Date: 20130307
Docket: T-1931-11
Citation:
2013 FC 238
Ottawa, Ontario, March 7, 2013
PRESENT: The Honourable Madam Justice Simpson
BETWEEN:
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ULTIMA FOODS INC., DANONE INC.
AND AGROPUR COOPERATIVE
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Applicants
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and
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ATTORNEY GENERAL OF CANADA, MINISTER OF INTERNATIONAL TRADE, AGRO-FARMA CANADA, INC.
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Respondents
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REASONS FOR JUDGMENT
– COSTS
[1]
In
my earlier decision on the merits (Ultima Foods Inc. v Canada (Attorney General), 2012 FC 799), I dismissed the Applicants’ application for
judicial review (the Application) of a decision of the Minister of
International Trade (the Minister) made on October 17, 2011 (the Decision). In
the Decision the Minister issued supplemental import permits allowing the
Respondent Agro-Farma Canada Inc. (Agro-Farma) to import specified quantities
of its Chobani brand Greek-style yogurt for a limited period of time. I granted
costs to all the Respondents but left open the possibility of further submissions
on the scale and quantum of costs if a settlement could not be reached.
[2] Since
the fees and disbursements payable to Agro-Farma were not settled, I heard
further submissions from counsel for the Applicants and Agro-Farma on December
4, 2012. The principal issue is whether Agro-Farma is entitled to costs on a
scale greater than that contemplated by Tariff B of the Federal Court
Rules, SOR/98-106 (the Tariff).
[3]
Agro-Farma
provided the following information for the hearing:
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Actual
fees $1,229,346.65 (full indemnity)
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Claimed
fees $941,000.00 (later reduced to $876,457.50 – see para. 6 below)
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Column
III fees $80,339.61
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Column
V fees $138,306.35
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Disbursements
$77,000.00 (later reduced to $74,929.56 – see para. 7 below)
[4]
As
noted above, Agro-Farma is seeking fees from the Applicants in the amount of
$941,000.00 (the Claimed Fees). The Claimed Fees include two claims for full
indemnity. The first is for fees of $121,000.00 attributable to Agro-Farma’s
response to the Applicants’ motions for injunctive relief. Agro-Farma alleges
that its work was wasted. The second claim is for fees in the amount of
$222,000.00 incurred responding to evidence filed by the Applicants that
Agro-Farma argues was unnecessary and outside the scope of the Application.
Deductions from
the Claimed Fees
[5] Although
I have not used the Claimed Fees as the basis for the costs award in this
decision, I nevertheless think it appropriate to deal with the Applicants’
arguments about the amounts claimed. Agro-Farma asked for fees for the attendance
of its two counsel as observers on a motion in Ottawa. I informed the parties
during the hearing that these costs could not be recovered. It was agreed that
these attendances represented roughly $15,000 in fees and disbursements. After
the hearing, Agro-Farma informed the Court that the disbursements were $1,500.
The balance of $13,500 will be considered as legal fees and will be deducted
from Agro-Farma’s Claimed Fees.
[6] Danone
Inc. also refutes Agro-Farma’s entitlement to fees for preliminary motions
which did not result in costs awards. The law is clear that no costs are to be
awarded if orders are silent on costs (Abbott Laboratories v Canada (Minister of Health), 2008 FC 693 at para 73; Estensen v Canada (Attorney General),
2009 FC 152 at para 9; Corbett v Canada (Attorney General), 2008 FCA
343). I therefore accept Danone’s argument with respect to the costs for uncontested
motions claimed in Agro-Farma’s bill of costs. Accordingly, a further $51,042.50
is hereby deducted from Agro-Farma’s Claimed Fees. The deductions of $13,500
and $51,042.50 reduce the Claimed Fees to $876,457.50.
Deductions from Disbursements
[7] After
the hearing, Agro-Farma filed an Affidavit made by
Alison McLean. It showed that the disbursements had been overstated by
$1,500.00 for the reasons set out above in paragraph 5 and noted other minor
miscalculations. The net result is that the disbursements are now $74,929.56.
Recovery above
Tariff B - The submissions:
[8] Agro-Farma
urges the Court to exercise its discretionary power under Rule 400(1) of the Federal
Court Rules to depart from Tariff B for the following reasons:
1.
The
Application was brought for strategic purposes in an effort to exclude
Agro-Farma from the Canadian market;
2.
The
Applicants brought and then “abandoned” allegedly urgent motions for injunctive
relief;
3.
Much
of the evidence filed by the Applicants was irrelevant, unnecessary and beyond
the scope of the Application.
4.
The
Applicants did not have standing to bring the Application;
5.
The
subject matter was complex.
[9] Agro-Farma
submits that the Court has departed from the Tariff in similar circumstances.
In Air Canada v Toronto Port Authority, 2010 FC 1335, Mr. Justice Hughes
held that a cost award outside Tariff B was warranted and awarded the
Respondent 50% of its actual costs, plus disbursements. In reaching this
decision Mr. Justice Hughes was influenced, inter alia, by the fact that
the applicant knew that there was no decision which could be judicially
reviewed and by the fact that the applicant made unsubstantiated allegations
that the Respondent had engaged in anti-competitive activity.
[10]
Agro-Farma
also relies on Mr. Justice Hugessen’s decision in Jazz Air LP v Toronto Port
Authority, 2007 FC 976, in which he awarded costs against the Applicant on
a solicitor-client basis after finding that the entire action was an abuse of
process. The litigation was brought solely to prevent a smaller competitor from
establishing itself in an important segment of the market.
[11]
The
Applicants, on the other hand, submit that there was nothing exceptional about
this case or the way it was argued that would justify departing from Tariff B.
They also say that the full indemnity costs sought by Agro-Farma are only
appropriate in exceptional circumstances in which the conduct of a party can be
characterized as reprehensible, scandalous or outrageous. The Applicants deny
Agro-Farma’s claim that their decision to proceed with an expedited hearing
instead of an injunction application indicates that they had exaggerated the
urgency of the situation. They stress that the plan to proceed to a hearing on
the merits on an expedited basis was initially proposed by Counsel for the
Minister. The Applicants also suggest that Agro-Farma should not be entitled to
fees for two senior counsel.
[12]
The
Applicants rely on a number of cases which urge a cautious approach to the
exercise of judicial discretion on costs issues. I will discuss them below. The
Applicants also argue that the circumstances which led Mr. Justice Hughes and
Mr. Justice Hugessen to depart from the Tariff in the cases noted above are not
present in this case.
Discussion and
Conclusions
[13]
I
am satisfied that this litigation was brought for the purpose of precluding
Agro-Farma from sharing in the expanding market for yogurt sales in Canada. To achieve this objective the Applicants argued that the Ministers’ Decision was ultra
vires because he did not have the authority to issue import permits which
harmed Supply Management. That argument failed because I was not persuaded that
harm to Supply Management had been established.
[14]
However,
in my view, this conclusion does not lead to the recovery of any fees on a full
indemnity basis because recovery at such a high level requires scandalous or
abusive conduct. Litigating for strategic purposes without more, does not meet
that test.
[15]
I
also agree with the Applicants that it cannot be said that the injunctions were
“abandoned” by the Applicants when it was Counsel for the Minister who proposed
that the matter proceed to an expedited hearing on the merits. It is my view
that the proposal was reasonable in the circumstances and that the Applicants
should not be penalized because they agreed with the Minister’s counsel.
Further, Agro‑Farma has provided no evidence to demonstrate that any work
it undertook was wasted. Accordingly, I am not persuaded that Agro-Farma is
entitled to costs on a full indemnity basis under this heading.
[16]
Agro-Farma
submits that the Applicants filed irrelevant expert and other technical
evidence regarding techniques used in the manufacture of Greek yogurt hoping
that the Court would decide anew whether Chobani is made using a “new and
unique process”. This was one of the questions before the Minister and
Agro-Farma says it was outside the scope of judicial review. The Evidence at
issue is found in the affidavits sworn on behalf of Danone by Donald Snyder on
February 11, 2012, and Luc Boulaine on February 13, 2012, and in the affidavit
of Mario Proulx sworn on February 13, 2012 on Ultima’s behalf. These deponents
were all cross-examined by counsel for Agro-Farma.
[17]
I
accept Agro-Farma’s assertion that by filing these affidavits the Applicants
forced Agro‑Farma to deal with this issue even though it was beyond the
scope of the judicial review of the Minister’s Decision. While one affidavit on
the issue might be viewed as reasonable industry background, three were
unnecessary. In my view, this conduct should lead to an increased costs award
even though it falls short of the scandalous or abusive behaviour which might
justify full indemnity.
[18]
Although
the Applicants alleged prejudice and direct harm to justify standing under
subsection 18.1(1) of the Federal Court Act, RSC 1985 c F-7, they
offered no evidence to substantiate their claims. Danone also alleged that it
was entitled to public interest standing but failed to meet the test.
Accordingly, neither Applicant had standing. While not justifying a full
indemnity award, this conclusion does justify increased costs.
[19]
Regarding
fees for two senior counsel, I am persuaded that staffing the file in this
manner made sense given the pressure created by the Applicants’ injunction
applications and the Christmas holiday period.
[20]
Against
this background, and given that costs are usually awarded under Column III, the
question becomes what constitutes increased costs? Is it costs under Column V
or costs outside the Tariff? I am mindful of the cases cited by the Applicants
and in particular the argument that fairness in the assessment of costs
requires the predictability and certainty provided by the Tariff. The
Applicants bring to my attention paragraph 57 of Mr. Justice Décary’s reasons
(dissenting in part) in Consorzio del Prosciutto di Parma v Maple Leaf Meats
Inc., 2002 FCA 417, where he warned that cost awards which exceed the
amounts permitted under the Tariff will lead to the undermining of the Tariff
and will result in “unpredictability, arbitrariness and in the end unfairness
in cost awards.” I also note that in Mugesera v Canada (Minister of
Citizenship and Immigration), 2004 FCA 157 at paragraph 15, the Federal
Court of Appeal cited the need for uniformity and foreseeability when it
instructed judges to be guided as much as possible by Tariff B.
[21]
The
Applicants also rely on Wihksne v Canada (Attorney General), 2002 FCA
356. In that case the Federal Court of Appeal held that absent special
considerations outlined in Rule 400(3), the Court should be reluctant to depart
from the Tariff. The Court in Wihksne relied on Mr. Justice Nadon’s
decision in Hamilton Marine Engineering Ltd. v CSL Group Inc. (1995), 99
FTR 285 (FCTD), which said that the Tariff must remain the rule and that a
departure from the Tariff is an exception that the Court should not make
lightly. However, I note that Mr. Justice Nadon, then of the Federal Court, did
depart from the Tariff in that case, citing the volume of work required of
counsel and the reasonable offers of settlement made by the successful party
prior to and at the commencement of the trial. He ultimately awarded twice the
Tariff amount under Column V.
[22]
There
is no doubt that uniformity and predictability are important objectives.
However, there are other relevant factors that guide the exercise of judicial
discretion in this realm. Although not referring to Tariff B, the Supreme Court
of Canada stated in British Columbia (Minister of Forests) v Okanagan Indian
Band, 2003 SCC 71, that the fair and efficient functioning of the justice
system, including the deterrence of frivolous actions and defences, is one of
the policy objectives of the modern approach to costs. Other decisions have
acknowledged that a cost award pursuant to Tariff B is not intended to fully
indemnify the successful party but is meant to represent a compromise between
awarding full compensation to a successful party and imposing a crushing burden
on the unsuccessful party (Apotex Inc v Wellcome Foundation Ltd. (1998),
159 FTR 233 at para 7 (FCTD); Air Canada v Thibodeau, 2007 FCA 115 at
para 21).
[23]
Taken
together the cases show that although judges generally exercise their
discretion within the Tariff, the Court may go beyond the Tariff when required
to achieve a reasonable outcome. In Consorzio del Prosciutto di Parma,
the Federal Court of Appeal awarded increased costs, representing roughly 30%
of the actual fees plus disbursements. Mr. Justice Rothstein, then of the
Federal Court of Appeal and writing for the majority, confirmed that Rule 400
permits judges to depart from the Tariff where an award of costs under the
Tariff is deemed unsatisfactory. Although the Court instructed judges to exercise
discretion prudently, it also offered the following reminder: “it must be borne
in mind that the award of costs is a matter of judgement as to what is
appropriate and not an accounting exercise” (at para 10). The reasons offered
by Mr. Justice Rothstein for granting increased costs were the complexity of
the matters and the amount of work required of counsel. The Court was also of
the view that the actual amount of solicitor-client costs, although not
determinative, may in some cases factor into determining an appropriate
party-party cost contribution.
[24]
This
Court addressed a judge’s discretion to award costs outside of the Tariff in Dimplex
North America Ltd. v CFM Corp, 2006 FC 1403. Mr. Justice Mosley held that
where increased costs are warranted the Court should first determine whether a
reasonable award can be achieved within the Tariff. However, when it is not
possible to achieve a reasonable or satisfactory result within Tariff B, the
Court may consider awarding an amount in excess of the Tariff. The Court in Dimplex
awarded Column V costs to the successful party but added a premium which
resulted in increased costs representing 20% of actual costs.
[25]
Remaining
mindful of the importance of predictability and certainty, and keeping in mind
the cases cited above, I am of the view that in this case an award $138,306.35
under Column V of the Tariff leaves Agro-Farma to pay too heavily for its
vindication. In my view, such an award would be unjust.
[26]
I
have therefore decided to depart from Tariff B and allow Agro-Farma to recover
approximately one third of its actual costs i.e. $410,000 plus disbursements of
$74,929.56.
ORDER
THIS
COURT ORDERS that:
The costs in
this matter are hereby granted to the Respondent Agro-Farma in the amount of
$410,000 plus disbursements of $74,929.56. The Applicants are liable jointly
and severally for this award.
“Sandra
J. Simpson”
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