Date: 20070201
Docket: T-2647-97
Citation: 2007 FC 116
BETWEEN:
NATURE'S
PATH FOODS INC.
Plaintiff
and
COUNTRY FRESH ENTERPRISES INC.
and SUKHDEVPAUL DHANOA
Defendants
ASSESSMENT OF
COSTS - REASONS
Charles
E. Stinson
Assessment Officer
[1]
This
action, addressing passing off under the Trade-Marks Act, R.S.C. 1985,
c. T-13, s. 7(b) in relation to sesame tahini products, was dismissed on August
4, 1999, by order silent as to costs, for delay after the Plaintiff failed to
respond to a Notice of Status Review requiring it to show cause. Previously, by
order dated December 3, 1998, the Court had dismissed the Defendants'
application for summary judgment (the summary judgment motion) with costs to
the Plaintiff in any event of the cause. The Plaintiff presented its bill of
costs for assessment relative to the summary judgment motion, but on May 21,
1999, I allowed the Defendants' preliminary objection to its assessment prior
to judgment in the action. On May 19, 2006, the Plaintiff renewed its request
for assessment of its bill of costs for the summary judgment motion. The
Defendants indicated their intent to object to entitlement and to advance their
own bill of costs ($10,961.00) for the action. I issued a timetable for written
disposition of the assessments of the bills of costs.
I. The Plaintiff's Position
[2]
The
Plaintiff noted that its claimed costs, assessable under the tariff, are
significantly less than one-half of the actual billed counsel fees and
disbursements, the latter exceeding $24,000.00. The evidence of counsel work
required, i.e. preparation (more than 100 hours) for the summary judgment
motion; preparing for, conducting and attending (17 hours) on cross-examination
of three affiants and preparation of a 19-page memorandum of fact and law and
two affidavits, warrant maximum Column III counsel fees.
[3]
The
Plaintiff argued further to Sun Construction Co. v. Canada, [2001]
F.C.J. No. 713 (A.O.) at para. [6], and Miller v. Six Nations of the Grand
River Band of Indians, [2005] F.C.J. No. 641 (A.O.) at para. [12], that the
Defendants cannot set off their costs of the action against any assessed costs
of the Plaintiff because the silence as to costs in the August 4, 1999 order
precludes the Defendant's entitlement to said costs of the action. The
Defendants cannot rely on Sax v. Chomyn, [1999] F.C.J. No. 979 (F.C.T.D.)
to justify an entitlement to costs because Forestex Management Corp. v.
Lloyd's Underwriters, Lloyd's London, [2004] F.C.J. No. 1590
(A.O.) at para. [5], establishes that only the Court (a judge), and not an
assessment officer, can exercise the Rule 400(1) jurisdiction for costs.
[4]
The
Plaintiff argued that the Federal Courts Rules do not contain a deadline
within which to assess costs. Rule 4 (the gap rule), providing that on
"motion, the Court may provide for any procedural matter not provided for
in these Rules or in an Act of Parliament by analogy to these Rules or by
reference to the practice of the superior court of the province to which the
subject-matter of the proceeding most closely relates", cannot be used to
invoke the British Columbia Supreme Court Rules because the gap rule is
predicated on a motion, a procedure not applicable in an assessment of costs.
Even if applicable, the gap rule is invoked only as a last resort if all other
avenues have been exhausted: see Khadr v. Canada (Minister of
Foreign Affairs), [2004] F.C.J. No. 1699 (F.C.) at para. [12]. The Federal
Courts Rules preclude that, being a complete code for costs.
[5]
The
Plaintiff argued that the Defendants' position incorrectly creates an
intermingling of entitlements to costs. That is, the Court specifically granted
costs of the summary judgment motion to the Plaintiff in any event of the cause
meaning that the Defendants' asserted entitlement to costs of the action cannot
interfere with the Plaintiff's entitlement to assessed costs. The Defendants'
failure to move the Court for costs of the action is irrelevant. As well, the
Defendants were aware of the Plaintiff's entitlement to costs of the summary
judgment motion, having successfully objected to the Plaintiff's initial
attempt to assess them.
[6]
The
Plaintiff argued that the result of the action, i.e. dismissal for delay,
should not be a limiting factor for assessed costs given that costs were not
awarded in the cause, but rather in any event of the cause. The brevity of the
motion judge's Reasons is not an indicator of complexity, particularly given
their acknowledgement of the complexity of the issues. The evidence supports
the time and maximum units claimed for counsel fee items 5 (preparation for the
summary judgment motion), 6 (appearance) and 8 (preparation for
cross-examination of three affiants). The wording for item 9 (attendance on the
cross-examinations) specifies a "per hour" attendance: the
Plaintiff's counsel necessarily had to be present during examination by the
Defendants' counsel of the Plaintiff's affiants. That the Court did not refer
to the Plaintiff's expert is irrelevant on this assessment of costs: the expert
witness affidavit was properly introduced in the motion materials and was
subject to cross-examination. The Plaintiff argued alternatively that, if
set-off is permitted, several items claimed in the Defendants' bill of costs
should be reduced or disallowed.
II. The Defendants' Position
[7]
The
Defendants' general position is (letter dated August 8, 2006, from their
counsel):
… we enclose the Defendants' Bill of
Costs resulting from the action together with the affidavit of the writer. We
also attach a decision of the Court, Sax v. Chomyn, indicating that just
as a defendant would be entitled to costs on a discontinuance, so, in the
circumstances of that case which are similar to the circumstances here (but for
the extraordinarily long delay of the Plaintiff in seeking to tax its costs of
a 1998 interlocutory application), the Defendants ought to have their costs of
the action which was dismissed on the initiative of the Court for delay.
The Defendants rely on the general powers
provided to the Assessment Officer in Rule 409 so as to consider these costs by
way of set-off to those presented by the Plaintiff without the necessity of the
expense of a motion to the Court.
The application by the Plaintiff to now
tax its costs arising from a 1998 application is indeed unusual. It may be one
of first instance. Having lulled the Defendants into a false sense of security
and constructed sufficient delay to undermine the Defendants' right to seek
costs of the action, the Plaintiff now seeks to proceed to tax its costs
arising from the interlocutory application. What happened here is that the
Plaintiff resisted dismissal of the action on summary judgment and then stood
by and allowed the action to be dismissed by reason of its own failure to
prosecute the action. It then allowed some six years to pass before seeking to
tax its costs. It is respectfully submitted that the Defendants' costs of the
action ought to be considered by way of set-off. Alternatively, if the consent
of the Plaintiff is not forthcoming, the Defendants respectfully seek leave to
make application to the Court.
The Rules should not be construed so as to
prejudice the Defendants by rewarding improper conduct, i.e. the Plaintiff's
asserted entitlement to costs for its opposition to the same result it later
allowed to occur. There are no authorities addressing such circumstances or a
delay of seven years after judgment to present a bill of costs for assessment.
[8]
The
Defendants argued further to the gap rule and to Rule 57(43) of the Supreme
Court of British Columbia:
Refusal or neglect to procure assessment
(43) If a party entitled to costs fails
to assess costs and prejudices another party by failing to do so, the registrar
may certify the costs of the other party and certify the failure and disallow
all costs of the party in default,
that an assessment officer has jurisdiction
to assess a bill of costs at nil dollars in the circumstances of this case,
i.e. the Plaintiff's conduct having caused prejudice in several ways. For
example, if the Plaintiff had renewed its request for assessment of costs promptly
after dismissal of its action, the Defendants could have applied for their
costs of the action with a view to set-off. The gap rule applies here because a
registrar in the provincial system, the counterpart to an assessment officer
here, would in these circumstances preclude this prejudice by disallowing the
Plaintiff's costs. Alternatively, if application of the gap rule is refused,
this matter should be referred to the Court particularly given Rules 409 and
400(3)(a) and (o) (result of the proceeding and any other relevant matter
respectively) addressing an assessment officer's considerations.
[9]
The
Defendants argued that Rule 409, permitting an assessment officer to apply Rule
400(3) factors, refutes the Plaintiff's position that Rule 400(1) reserves to
the Court, as opposed to an assessment officer, the jurisdiction to award
costs. That is, Rule 400(3)(a) (result) and (o) (any other relevant matter)
should be applied in the unusual circumstances here for set-off of the
Defendants' costs of the action against the Plaintiff's costs of the summary
judgment motion. The core consideration, i.e. whether assessment officers may
exercise the gap rule, lies in this accepted principle of statutory
interpretation in Chieu v. Canada (Minister of
Citizenship and Immigration), [2002] 1 S.C.R. 84 at 102:
… This Court has stated on numerous
occasions that the preferred approach to statutory interpretation is that set
out by E.A. Driedger in Construction of Statutes (2nd ed.
1983), at p. 87:
Today there is only one principle
or approach, namely, the words of an Act are to be read in their entire context
and in their grammatical and ordinary sense harmoniously with the scheme of the
Act, the object of the Act, and the intention of Parliament….
Here,
the circumstances of this assessment of costs have created a situation so
unusual as not to be contemplated by any existing Rule. Therefore, an
assessment officer should apply the gap rule or Rule 400(3) factors in favour
of the Defendants to preclude an injustice. Alternatively, leave should be
given to seek directions from the Court.
[10]
The
Defendants are entitled to costs further to dismissal of an action on the
Court's initiative and were not obligated to incur costs to prod the Plaintiff
to accelerate the pace of litigation: see Sax v. Chomyn, above, and Anishinabe
Nations v. Canada, [2004] F.C.J. No. 1785 (F.C.). If the Plaintiff had
moved expeditiously for assessment of its costs, and there is no evidence
justifying the delay here, there is case law indicating that the Defendants
could have obtained an extension of the 30-day deadline in Rule 403 to bring an
application for directions as to their costs of the action: see Smerchanski
v. M.N.R., [1979] 1 F.C. 801 (F.C.A.); Spur Oil Limited v. The Queen,
[1983] 1 F.C. 244 (F.C.T.D.); Bayliner Marine Corp. v. Doral Boats Ltd.,
[1987] F.C.J. No. 348 (F.C.T.D.) and Carruthers v. The Queen, [1983] 2
F.C. 350 (F.C.T.D.).
[11]
As
the Defendants reasonably believed that all matters in this litigation,
including costs of the summary judgment motion, were concluded or abandoned,
the Plaintiff's delay is prejudicial to the Defendants' interests given case
law indicating that extensions of time for applications for directions for
costs brought several years later may not be granted: see The Queen v.
Ontario Development Corporation, 92 D.T.C. 6121 (F.C.A.). As well, given
the usual practice that each side bears its own costs when the Court of its own
volition dismisses an action for delay, the Defendants are prejudiced because
they reasonably believed that the summary judgment motion costs had been
abandoned. The passage of seven years makes recollection of details and
verification of estimates in the parties' respective bills of costs difficult,
i.e. undermining the accuracy of records of hours of work by counsel, said
accounts being estimates in the first instance. The prejudice for the
Defendants is greater because they must substantiate their bill of costs as
well as disprove the Plaintiff's bill of costs.
[12]
The
Defendants argued alternatively for a general reduction of assessed costs
further to several factors. Further to Rules 409 and 400(3)(a) (result), the
principle implicit in a dismissal for want of prosecution, i.e. a finding of
abuse of the court system and of the administration of justice both as a
function of inordinate delay, must apply here: see Trusthouse Forte
California Inc. v. Gateway Soap & Chemical Co., [1998] F.C.J. No. 1937
(F.C.T.D.). As well, given that the Plaintiff did not pursue its action after
successfully rebuffing the Defendants' attempt to have it dismissed, the
Defendants could be considered in the broader context to have prevailed and
therefore should not be liable for the full costs of the summary judgment
motion.
[13]
The
Defendants argued further to Rule 400(3)(i) and (o) (conduct unnecessarily
lengthening a proceeding and any other matter respectively) that, to the extent
that the process of assessment of costs of the summary judgment motion can be
considered part of the proceeding, the Plaintiff's delay of six years before
presenting them again for assessment warrants reductions. The allowance of said
costs in these circumstances would undermine public confidence in the
administration of justice and be inconsistent with the general principle of
Rule 3 requiring the "just, most expeditious and least expensive
determination of every proceeding on its merits."
[14]
The
Defendants argued that the preparation (none of the three affidavits exceeded
14 pages) and appearance associated with the summary judgment motion were straightforward.
The Court did not find it frivolous or vexatious and, although noting in para.
[9] of its December 3, 1998 decision that the "evidence raises many valid
and complex issues of fact and law", instead found, in para. [10], that
where "as here, credibility is a fundamental issue, a trial is essential
so that the evidence and demeanour of the witnesses can be observed and
tested." Therefore, only the minimum value of 3 units should be allowed
for item 5 (preparation) in place of the maximum 7 units claimed. As much of
the actual hearing was consumed by argument on the admissibility of the
Plaintiff's proposed expert evidence and by the presentation of physical
exhibits, only 2 units per hour in place of the 3 units per hour claimed for
item 6 (appearance) should be allowed. The evidence for item 6 justifies only six
hours and not the nine hours claimed. Given the absence of directions from the
Court permitting assessment of fees for second counsel, the claim for junior
counsel must be disallowed: see Stewart v. Canada (Attorney
General),
[2003] F.C.J. No. 947 (A.O.).
[15]
The
Defendants argued that the evidence does not justify the maximum 5 units (item
8) claimed three times for preparation for the cross-examination of each of three
affiants. Instead, a single mid-range value of 7 units would be appropriate.
Given that these straightforward cross-examinations lasted less than five hours
and not the eight hours claimed, and much of the conduct was by the Defendants'
counsel, the record justifies only a minimal allowance of 1 unit per hour for
item 9 (appearance) for five hours in place of the 3 units per hour claimed for
eight hours.
[16]
The
Defendants argued that, just as the Plaintiff should not be entitled to costs
of the summary judgment motion, it should not be allowed anything for item 26
(assessment of costs) even if allowed other assessed costs. Per Rule 408(3),
the Defendants should receive maximum item 26 costs. The Defendants argued that,
given their position at the hearing on the admissibility of proposed expert
evidence and given that the Court did not rule on its admissibility or refer to
it in its decision, the $700.00 and $273.66 claimed for expert witness fees and
cross-examination transcript respectively should be disallowed.
III. Assessment
[17]
Further
to my conclusions in Balisky v. Canada (Minister of
Natural Resources), [2004] F.C.J. No. 536 (A.O.) at para. [6] and Aird
v. Country Park Village
Properties (Mainland) Ltd., [2005] F.C.J. No. 1426 (A.O.) at para. [10],
the decision dated December 3, 1998 disposing of the summary judgment motion is
final and I cannot vary it by, for example, effectively removing its creation
of the Plaintiff's entitlement to costs. As well, their conclusions indicate
that I am not the Court within the meaning of Rule 4 and I therefore have no
jurisdiction to apply a gap rule, i.e. by awarding to the Defendants costs not
given to them in the first instance pursuant to Rule 400(1) jurisdiction
reserved exclusively to the Court and not an assessment officer. It follows that
Rule 409 cannot be applied for set-off. The Defendants' bill of costs,
presented at $10,961.00, is assessed at nil dollars.
[18]
In
so concluding, I am aware of Rule 403 (providing for a motion for directions
for costs within 30 days after judgment whether or not the judgment included an
order for costs) and the finding in Apotex Inc. v. Bayer AG (2005), 39
C.P.R. (4th) 193 (F.C.A.) that the principles of res judicata
and functus officio do not limit its application. The Defendants did not
and do not require my leave to bring such an application. Given what I perceive
as the likely difficulty of the Defendants meeting the threshold for issuance
of an extension, after the passage of several years, of the 30-day limit for a
motion to vary the August 4, 1999 order by adding a provision for costs of the
action, I felt that an adjournment of the assessment of costs was not
appropriate. The Defendants did not need to wait for the Plaintiff's
presentation of its bill of costs for assessment before moving further to Rule
403.
[19]
I
will not, as the Defendants urge, deny or generally reduce the Plaintiff's
costs as a function of delay, other than relative to item 26 (assessment of
costs). The Plaintiff certainly tried in the first instance to expedite
assessment of its costs of the summary judgment motion, but drew a successful
objection from the Defendants that it was premature. The record is not clear on
why the Plaintiff waited several years before again bringing forward its bill
of costs, nor why the Defendants did not initiate some process in the interim
to resolve costs once and for all. The Defendants raised serious issues for
assessments of costs. The assessment of individual items of costs was
straightforward. I am not satisfied, however, that the Defendants should not
bear some responsibility for the delay in the resolution of costs. I allow 1
unit more (3 units) than the minimum value in the available range for item 26.
In so concluding, I am aware of Rules 392(2) and 406 which do not impose a time
limit on the effect of an order and within which to bring an assessment of
costs respectively. The only limiting factor, within the circumstances here,
might be the time limit in Rule 434(1)(a) (requiring leave of the Court to
issue a writ of execution to enforce an order if six or more years have elapsed
since the date of the order). That is, however, an enforcement matter not
within my jurisdiction.
[20]
My
view, often expressed further to my approach in Carlile v. The Queen
(1997), 97 D.T.C. 5284 (T.O.) and the sentiment of Lord Justice Russell in Re
Eastwood (deceased) (1974), 3 All. E.R. 603 at 608, that assessment of
costs is "rough justice, in the sense of being compounded of much sensible
approximation", is that discretion may be applied to sort out a reasonable
result for costs equitable for both sides. I think that my view is reinforced
by the editorial comments (see: The Honourable James J. Carthy, W.A. Derry
Millar & Jeffrey G. Gowan, Ontario Annual Practice 2005-2006
(Aurora, Ont: Canada Law Book, 2005)) for Rules 57 and 58 to the effect that an
assessment of costs is more of an art form than an application of rules and
principles as a function of the general weight and feel of the file and issues,
and of the judgment and experience of the assessment officer faced with the
difficult task of balancing the effect of what could be several subjective and
objective factors.
[21]
I
concluded at para. [7] in 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 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 have
read the Defendants' motion materials, which were extensive. The Plaintiff
required careful presentation of motion materials to avert an abrupt end to its
action and to ensure that the record satisfied the Court that this matter did
not meet the test posed by the jurisprudence addressing summary judgment. That
is not the same as having to prepare for a full trial. I allow 6 units for item
5 (available range 3 – 7 units). The record discloses a duration of just over
six hours. I have consistently held that an appearance in Court necessarily means
arrival some time before the prescribed start time to arrange materials and
identify oneself to the assigned court registrar. Item 6 (appearance) does not
provide for second counsel, but the broad discretion conferred by Rule 400(1)
can permit such costs. As above, I am not the Court as that term is used in
Rule 400(1) and therefore cannot presume to allow costs for junior counsel in
the absence of a visible direction from the Court. I understand the Defendants'
point concerning time taken with presenting physical exhibits justifying an
expert, but this hearing did have the potential of precluding the Plaintiff's
chance to prove, via the full arsenal of a trial, its claims against the
Defendants: a serious adverse consequence. I allow the maximum value of 3 units
per hour for 6.5 hours for item 6 (one counsel only).
[22]
A
discrete preparation for cross-examination for each of three affiants would
have been required. I am not inclined to ignore the motion judge's comment
about the presence of complexity. I agree that the Plaintiff's counsel had to
necessarily be present at the cross-examination by the Defendants of the
Plaintiff's two affiants. The demands on his professional skills for that might
have differed from those for his conduct of the cross-examination of the
Defendants' single affiant, but complexity, for example, as a factor for costs
might have been comparable or quite different. In other words, the allowances
for item 8 (preparation for cross-examination of affidavit) and item 9
(appearance) may distinguish between each affiant. In these circumstances, I
simply allow 3 units (available range 2 – 5 units) for item 8 for each of the
three affiants and 2 units per hour (available range 0 – 3 units per hour) for
item 9 for five hours in total. The evidence led by the Defendants before me in
1999, i.e. the verbatim reporter's certificate of durations, indicated 45
minutes, two hours and 18 minutes and one hour and 43 minutes for the
respective cross-examinations.
[23]
In
Almecon Industries Ltd. v. Anchortek Ltd., [2003] F.C.J. No. 1649 (A.O.)
at para. [31], I found certain comments in the evidence, although self-serving,
nonetheless to be pragmatic and sensible concerning the reality of a myriad of
essential disbursements for which the costs of proof might or would exceed
their amount. However, that is not to suggest that litigants can get by without
any evidence by relying on the discretion and experience of the assessment
officer. The proof here is less than absolute, i.e. the circumstances
necessitating the use of Bryanston Cooper, a marketing and advertising
consultant, as an expert on a summary judgment motion. A paucity of evidence
for the circumstances underlying each expenditure makes it difficult for the
respondent on the assessment of costs and the assessment officer to be
satisfied that each expenditure was incurred as a function of reasonable
necessity. The less that evidence is available, the more that the assessing
party is bound up in the assessment officer's discretion, the exercise of which
should be conservative, with a view to a sense of austerity which should
pervade costs, to preclude prejudice to the payer of costs. However, real
expenditures are needed to advance litigation; a result of zero dollars at
assessment would be absurd.
[24]
My
reading of Mr. Cooper's proposed expert evidence and the Plaintiff's Memorandum
of Fact and Law convinces me that counsel's decision to disburse $700.00 for
Mr. Cooper's services to assist in persuading the Court that issues such as
distinctiveness, confusion and passing off relative to potential consumers of
sesame tahini products should not be addressed in a summary proceeding, but
rather by full trial, was reasonable: I allow the $700.00. The disbursement of
$273.66 for the cross-examination transcript was prudent and is allowed. I am
satisfied that the other disbursements, i.e. photocopies and binding ($894.65),
facsimiles ($87.50), delivery and postage ($44.51) and film processing and
samples ($13.62) were reasonable in these circumstances of a commercial dispute
and allow them as presented.
[25]
The
Plaintiff's bill of costs for its costs of the summary judgment motion,
presented at $11,019.94, is assessed and allowed at $7,428.94.
"Charles
E. Stinson"
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