Date: 20030117
Docket: T-1116-00
Neutral Citation: 2003 FCT 39
Ottawa (Ontario), January 17, 2003
Present: The Honourable Mr. Justice Blais
ADMIRALTY ACTION IN REM AND IN PERSONAM
BETWEEN:
CHAMPION INTERNATIONAL CORP.
Plaintiff
and
THE SHIP "SABINA"
and
THE OWNERS AND ALL OTHERS INTERESTED
IN THE SHIP "SABINA"
and
CARISBROOKE SHIPPING LIMITED
Defendants
REASONS FOR ORDER AND ORDER PURSUANT TO COSTS
-
- [1] I have carefully reviewed the written submissions of both parties.
FACTS
- [2] On April 11, 2001, the plaintiff made an offer to settle to the defendants, pursuant to rule 420(1) of the Federal Court Rules, 1998 [Rules] in the amount of U.S. $45,795.00 in principal plus all interest and costs the Court may award the plaintiff, offer which was still open for the defendants acceptance one day before the commencement of the trial, i.e. September 8, 2002, as per tab E of the plaintiff's written representations on costs.
- [3] A second offer was made by the plaintiff on or around September 5, 2002, in the amount of U.S. $25,442.20 in principal plus interest on that amount at the rate of 5.79% since June 28, 2000, plus some indemnity for its taxable costs. This offer was withdrawn on September 8, 2002, as per tab F of the plaintiff's written representations on costs.
- [4] On their side, the defendants made one offer of settlement to the plaintiff on August 27, 2002 in the amount of Cdn $15,550.00. The offer was revoked on the eve of the trial, i.e. September 8, 2002, as per tab C of the plaintiff's written representations on costs.
- [5] By way of Reasons for Judgment and Judgment dated November 6, 2002, the plaintiff's claim was granted in the amount of U.S. $50,844.39 with pre-judgment and post-judgment interest since June 26, 2000.
[6] The plaintiff's action was instituted on June 28, 2000. In addition to the exchange of pleadings, affidavit of documents and pre-trial conference memoranda, it necessitated an examination for discovery of Mr. Van der Lugt, two interlocutory motions and a two day trial.
RELEVANT LEGISLATION
Rule 400 of the Rules - Awarding of Costs Between Parties
| 400. (1) The Court shall have full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid.
|
|
400. (1) La Cour a entière discrétion pour déterminer le montant des dépens, les répartir et désigner les personnes qui doivent les payer.
|
|
|
|
|
[7] Subsection 400(3) constitutes the substance of rule 400 in that it outlines the many factors to be taken into account by this Court when awarding costs:
| 400(3) In exercising its discretion under subsection (1), the Court may consider
(a) the result of the proceeding;
(b) the amounts claimed and the amounts recovered;
(c) the importance and complexity of the issues;
...
(e) any written offer to settle;
...
(g) the amount of work;
(h) whether the public interest in having the proceeding litigated justifies a particular award of costs;
(i) any conduct of a party that tended to shorten or unnecessarily lengthen the duration of the proceeding;
...
(k) whether any step in the proceeding was
(i) improper, vexatious or unnecessary, or
...
(o) any other matter that it considers relevant.
|
|
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 :
a) le résultat de l'instance;
b) les sommes réclamées et les sommes recouvrées;
c) l'importance et la complexité des questions en litige;
[...]
e) toute offre écrite de règlement;
[...]
g) la charge de travail;
h) le fait que l'intérêt public dans la résolution judiciaire de l'instance justifie une adjudication particulière des dépens;
i) la conduite d'une partie qui a eu pour effet d'abréger ou de prolonger inutilement la durée de l'instance;
[...]
k) la question de savoir si une mesure prise au cours de l'instance, selon le cas :
(i) était inappropriée, vexatoire ou inutile,
[...]
o) toute autre question qu'elle juge pertinente.
|
|
|
|
|
[8] Subsection 400(4) provides for the award of costs by way of a lump sum:
| (4) The Court may fix all or part of any costs by reference to Tariff B and may award a lump sum in lieu of, or in addition to, any assessed costs.
|
|
(4) La Cour peut fixer tout ou partie des dépens en se reportant au tarif B et adjuger une somme globale au lieu ou en sus des dépens taxés.
|
| |
|
|
[9] The notes under rule 400 read as follows:
Rule 400(3) particularizes the Court's discretion by listing 14 factors which the Court may wish to consider in exercising its discretion. Rule 400(3) is not restrictive: the Court may consider any other matter that it considers relevant: rule 400(3)(o).
Paragraph (e) of rule 400(3) indicates that the Court may consider any written offer to settle. It is open to the Court to take a written offer to settle into account whether or not that offer has triggered "double costs" under rules 419 and 420.
Costs awarded may be fixed by the Court or left to be assessed. Rule 400(4) allows the Court to fix costs or award a lump sum.
Rule 420 of the Rules - Offer to Settle
[10] Subsection 420(1) of the Rules provides for the consequences of failure to accept the plaintiff's offer:
| 420. (1) Unless otherwise ordered by the Court, where a plaintiff makes a written offer to settle that is not revoked, and obtains a judgment as favourable or more favourable than the terms of the offer to settle, the plaintiff shall be entitled to party-and-party costs to the date of service of the offer and double such costs, excluding disbursements, after that date.
[emphasis added]
|
|
420(1) Sauf ordonnance contraire de la Cour, le demandeur qui présente par écrit une offre de règlement qui n'est pas révoquée et qui obtient un jugement aussi avantageux ou plus avantageux que les conditions de l'offre a droit aux dépens partie-partie jusqu'à la date de signification de l'offre et, par la suite, au double de ces dépens, à l'exclusion des débours.
[nos italiques]
|
|
|
|
|
[11] The notes relevant to rule 420 read as follows:
The Court may depart from the consequences prescribed under rules 420 and 421. As well, whether or not those rules are triggered, it is open to the Court to take a written offer to settle into account in exercising its general discretion as to costs: rule 400(3)(e). It is also a factor the assessment officer may consider: rules 409 and 400(3)(e).
Rule 405 of the Rules - Assessments of Costs
| 405. Costs shall be assessed by an assessment officer.
|
|
|
|
|
|
|
Currency Act
[12] Section 12 deals with public accounts and statements:
| 12. All public accounts established or maintained in Canada shall be in the currency of Canada, and any reference to money or monetary value in any indictment or other legal proceedings shall be stated in the currency of Canada.
[emphasis added]
|
|
12. Les comptes publics doivent être tenus dans tout le pays en monnaie canadienne; les sommes d'argent ou les valeurs en argent doivent, dans les procédures, notamment les actes d'accusation, être exprimées en monnaie canadienne.
[nos italiques]
|
|
|
|
|
ISSUES
[13] The Court should address three issues:
1. Is the plaintiff's offer to settle valid in terms of the Rules, thereby entitling it to double costs?
2. What is the appropriate scale at which costs should be assessed?
3. What are the allowable disbursements as related to fees and travel costs paid to representatives; amounts paid for photocopying; and amounts paid for processing or bailiffs?
ANALYSIS
1. Is the plaintiff's offer to settle valid in terms of the Rules, thereby entitling it to double costs?
- [14] In consequence of the decision rendered on November 6, 2002, the plaintiff now finds itself in a position more favourable than it would have been, had the offer to settle been accepted by the defendants.
- [15] In regards to the offer to settle itself, there is applicable jurisprudence that sheds some light as to the triggering effect of the doubling of costs by virtue of rule 420. In Apotex Inc. v. Syntex Pharmaceuticals International. Ltd., (2001) 273 N.R. 217, [2001] F.C.J. No. 727, Stone, Noël and Evans JJ.A. held:
[para. 10] If the generous costs advantage afforded by Rule 420(1) is to be available to a plaintiff, the offer to settle must be clear and unequivocal in the sense it leaves the opposite party to decide only whether to accept it or reject it.
- [16] The defendants argue that the Currency Act, specifically section 12, applies to the offer thereby making it invalid due to it not being in Canadian currency.
- [17] I cannot agree with such statement. Firstly, section 12 of the Currency Act specifically states that:
... any reference to money or monetary value in any indictment or other legal proceeding shall be stated in the currency of Canada.
[emphasis added]
- [18] Indeed, an offer to settle, in my mind, does not correspond to this definition. A legal proceeding does not refer to each and every document emanating from such a proceeding.
- [19] Secondly, reading the French version only confirms this conclusion, i.e.:
[...] les sommes d'argent ou les valeurs en argent doivent, dans les procédures, notamment les actes d'accusation, être exprimées en monnaie canadienne.
[emphasis added]
- [20] Such conclusion is furthermore corroborated by Canadian Pacific Forest Products Ltd v. Termar Navigation Co., (1998) 146 F.T.R. 72, [1998] F.C.J. No. 384, wherein double costs were granted on the basis of offers made in U.S. dollars.
- [21] In the case at hand, the offer to settle presented on behalf of the plaintiff was clear and unequivocal requiring but a response from the defendants.
[22] Also, in Canadian Olympic Assn. v. Olymel, Société en commandite, [2000] F.C.J. No. 1725, Lemieux J. held:
[para 10] ...I am of the view that the ingredient of compromise (or incentive to accept) is an essential element of an offer to settle. ...
[para 11] The purpose of the offer to settle rule, as pointed out by Morden A.C.J.O. in Data General, supra, is to encourage the termination of litigation by agreement of the parties -- more speedily and less expensively than by judgment of the Court at the end of a trial. He added the impetus to settle is a mechanism which enables a plaintiff to make a serious offer respecting his or her estimate of the value of the claim which will require the defendant to give early and careful consideration to the merits of the case.
- [23] The offer to settle in the present case does demonstrate an ingredient of compromise as it allows for a slackening of interest and costs should it be accepted.
- [24] Lastly, in Feherguard Products Ltd. v. Rocky's of B.C. Leisure Ltd., (1994) 53 C.P.R. (3d) 417, [1994] F.C.J. No. 2012, Stinson (Taxing Officer) stated that there is an automatic triggering effect of a valid offer to settle which does not require the Court's intervention (former rule 344.1 being similar to current rule 420):
[para 9] ...[W]ritten settlement offers made on four separate occasions were never withdrawn. They meet the threshold of Rule 344.1 and, as Rule 344 does not require an Order triggering Rule 344.1, the Taxing Officer has the authority to permit doubling. If Rule 344.1 was not automatic or mandatory, there would have been express language to that effect. If I conclude otherwise, I should refer this issue to the Court for the appropriate direction rather than simply disallow the doubling outright.
[para 10] In any event, I think that an explicit and visible exercise of the Court's authority under Rule 344(1) is not necessary to trigger Rule 344.1. ...
[25] Therefore, I am of the opinion that the offer to settle presented by the plaintiff to the defendants was clear and unequivocal and that it contained an ingredient of compromise, having the automatic effect of triggering the doubling of costs as per the language of rule 420.
2. What is the appropriate scale at which costs should be assessed?
[26] In Apotex Inc. v. Syntex Pharmaceuticals International Ltd, (1999) 176 F.T.R. 142, [1999] F.C.J. No. 1465 (varied on another point in [2001] F.C.J. No. 727 (F.C.A.), supra), Reed J. helps us in understanding the concept of scaling:
[para. 5] The plaintiff seeks an increase above column III of Tariff B level costs (the level at which costs are assessed unless otherwise ordered by the Court). Column III level costs are designed to address a case of average complexity. Roger Hughes notes in the looseleaf Federal Court of Canada Service that "Column III was intended to cover approximately half of a modest bill." ...
[para. 6] A non-exhaustive list of factors that the Court may consider when determining the appropriate scale of costs is set out in Rule 400(3). ...
[emphasis added]
[27] Reed J. pursues by stating the relevant factors to the case, and later says:
[para. 7] The plaintiff was completely successful in its claim. During the course of the trial, both the correctness of the plaintiff's position and the weakness of the defendants' position was obvious. ...
...
[para. 9] This case, while not the most complex of patent cases, did exceed the average complexity of an average case. An increase in complexity justifies an increase above column III level costs. The amount of work was average for a patent proceeding, but exceeded that of an "average case." ...
[para. 10] The defendants' conduct did lengthen the proceedings unnecessarily, but not egregiously so. ...
...
[para. 12] There is merit in counsel for the plaintiff's argument that an inference arises that the defendants' main objective in continuing the litigation was to keep the plaintiff out of the market for as long as possible. ...
...
[para. 13] Taking the above factors into account, I conclude that the circumstances of this case justify costs assessed at the maximum end of the column V level. ...
[emphasis added]
[28] In the present case, I am of the opinion that the factors which should be taken into account, when concluding on the appropriate scale, are the following:
- the plaintiff was completely successful in its claim (paragraphs 400(3)(a) and (b));
- this case, while not the most complex of admiralty cases, did exceed the average complexity of an average case, specifically with respect to its facts, which justifies an increase above column III level costs (paragraph 400(3)(c));
- the plaintiff's written offer to settle (paragraph 400(3)(e));
- the amount of work, as evidenced by the substantial time and efforts devoted by both parties and the decision of November 6, 2002 (paragraph 400(3)(g));
- the defendants' conduct, which had they otherwise agreed to the offer or to arbitration in the United States of America and collaborated with respect to the discovery of documents, could have shortened the duration of the proceedings (paragraph 400(3)(i)); and
- the defendants' lack of professionalism, imprecise, inaccurate and self-serving evidence and conduct tantamount to bad faith (paragraph 400(3)(o)).
[29] Taking the above factors into consideration, an increase above column III of Tariff B level costs is justified. Therefore, costs should be assessed in accordance with column IV of Tariff B.
3. What are the allowable disbursements as related to fees and travel costs paid to representatives; amounts paid for photocopying; and amounts paid for processing or bailiffs?
[30] In Canadian Pacific Forest Products Ltd v. Termar Navigation Co., supra, Rothstein J. decided that he would exercise his discretion to award counsel fees on a lump sum basis rather than refer the matter to the taxing officer (under former rule 344.1). This passage might help the Court in assessing the reasonable disbursements of this case:
[para. 18] I turn to disbursements in the plaintiffs' bill of costs totalling $80,684.61. I would disallow the following disbursements:
(1) The sum of $2,877.35 being expenses of the plaintiffs' expert incurred as a result of the postponement of the trial. I think that Noël J. totally disposed of costs for the postponement with his award of $10,000 to the plaintiffs and the matter of those costs is res judicata.
(2) Travel by counsel. I would disallow the sum of $2,000 being costs of one attendance by plaintiffs' counsel to the United Kingdom to meet with United Kingdom counsel which I cannot, on the evidence, connect to the progress of this litigation.
(3) Fees and disbursements of United Kingdom and Danish counsel. These are solicitor and client fees which are claimed here as disbursements. However, there is no evidence that plaintiffs' counsel in this Court required the services of foreign counsel for this litigation. As I understand it, these costs were incurred in part when it appeared this case might proceed in Denmark. This has nothing to do with the case in this Court. It also appears that plaintiffs' counsel met with United Kingdom counsel to discuss various legal issues, but I do not see how that relates to this case. United Kingdom counsel could not assist with respect to Canadian law. It appears the plaintiffs did incur these costs but for the Court to recognize them, they must have something to do with the litigation in this Court. I am not satisfied, on the evidence, that they do. The sum of $37,926.79 is disallowed as a disbursement.
(4) Plaintiffs' representatives' attendance at trial. Certainly, plaintiffs are entitled to be present at trial. However, I do not see why the cost of their attendance is a proper disbursement to charge to the defendants. The sum of $1,402.76 is disallowed.
[para. 19] In the result, plaintiffs are entitled to disbursements of $36,477.71. In total, the plaintiffs are awarded $95,000 fees, $36,477.71 disbursements for a total of $131,477.71.
[emphasis added]
-
- [31] The plaintiff's draft bill of costs is submitted in further support of it's request for a lump sum award of costs in the amount of Cdn $40,000.00 in lieu of taxable costs. The proposed amount is, according to the plaintiff, less than 80% of the actual costs so far incurred by it in this matter.
- [32] On the advantages of such a form of taxation, the plaintiff quotes Hugessen J. in Barzelex Inc. v. Ebn Al Waleed, [1999] F.C.J. No. 1839:
[para. 11] Finally, the defendants have raised the possibility of my making a lump sum order. In my view, as a matter of policy the Court should favour lump sum orders. It saves time and trouble for the parties and it is a more efficient method for them to know what their liability is for costs.
[emphasis added]
[33] However, in my view, this is not a case where costs should be awarded on a lump sum basis.
O R D E R
[1] In conclusion, I am of the opinion that the plaintiff should be entitled to party-and-party costs to the date of service of the offer, i.e. April 11, 2001 and double such costs, excluding disbursements, after that date.
[2] The task of determining the reasonableness of the expenses in the pro forma bill of costs and the calculation of the doubling factor of rule 420, in accordance with column IV of Tariff B, is left to the assessment officer.
"Pierre Blais"
J.F.C.C.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1116-00
STYLE OF CAUSE: CHAMPION INTERNATIONAL CORP. V THE SHIP
"SABINA" AND OTHERS
SUBMISSIONS ON COSTS DEALT WITH IN WRITING WITHOUT THE APPEARANCE OF PARTIES
REASONS FOR ORDER
AND ORDER : THE HONOURABLE MR. JUSTICE BLAIS
DATED: JANUARY 17, 2003
APPEARANCES:
MR. LOUIS BUTEAU FOR PLAINTIFF
MR. SEAN J. HARRINGTON FOR DEFENDANTS
SOLICITORS OF RECORD:
FLYNN, RIVARD FOR PLAINTIFF
MONTREAL, QUEBEC
BORDEN LADNER GERVAIS FOR DEFENDANTS
MONTREAL, QUEBEC
Email this Content