Date: 20040825
Dockets: A-806-99, A-807-99, A-808-99
Citation: 2004 FCA 278
CORAM: LINDEN J.A.
ROTHSTEIN J.A.
SHARLOW J.A.
A-806-99
BETWEEN:
CCH CANADIAN LIMITED
Appellant
and
THE LAW SOCIETY OF UPPER CANADA
Respondent
A-807-99
BETWEEN:
THOMSON CANADA LIMITED C.O.B. AS CARSWELL THOMSON
PROFESSIONAL PUBLISHING
Appellant
and
THE LAW SOCIETY OF UPPER CANADA
Respondent
A-808-99
BETWEEN:
CANADA LAW BOOK INC.
Appellant
and
THE LAW SOCIETY OF UPPER CANADA
Respondent
Heard at Toronto, Ontario, on August 13, 2004
Order delivered at Ottawa, Ontario, August 25, 2004.
REASONS FOR ORDER BY: ROTHSTEIN J.A.
CONCURRED IN BY: LINDEN J.A.
SHARLOW J.A.
Date: 20040825
Dockets: A-806-99, A-807-99, A-808-99
Citation: 2004 FCA 278
CORAM: LINDEN J.A.
ROTHSTEIN J.A.
SHARLOW J.A.
A-806-99
BETWEEN:
CCH CANADIAN LIMITED
Appellant
and
THE LAW SOCIETY OF UPPER CANADA
Respondent
A-807-99
BETWEEN:
THOMSON CANADA LIMITED C.O.B. AS CARSWELL THOMSON
PROFESSIONAL PUBLISHING
Appellant
and
THE LAW SOCIETY OF UPPER CANADA
Respondent
A-808-99
BETWEEN:
CANADA LAW BOOK INC.
Appellant
and
THE LAW SOCIETY OF UPPER CANADA
Respondent
REASONS FOR ORDER
ROTHSTEIN J.A.
INTRODUCTION
[1] This is a motion by the respondent, Law Society of Upper Canada ("Law Society") for increased costs. The extension of time for the filing the motion has been granted with the consent of the appellants ("the publishers").
JUDICIAL HISTORY
[2] This matter originated in the Federal Court, Trial Division (as it then was), as an action by the publishers against the Law Society for copyright infringement. The publishers asserted that in providing copies of reported judicial decisions and other legal works to members of the Law Society, or in permitting patrons of the Great Library in Toronto to make photocopies of such works, the Law Society was infringing or authorizing the infringement of their copyright in those works.
[3] The Trial Judge found that copyright subsisted in certain materials, but not in reported judicial decisions. In respect of those works in which he found copyright to subsist, he determined that by photocopying those works and distributing them, the Law Society infringed the publishers' copyright. However, he declined to grant the publishers request for a permanent injunction against the Law Society. Ultimately, he did not make an award of costs to any party.
[4] The publishers appealed and the Law Society cross-appealed. In this Court, copyright was found to subsist in all the publishers' works in evidence, including reported judicial decisions. The Law Society was found to have infringed the publishers' copyright in providing photocopies of those works to its members and to have authorized copyright infringement by allowing patrons at the Great Library to copy those works. However, the Court rejected the argument of the publishers for a permanent injunction against the Law Society.
[5] In the Court's reasons, the parties were invited to make submissions as to costs before the Court issued its judgment. The Law Society requested costs at the maximum end of Column IV of Tariff B. Following the submissions, the Court issued its judgment on July 8, 2002, ordering, inter alia, that, because of the importance and complexity of the issues, the absence of established principles on some of the issues and the divided success on the appeal and cross-appeal, each party was to bear its own costs.
[6] The Law Society appealed and the publishers cross-appealed to the Supreme Court of Canada, which allowed the appeal and dismissed the cross-appeal. The Supreme Court issued a declaration that the Law Society does not infringe the publishers' copyright when a single copy of a reported judicial decision or other legal work is made and that the Law Society does not authorize copyright infringement by allowing photocopies of such works to be made in the Great Library. Given its success on the appeal and cross-appeal, the Law Society was awarded "costs throughout."
THE LAW SOCIETY'S REQUEST FOR INCREASED COSTS
[7] The Law Society now returns to this Court to ask for a lump sum award of costs of $251,000 fees and $37,000 disbursements, for a total of $288,000. The figures have been rounded and include GST.
[8] To put the matter for increased costs into perspective, the Law Society has provided information as to its solicitor-and-client fees and disbursements and its calculation of the amount of party-and-party costs that would be awarded under Tariff B, Columns III and V. The figures shown have been rounded and include GST.
|
|
Solicitor-and-Client
Fees and Disbursements
|
Column III
|
Column V
|
Lump Sum Requested
|
|
Fees
|
$ 377,000
|
$ 14,000
|
$ 23,000
|
$ 251,000
|
|
Disbursements
|
$ 37,000
|
37,000
|
37,000
|
37,000
|
|
TOTAL
|
$ 414,000
|
$ 51,000
|
$ 60,000
|
$ 288,000
|
[9] The publishers submit that costs should be awarded on the basis of the high end of Column III of Tariff B and that the Law Society did not provide acceptable evidence of disbursements in excess of $13,000. As the publishers applied a slightly different unit assessment under Column III than the Law Society, their calculation results in party-and-party fees of $13,000 and disbursements of $13,000, for a total of $26,000. Again, the figures shown have been rounded and include GST.
[10] Counsel for the Law Society advised that an amount exceeding $414,000 has been billed to the Law Society in respect of the appeal in this Court and has been paid.
[11] The Law Society submits that increased costs are justified by its complete success, the complexity of the appeal, the importance of the matter, and the amount of work involved. It says that the amount of costs provided by the Tariff is not reasonable in the particular circumstances of this appeal.
THE EXTENT OF THIS COURT'S DISCRETION TO AWARD INCREASED COSTS
[12] The publishers appear to give three reasons why this Court has no discretion to award increased costs. First, they say that this Court has no jurisdiction to deal with an application for increased costs after a judgment of the Supreme Court of Canada. Any application for increased costs must be made to that Court.
[13] Second, the publishers say that even if this Court is the proper forum for an application for increased costs, an order by the Supreme Court of "costs throughout" leaves no discretion to this Court to order costs other than under Column III of Tariff B. The publishers rely on Consorzio del Prosciutto di Parma v. Maple Leaf Meats Inc. (2002), 22 C.P.R. (4th) 177 at para. 9 (F.C.A.):
In exercising its discretion, the Court may fix the costs by reference to Tariff B or may depart from it. Column III of Tariff B is a default provision. It is only when the Court does not make a specific order otherwise that costs will be assessed in accordance with Column III of Tariff B.
As the Supreme Court did not make a specific order for increased costs, the publishers argue that costs must be assessed in accordance with Column III.
[14] Third, the publishers submit that even if an award of "costs throughout" might ordinarily leave this Court with discretion to award increased costs, such increased costs cannot be awarded in this case because the Law Society, in argument before the Supreme Court, represented that there were no special circumstances regarding costs. The publishers say this Court should infer from that submission that the Supreme Court's judgment awarding "costs throughout" is a direction that no increased costs be awarded.
[15] As to the publishers' first argument, nothing in the judgment of the Supreme Court expressly or implicitly reserves to the Supreme Court the exclusive authority to award increased costs. Rather, an award of "costs throughout" by the Supreme Court remits to the respective lower courts the determination of costs in respect of the proceedings in each Court, according to the rules of each lower court.
[16] Turning to the publishers' second argument, when the matter of costs is remitted to this Court after a judgment of the Supreme Court awarding costs, the only fetter on the discretion conferred upon this Court in respect of costs is that this Court may not exercise its discretion in a manner inconsistent with the award of costs by the Supreme Court of Canada. This approach was succinctly explained by Strayer J.A. in Eli Lilly and Co. v. Novopharm Ltd. (1998), 85 C.P.R. (3d) 219 at paragraph 5 (F.C.A.):
Clearly there are some discretionary powers under Rule 400 which cannot be exercised in the face of an award of costs ordained by the Supreme Court. For example, this Court could not, in the face of such a direction, refuse costs or award them instead to the unsuccessful party. But, in my view, any discretionary power granted by the Federal Court Rules whose exercise is not inconsistent with the award of costs by the Supreme Court can be exercised in giving effect to an award of costs in this Court by the Supreme Court on appeal.
[17] In my view, when the Supreme Court makes an award of "costs throughout," the direction to this Court is neutral, in the sense that, as long as costs are awarded, the Supreme Court is leaving it to this Court to decide on the appropriate amount of costs. Under such a direction, when the matter of costs is remitted to this Court, costs are to be assessed in accordance with the Rules of this Court which allow for the awarding of increased costs (see rules 400(1) and (4)).
[18] As to the publishers' third argument, the Law Society says that its representations to the Supreme Court that there were no "special circumstances" were only made in the context of whether there was justification for an order for solicitor-and-client costs. It argues that those representations should not be taken as a concession that increased party-and-party costs are not justified in this Court. I accept the Law Society's argument. The record does not support the argument of the publishers that the Supreme Court gave any consideration to the quantum of party-and-party costs in this Court. I cannot infer from the parties' costs submissions in the Supreme Court that the Supreme Court intended to fetter the discretion of this Court to award increased costs in this case.
[19] For these reasons, I am of the opinion that this Court has jurisdiction to consider the Law Society's application for increased costs.
CONSIDERATIONS IN THE AWARDING OF INCREASED COSTS
[20] I turn to the factors to consider in awarding increased costs. This was a copyright case involving sophisticated clients. There is no suggestion that the parties do not have reasonable financial resources. Both parties retained highly experienced and specialized counsel. The matter was of a high degree of complexity, with numerous interconnected issues, many of which had not been considered in Canada. The argument in this Court took three days (most appeals are heard in no more than half a day). The record and the written arguments were much longer than in most appeals, as was the judgment of this Court (some 140 pages, including concurring reasons). The case was important, as evidenced by the granting of leave to appeal by the Supreme Court as well as the five interventions permitted by the Supreme Court of Canada. There was much work involved and time spent. The Law Society, which did not initiate the litigation but was defending itself from claims by the publishers, was entirely successful. These factors, in my view, justify an award of increased costs.
[21] However, the publishers point out that in the Law Society's original submission for costs in this Court, the Law Society asked only that "costs ... should be taxed at the maximum end of Column IV of Tariff B." The publishers say that party-and-party costs at the high end of Column IV amount to about $17,000, including GST.
[22] The Law Society replies that a major difference is that, in this Court, success was divided, while, at the Supreme Court, it was entirely successful. I agree that this is a significant factor to take into account. However, the complexity, the importance of the case and the amount of work and time involved relative to the appeal in this Court did not change as a result of the Law Society's victory in the Supreme Court. I do not see how I can completely overlook the submissions originally made by the Law Society in this Court. If, in the Law Society's view, the factors of complexity, importance and amount of work and time involved only merited costs at the high end of Column IV when it made its original costs submission in this Court, it is difficult to give these factors significantly greater weight on the assessment of costs at this stage of the proceedings. I would therefore award the Law Society increased costs, but temper a lump sum award having regard to the Law Society's earlier representations seeking increased costs only at the high end of Column IV.
DISBURSEMENTS
[23] The publishers also take issue with the Law Society's claim for disbursements. They say that the disbursements have not been adequately proven. They are of the view that the Law Society should only be awarded some $13,000 in respect of disbursements, rather than $37,000.
[24] While the Law Society could have made a somewhat greater effort to provide evidence of the necessity and reasonableness of its disbursements, I do not think the level of detail which the publishers argue for is required. On the other hand, when disbursements are challenged, a party has an obligation to provide some evidence to show that the disbursements were justified.
[25] The largest single item of disbursements is photocopying. From the extensive appeal books and books of authorities provided to this Court, it can readily be inferred that significant photocopying expenses were incurred. The other items of disbursements are those normally associated with litigation. I am satisfied, in the circumstances of this case, that the Law Society is substantially entitled to its disbursements, but in view of the paucity of the evidence, that some reduction should be made.
INTEREST
[26] The Law Society claims post-judgment interest from the date of this Court's judgment, July 8, 2002, until the date of payment. The publishers say that interest should only run from the date this Court makes its order for costs in accordance with the direction of the Supreme Court.
[27] Mercifully, at least the parties are agreed on two issues:
1. the rate of interest should be four percent per annum; and
2. the law of Ontario relating to interest on judgments is the law applicable to this case. (See subsection 37(1) of the Federal Courts Act, R.S.C. 1985, c. F-7.)
[28] Subsection 129(1) of the Ontario Courts of Justice Act, R.S.O. 1990 c. C.43, provides that money owing under an order, including costs to be assessed by the court, bears interest from the date of the order. Subsection 129(1) provides:
|
129. (1) Money owing under an order, including costs to be assessed or costs fixed by the court, bears interest at the postjudgment interest rate, calculated from the date of the order.
|
129. (1) La somme d'argent due aux termes d'une ordonnance, y compris les dépens devant être liquidés ou ceux fixés par le tribunal, porte intérêt au taux d'intérêt postérieur au jugement, à compter de la date de l'ordonnance.
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[29] Subsection 127(1) defines "date of the order" as follows:
|
127. (1) In this section and sections 128 and 129,
....
"date of the order" means the date the order is made, even if the order is not entered or enforceable on that date, or the order is varied on appeal ....
|
127. (1) Les définitions qui suivent s'appliquent au présent article et aux articles 128 et 129.
« date de l'ordonnance » Date à laquelle est rendue l'ordonnance, même si elle n'est pas inscrite ou exécutoire ce jour-là, ou si elle est modifiée en appel....
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[30] No authorities interpreting subsection 129(1) were produced before this Court. However, counsel for the publishers relied on Canadian Aero Service Ltd. v. O'Malley (1973), 2 O.R. (2d) 92, a case decided under section 40 of the Judicature Act, R.S.O. 1970, c. 228, a predecessor of subsection 129(1). Grant J. ruled that interest would run only from the date of a taxation of costs.
[31] In the subsequent case of Houser v. Township of West Lincoln (1984), 46 O.R. (2d) 703, Osborne J. (as he then was) found that when the Court of Appeal varied a trial judgment, interest ran from the date of the trial judgment. The debate between these two interpretations continued after the coming into force of the Courts of Justice Act in 1984.
[32] In 2003, however, McIsaac J. held that the proper interpretation of subsection 129(1) requires interest on costs to be payable from the date of judgment rather than from the date of assessment (Roberts v. Aasen (2003), 36 C.P.C. (5th) 185 (Ont. Sup. Ct.)). He found support for this interpretation in the decision of the House of Lords in Hunt v. R.M. Douglas (Roofing) Ltd., [1988] 3 All E.R. 823 at 833 in which Lord Ackner held that in the majority of cases, the balance of justice favours awarding interest on costs from the date of judgment. Roberts was followed by Lane J. in Hodgson v. Canadian Newspapers Co., [2004] O.J. No. 537 (Sup. Ct.).
[33] I agree that the preferred interpretation of subsection 129(1) is more in accord with Houser than Canadian Aero Service. Subsection 129(1) appears to contemplate the circumstance where an order is made with costs to be assessed subsequently. In such case, the costs would bear interest from the date of the order, even though they were not taxed and ascertained until a later date. Applying that approach to this case means that interest would run from the date of the Court's original judgment, July 8, 2002, which, according to the Supreme Court of Canada, should have awarded costs to the Law Society.
[34] There is a rationale for this approach. Where, as here, an order for costs is made only after an appeal to the Supreme Court of Canada, the successful party is normally out-of-pocket its solicitor-and-client costs for a considerable period of time. Party-and-party costs are intended to be a partial indemnity towards solicitor-and-client costs. Interest recognizes the time value of money. I acknowledge that under paragraph 130(1)(c) of the Courts of Justice Act, the Court has a discretion to allow interest for a period other than that provided under subsection 129(1). However, in usual circumstances, I see no reason why a successful party should have an award of costs eroded by delay simply because it was required to go through a series of appeals and a taxation of costs before obtaining the result to which it was entitled in the first place.
CONCLUSION
[35] I would award the Law Society party-and-party costs of $80,000 including fees, disbursements and GST, with interest at four percent per annum from July 8, 2002, to the date of payment.
[36] Success on this motion was divided. I would award no costs on this motion.
"Marshall Rothstein"
J.A.
"I agree
A.M. Linden J.A."
"I agree
K. Sharlow J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKETS: A-806-99, A-807-99, A-808-99
STYLES OF CAUSE:
A-806-99
CCH CANADIAN LIMITED
Appellant
and
THE LAW SOCIETY OF UPPER CANADA
Respondent
A-807-99
THOMSON CANADA LIMITED C.O.B. AS CARSWELL THOMSON PROFESSIONAL PUBLISHING
Appellant
and
THE LAW SOCIETY OF UPPER CANADA
Respondent
A-808-99
CANADA LAW BOOK INC.
Appellant
and
THE LAW SOCIETY OF UPPER CANADA
Respondent
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: AUGUST 13, 2004
REASONS FOR ORDER: ROTHSTEIN J.A.
CONCURRED IN BY: LINDEN J.A.
SHARLOW J.A.
DATED: AUGUST 25, 2004
APPEARANCES:
Mr. Roger T. Hughes, Q.C.
Ms. Jeilah Y. Chan FOR THE APPELLANTS
Mr. Kelly Gill
Mr. Kevin Sartorio FOR THE RESPONDENT
SOLICITORS OF RECORD:
Sim, Hughes, Ashton & McKay LLP
Toronto, Ontario FOR THE APPELLANTS
Gowling Lafleur Henderson LLP
Toronto, Ontario FOR THE RESPONDENT
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