, 2005, at double the tariff set
out and in accordance with column III of Tariff B;
(2) the
assessment officer allows assessment of costs for:
(a) the
fees and disbursements of the experts heard at the hearing;
(b) all
disbursements, including travel expenses for witnesses, photocopy fees, online
research fees, transcript fees for examinations for discovery and the hearing,
long distance fees, fax fees, postage and courier fees and other administrative
fees;
(c) interest
on fees and disbursements since June 14, 2012;
less
a 25% deduction given the vexatious conduct of the defendants during the discovery
of defendant Jerry McIntosh.
"André F.J.
Scott"
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