Date: 20110830
Docket: T-435-09
Citation: 2011
FC 1027
BETWEEN:
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GRK FASTENERS INC.
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Applicant
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and
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ATTORNEY GENERAL OF CANADA
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Respondent
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REASONS FOR ASSESSMENT OF
COSTS
JOHANNE PARENT, Assessment Officer
[1]
On February
18, 2011, the Court dismissed the application for judicial review with costs.
Further to the filing of the respondent’s Bill of Costs, directions were issued
and sent to the parties informing them that the assessment of the Bill of Costs
would proceed in writing and setting the timeframe to file representations.
[2]
The
respondent’s submissions on costs provide a detailed account of the proceedings
before the Court. Referring to Rule 409 of the Federal Courts Rules where
it states that the assessment officer may consider the factors referred to in
subsection 400(3), counsel for the respondent argues that three factors should
be taken into consideration to increase entitlement to costs i.e. 400(3)(c)
complexity of the issues, 400(3)(e) offers to settle and 400(3)(i) conduct of a
party that tended to unnecessary lengthen the duration of the proceeding.
[3]
For Rule
400(3)(e), the respondent contends that Rule 420(2)(b) should find application
considering that the application was dismissed with costs and that the
applicant obtained a judgment less favourable than the terms of the offer to
settle made in writing on December 21, 2009 by which the applicant could have
discontinued its application while in exchange the respondent would have foregone
its entitlement to costs. Said letter of offer did not contain an expiration
date, was never revoked and never accepted. In view of that, it is the
respondent’s position that the doubling of costs should be allowed from the
date of the offer to settle to the date of the judgment.
[4]
On the
argument advanced by the respondent regarding Rule 400(3), the applicant contends
that the issue of the scale of costs is res judicata and that “there is
no basis for any enhanced costs payable to the respondent pursuant to Rule 400”
as no request was made by the applicant to depart from Tariff B and the general
default parameters of Column III. Particularly, the applicant argues that the
respondent cannot obtain the doubling of counsel fees in a costs assessment
relying on the discretionary factors of Rule 400(3)(e). The applicant relies on
the decision of Apotex v Merck & Co. Inc. 2006 FCA 324 (Fed.C.A.)
[Apotex] in which the Court established that “the scale of costs is res
judicata and cannot be modified by an assessment officer or even the Court
of Appeal or an appeal of costs.” The applicant argues that the respondent,
having failed to raise the offer to settle before the Application’s judge and
to seek a variance of the costs pursuant to Rule 403, cannot now utilize the
assessment process to double the scale of costs. Counsel further argued the
considerations that would have had to be argued before the Application judge
with regards to the legitimacy of the respondent’s letter of offer and if the
judgment of the Court met or exceeded said offer.
[5]
In
rebuttal, the respondent contends that it did not seek to vary the order on
costs: all costs claimed in the Bill of Costs having been calculated under
Column III. As per counsel, the assessment officer has jurisdiction to determine
the number of units for each Item under Column III considering the wording of
Rule 409 that provides for the assessment officer to consider the factors in
subsection 400(3). It is further argued that the doubling of costs is the
result of a mandatory direction in Rule 420 “unless otherwise ordered by the
Court”. Considering that the Court made no such order, the doubling effect of
Rule 420 should ensue. In Peerless Ltd v Aspen Custom Trailers Inc. 2010
FC 618 (A.O.) [Peerless], Assessment Officer Stinson concluded that an
assessment officer “cannot negate or vary the application of Rule 420”. As per
the respondent, the offer was never withdrawn and the offer made was more
favourable than the results obtained by the applicant on the Application: the applicant
having obtained no relief and was ordered to pay costs.
[6]
Rule 420
reads:
420. (1) Unless otherwise ordered by the Court and subject to
subsection (3), where a plaintiff makes a written offer to settle and obtains a
judgment as favourable or more favourable than the terms of the offer to
settle, the plaintiff is entitled to party-and-party costs to the date of
service of the offer and costs calculated at double that rate, but not double
disbursements, after that date.
Consequences of failure to accept defendant’s offer
(2) Unless otherwise ordered by the Court and subject to
subsection
(3), where a defendant makes a written offer to settle,
(a) if
the plaintiff obtains a judgment less favourable than the terms of the offer to
settle, the plaintiff is entitled to party-and-party costs to the date of
service of the offer and the defendant shall be entitled to costs calculated at
double that rate, but not double disbursements, from that date to the date of
judgment; or
(b) if
the plaintiff fails to obtain judgment, the defendant is entitled to
party-and-party costs to the date of the service of the offer and to costs
calculated at double that rate, but not double disbursements, from that date to
the date of judgment.
Conditions
(3) Subsections (1) and (2) do not apply unless the
offer to settle
(a) is made at least 14 days before the
commencement of the hearing or trial; and
(b) is not
withdrawn and does not expire before the commencement of the hearing or trial.
[7]
As
mentioned by the applicant, the Federal Court of Appeal in Apotex at
paragraph 15 clearly stated that without a modifier varying the general default
parameters of Column III, party-and-party costs shall be assessed in accordance
with column III of the table to Tariff B (Rule 407 of Federal Courts Rules).
15 By
virtue of Rule 407, an award of costs, without stipulation as to scale or
quantum, is to be assessed in accordance with Column III. Awards such as costs
in the cause,' while leaving the matter of the recipient of costs to be determined
by the ultimate result of the case, do not defer to a trial judge the decision
as to their scale. Once a motion judge issues an order for costs or costs in
the cause without a modifier varying the general default parameters of Column
III, the issue of scale is res judicata, subject to
a motion brought pursuant to Rule 403 to vary the scale (see Consorzio del Prosciutto di Parma v. Maple Leaf Meats Inc.,
[2002] F.C.J. No. 1504, 2002 FCA 417 at paragraphs 8 and 9 (F.C.A.); AB Hassle v. Genpharm Inc., [2004] F.C.J. No. 1087, 2004 FC 892 (T.D.) at paragraph 8; Aird
Country Park Village Properties (Mainland) Ltd., [2005] F.C.J. No. 1426, 2005 FC 1170 at paragraph 10).
[8]
As
contended by the respondent and as stated by Assessment Officer Stinson in Peerless,
assessment officer cannot negate or vary the application of Rule 420(2):
18 I am not the "Court" as that
term is used in Rule 420(2): 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.). Therefore, I cannot exercise the
otherwise jurisdiction of the Court in Rule 420(2) to negate or vary its
application.
[9]
Reaching a
decision with respect to the offer made by the respondent was difficult due to
the fact that the arguments provided by the parties lacked concrete linkages to
the test to determine whether or not the offer was valid. However, although the
applicant did not present specific arguments on the validity of the letter of
offer in its representations, the test that the Application judge would have
needed to use to consider the validity of said letter of offer was touched upon
in the res judicata arguments.
[10]
While the
test is not specifically referred to by the parties, it is found in the
decision of the Court in M.K.
Plastics Corp. v. Plasticair Inc.
2007 FC 1029 (F.C.) at paragraph 39:
39 In order to
trigger the double costs rule, an offer must be clear and unequivocal in that
the opposite party need only decide whether to accept or reject the offer (Apotex Inc. v. Syntex Pharmaceuticals, [2001] FCA 137, [2001] F.C.J. No. 727
(QL), at para. 10). The offer must also contain an element of compromise (or
incentive to accept) (Canadian Olympic Assn. v. Olymel,
Société en commandite, [2000] F.C.J. No. 1725
(QL), at para. 10). The offer must also be presented in a timely fashion such
that the benefit would still be derived from the opposite party if accepted (Sammammas Compania Maritima S.A. v. Netuno (the) Action in rem
against the Ship "Netuno", [1995] F.C.J. No. 1442
(QL), at paras. 30 and 31). Finally, if accepted, the offer must bring the
dispute between the parties to and end (TRW, supra,
at p. 456).
[11]
I am
satisfied that the respondent’s letter of offer was clear and unequivocal, that
it was made in a timely fashion and, if accepted, would have brought the
dispute to an end. However, considering the manner in which the letter of offer
was drafted and the Court’s decision of December 10, 2009, I am not convinced
that said offer contained an element of compromise or incentive to accept. In the
decision of Madam Prothonotary Tabib of December 10, 2009, she dismisses the
respondent’s motion for an order to strike the Application, specifically mentioning:
“As compelling as the Respondent’s argument may be, I need only be satisfied
that the Applicant’s case has a scintilla of a chance of success in order to be
compelled to dismiss this motion. That scintilla is present here.” Considering
the offer made eleven days after that decision of the Court, I fail to see the
element of compromise by the respondent when it offers to forego its
entitlement to costs shall the applicant discontinue its application. However, I
am mindful of the decision rendered by the Court on a very similar matter on
January 22, 2010 in Toyota Tsusho Inc. v AGC 2010 FC 78 (F.C.) (upheld
by the Court of Appeal on October 12, 2010) [Toyota] and which the Court relied
upon in his final decision here. From my reading of the file, I think that the
applicant should have been aware of the binding implications of the Toyota decision and its implications
relative to the outstanding letter of offer. In consideration of the latter and
the fact that the letter of offer had never been formally revoked or rejected
by the date the Court of Appeal decision was delivered in the Toyota matter
on October 12, 2010, I am of the opinion that said offer was at that date a
good compromise and will allow the doubling of costs for the respondent’s
counsel fees from October 12, 2010 to the date of the judgment.
[12]
It is the
respondent’s position that in assessing the Bill of Costs, the assessment
officer should further consider the complexity of the issues (Rule 400(3)(c))
and the conduct of the applicant that unnecessary lengthened the proceeding
(Rule 400(3)(i)). On the complexity of the issue, the respondent, referring to
the decision of the Court of December 10, 2009 whereas the respondent’s motion
to strike the application was dismissed with costs to the applicant at the high
end of Column III of Tariff B, contends that the main application, although
decided on the basis of the same arguments as the motion to strike, involved much
more complex issues. The respondent further argues that the Record was
voluminous and contained novel arguments. Considering the complexity of the
legal and procedural issues involved, the respondent claims costs at the high
end of Column III.
[13]
Under Rule
400(3)(i) of the Federal Courts Rules, it is the respondent’s position
that the applicant’s conduct had “unnecessarily lengthened the proceeding
through positions that were completely unmeritorious and by continuing the
application once it became evident that the application had become moot …” It
is the respondent’s position that the applicant continued the proceeding
notwithstanding a decision of the Federal Court of Appeal that established that
its argument had no chance of success putting the respondent in a position to
respond to a 17 volume application record. The respondent contends that it had
to go through unnecessary expenses to respond to an application likely to fail,
more specifically through its request under Rule 317 for materials “that were
completely unrelated to the decision under review”, cross-examining the
respondent’s witness for over three hours unnecessarily and delaying the
application for months.
[14]
In
response, the applicant contends that the respondent has “failed entirely to
show why costs should be assessed at the high end of Column III”. It is argued
that this was a fairly standard judicial review application and the respondent
has failed to demonstrate how this matter was more complex than other judicial
review applications before the Federal Court. With regards to Rule 400(3)(i),
the applicant argues that the respondent did not point to any specific steps or
actions that “extended the proceeding beyond the steps normally taken in a
judicial review application and specified under the Rules”. It is further
alleged that it is the respondent, in bringing three interlocutory motions,
unduly lengthened the proceeding.
[15]
In
rebuttal, the respondent argued that this was not a “standard” matter as contended
by the applicant, i.e. the motion to strike said application “was complex
enough to warrant costs at the higher end of Column III”. As put by the
respondent, the application was won on the same complex issues presented to the
Court on the motion to strike.
[16]
I do
consider the complexity of this matter to be significant as I also understand
that the arguments on the hearing of the Application were quite similar to the
arguments made on the respondent’s motion to dismiss same Application. However,
I do not consider having sufficient evidence before me to conclude that one
party more that the other caused this matter to have been significantly lengthened.
As in Peerless, where Assessment Officer Stinson stated at paragraph 14:
I concluded in
paragraph 7 of Starlight v. Canada, [2001] F.C.J. No. 1376 (A.O.) that the same
point in the ranges throughout the Tariff need not be used as each fee item for
the services of counsel is discrete and must be considered in its own
circumstances. As well, broad distinctions may be required between an upper
versus lower allowance from available ranges.
I will assess each service claimed in the Bill of Costs
taking into consideration the above and the specific circumstances of each fee
Item.
[17]
All
assessable services were claimed under Column III of Tariff B of the Federal
Courts Rules. The services claimed for the preparation and filing of the Notice
of Appearance (Item 27) and for the preparation of the case management
conferences (Item 10) of May 11, 2009 and September 10, 2009 are not contested
and will be allowed as claimed. The applicant did not take issue of the
services claimed for preparation for case management (Item 10) and attendance (Item
11) on May 11, 2009, September 10, 2009 and May 10, 2010. Said services will be
allowed but not at double costs because they fall outside the timeframe
provided by Rule 420(2) of the Federal Courts Rules.
[18]
Under Item
4 of Tariff B, the respondent claims costs for the preparation and filing of
numerous motions. Further to the applicant’s arguments that no costs award was
made for any of these motions, the respondent in his submissions in reply
agrees that “where contested motions result in an Order that is silent as to
costs, there is no power to award costs as part of an assessment.” The
respondent further adds:
“…but uncontested Orders don’t ever
result in an award of costs. The Tariff nonetheless provides for the
“preparation and filing of an uncontested motion, including all materials”,
albeit at a reduced scale. There are many reported cases where assessment officers
award costs to the successful party under Item 4, for uncontested motions.”
Unfortunately, the respondent did not provide any
jurisprudence to that effect and I do not know of any. As put by the
respondent, it is recognized that “litigants are sometime forced to bring
uncontested motions as part of a proceeding.” Nevertheless, it is not for the
assessment officer while assessing the Bill of Costs to award costs. As
mentioned by parties, the jurisprudence is consistent that for costs to be
allowed on any motions, they must have been awarded by the Court. Considering
the principle that there is no award of costs on motions where the orders
disposing of the motions are silent as to costs, I will, therefore, disallow
the claims for the services and disbursements in relation to the preparation
and filing of the motions of April 17, 2009 and June 24, 2009 plus the claims for
the preparation and filing of the Rule 317 motion (Item 5) as well as for the
appearance in Court on said motion (Item 6). I note that in the course of his
submissions, the respondent withdrew his claim for the preparation and filing
of the special management motion (June 9, 2009).
[19]
The respondent
claims in his Bill of Costs for services under Item 8 (Preparation for
cross-examination of Robert Wright) and Item 9 (Attendance on examination) with
no further justification. In response, the Applicant contends that this claim
should be disallowed since it is in relation with the Rule 317 Motion for which
no costs were allowed by the Court and therefore costs attached to the document
filed further to that motion, should also be disallowed.
[20]
On the
topic of the Rule 317 Motion, the decision of the Court dated June 30, 2009
makes no mention of costs. However, the application of Items 8 and 9 of Tariff
B does not require any leave from the Court and I am satisfied that said
cross-examination took place. I am also of the view that although it was the
cross-examination of the respondent’s client, it did necessitate preparation
and an active role on behalf of counsel to help clarify questions, to decide to
refuse to answer questions etc. However, I am not satisfied that the maximum
number of units claimed is warranted. I allow four units for Item 8 and two
units per hour for Item 9.
[21]
The
respondent claims the maximum number of units under Item 13 (counsel fee for
preparation of hearing) and 14 (Counsel fee at hearing). In response, the
applicant contends that the amount claimed should be reduced as a “portion of
these fees are attributable to the preparation and argument of the two motions
to strike, not the argument of the application itself”. Upon my review of the
Court file, I note that the hearing that took place on November 15 and 16, 2010
lasted nine hours in total. As submitted by the applicant, the judicial review
along with the respondent’s motion for striking the application and the
applicant’s motion to strike certain paragraphs of the respondent’s memorandum
of fact and law were heard together. I further note that the Court in the decision
of February 18, 2011 makes no mention of costs for the last two motions. The
respondent made no further submissions following the applicant’s proposal in
their submissions to reduce the amount claimed to four units for Item 13 and 18
units for Item 14. In light of the file, I consider the applicant’s proposal
satisfactory and I allow a total of 8 units for Item 13 and 36 units for Item
14, which includes the doubling of costs.
[22]
Seven
units are claimed by the respondent under Item 27 (such other services as may
be allowed by the assessment officer or ordered by the Court) for the work
performed in the preparation of the Rule 317 Record. It is the respondent’s
position that the applicant unnecessarily requested over 1 million pages of
documents. While that issue was later resolved in the respondent’s favour and
limited the record to 8,514 pages, it is argued that a significant amount of
work was involved as the respondent had started preparing in the event its
objection was unsuccessful. In addition, the respondent relies on the decision
in Chief Jean Maurice Matchewan v Minister of Indian and Northern Affairs
2010 FC 910 (A.O.) [Matchewan] at paragraph 11 in which two units were
allowed under similar circumstances. In response, the applicant relies on the
fact that no award of costs was made by the Court in relation to the motion or
the subsequent preparation of the Rule 317 record. On the case cited by the
respondent, it is argued that it does not apply to the circumstances as that
case arose in the context of a discontinuance, where there was no court order
on costs. The applicant further argues that if these costs were recoverable,
they could not be recovered by the respondent since the “tribunal” whose
decision is under review is the Canada Border Services Agency (CBSA).
Accordingly, under Rule 318 of the Federal Courts Rules, it is the CBSA
who is responsible for transmitting the Record. Pursuant to Rule 304(1)(b), the
CBSA is to be treated as distinct from the Attorney General of Canada. In
rebuttal, the respondent contends that the costs for the preparation of the
Rule 317 Record did not arise from the Court Order of June 30, 2009 but arose
independently of this Order as per the provision of Rule 317. Regarding the
applicant’s argument that the Attorney General of Canada is not entitled to
these costs but the CBSA, it is argued that:
“this application was taken against a
decision of the Canada Border Services Agency’s division of the executive
branch of the government. While proceedings may be taken in the name of the
Attorney General of Canada, it does not take away from the fact that the
respondent is the government. The Attorney General of Canada is not a separate
party.”
On the jurisprudence cited, it is argued that “costs
entitlement should not turn on who the applicant chooses to name as
respondent”.
[23]
The
pertinent rules of the Federal Courts Rules read:
317. (1) A party may request material relevant to an application
that is in the possession of a tribunal whose order is the subject of the application
and not in the possession of the party by serving on the tribunal and filing a
written request, identifying the material requested.
(2) An applicant may include a request under
subsection (1) in its notice of application.
(3) If an applicant does not include a request under subsection
(1) in its notice of application, the applicant shall serve the request on the
other parties.
318. (1) Within 20 days after service of a request under rule
317, the tribunal shall transmit
(a) a
certified copy of the requested material to the Registry and to the party
making the request; or
(b) where
the material cannot be reproduced, the original material to the Registry.
(2) Where a tribunal or party objects to a request
under rule 317, the tribunal or the party shall inform all parties and the
Administrator, in writing, of the reasons for the objection.
(3) The Court may give directions to the parties and to a tribunal
as to the procedure for making submissions with respect to an objection under
subsection (2).
(4) The Court may, after hearing submissions with
respect to an objection under subsection (2), order that a certified copy, or
the original, of all or part of the material requested be forwarded to the
Registry.
319. Unless the Court directs otherwise, after an application has been
heard, the Administrator shall return to a tribunal any original material
received from it under rule 318.
[24]
Rule 317
is intended to secure production of material that was before the tribunal upon
making its decision. Under that same rule, a party may request the tribunal to
transmit the material in its possession that is relevant to the judicial review
application. It is for the tribunal an obligation to produce its record unless
a party or the tribunal objects to the request. That is what the respondent did
upon filing its motion pursuant to Rule 317 for which no costs were allowed.
Nevertheless, I am of the opinion upon reading the pertinent Rules that the
tribunal should not be confused with the Attorney General of Canada and it was
the CBSA, the decision maker, who had the obligation to produce the material,
not the respondent. With regards to the Matchewan decision cited by the
respondent to support his position, the facts were different than what is
raised here. The costs assessment there took place further to the filing of a
notice of discontinuance and “comparable materials” to Rule 317 were
prepared by the party in the interest of time. The respondent’s claim under
Item 27 is disallowed.
[25]
The
respondent claims the maximum number of units under Item 26 (assessment of
costs). The applicant contends that no costs should be allowed under this Item
considering that it would not have been necessary had the respondent complied
with the established principals relating to assessment of costs, as per the
applicant’s objection. In consideration for the documents and representations submitted
in the context of this costs assessment, I acknowledge that a certain amount of
work was performed in the preparation of the documentation in support of the
Bill of Costs in order to provide background information to the assessment
officer and as such four units are allowed.
[26]
The
services after judgment are allowed at one unit considering that the doubling
of costs as per Rule 420 ends at the date of the judgment.
[27]
I have
examined the disbursements demanded along with the supporting material. In line
with my decision, all disbursements claimed for photocopies of motions for
which costs were not awarded are disallowed as well as the photocopies claimed
for the tribunal or administrative record. The respondent further claimed for
the internal photocopying of some applicant’s material. As submitted by the
applicant, this claim relates to the internal administration of the respondent
and should be disallowed. I agree. In light of the above, I have reduced the
amount for photocopy expenses to $785.25.
[28]
The
applicant contends that the disbursement claimed for courier services include
the service of motions for which costs were not awarded. I have reviewed the invoices
and in line with my decision regarding the costs on these motions, I disallow
the amount claimed. The applicant did not take issue with the other
disbursements claimed and they will be allowed as demanded.
[29]
The Bill
of Costs is allowed for a total amount of $10,537.33
“Johanne Parent”
Toronto, Ontario
August
30, 2011
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