Date: 19980610
Docket: T-1712-97
BETWEEN:
AIC LIMITED,
Plaintiff
- and -
INFINITY INVESTMENT COUNSEL LTD.,
INFINITY FUNDS MANAGEMENT INC.,
RICHARD CHARLTON, DAVID SINGH,
JEFFREY LIPTON and GRANT JUNG,
Defendants.
REASONS FOR ORDER
(Costs on Motion for Judgment)
ROTHSTEIN J.
1 The plaintiff's motion for judgment based on an alleged settlement agreement was dismissed on May 5, 1998. The Court found there was no binding settlement agreement, or if there was that it was repudiated. Because the motion for judgment was dismissed, the action will proceed to trial and judgment after trial.
2 In respect of costs, the Judgment provided:
2.The question of costs is reserved
The Reasons for Judgment provided:
The defendants are entitled to costs. In lieu of taxation, the parties shall, if they cannot agree as to the amount of costs, contact the Registrar within fourteen (14) days of the date of these reasons and a short conference call will be convened with the Court for the purpose of fixing a lump sum inclusive of disbursements.
The parties appeared before the Court on June 5, 1998 at Toronto to argue the question of costs.
3 The plaintiff makes a preliminary objection to costs being awarded to the defendants and submits that costs should be awarded "in the cause". Reliance is placed on Toronto Dominion Bank v. Canada Trust Co. Mortgage Co. (1992), 40 C.P.R. (3d) 68 (F.C.T.D.) which followed Thurston Hayes Developments Ltd. v. Horne Abbot Ltd. (1985), 5 C.P.R. (3d) 124 (F.C.A.), in which the Federal Court of Appeal stated at page 126:
As to the question of the award of costs in any event of the cause, to make such an award at this stage, necessarily assumes that the appellants are guilty of, or are likely to be found guilty of, the infringements alleged by the respondents and, should be penalized therefor despite the fact that it is quite possible that they may successfully defend the action at trial. We do not believe that to impose such a penalty is a proper exercise of a judicial discretion. It is more appropriate, in our view, for the award to be 'costs in the cause'.
4 As I have said, Thurston Hayes was followed in Toronto Dominion Bank. It was also followed by me in Effem Foods Ltd. v. H.J. Heinze Co. of Canada Ltd. (1997), 75 C.P.R. (3d) 334.
5 In Effem Foods, I observed that the law of costs was evolving and that there was a rationale for awarding costs on a motion irrespective of the outcome at trial. In Apotex Inc. v. Egis Pharmaceuticals (1990) 32 C.P.R. (3d) 559 (Ont. Ct. (Gen. Div.)) Henry J. states at page 571:
The issue on the motion is discrete - - it is whether to grant an interlocutory injunction. That issue is not the issue at trial and the decision made on the motion does not fetter the judge at trial. The motions judge is concerned only to assess whether the plaintiff (in this case) has a claim or a right that the court ought to protect until trial (the substantive issue), and that the choice of remedy (an injunction) as a matter of justice or convenience ought to be granted by a court of equity in the circumstances. It is my opinion that this is a discrete issue and one to which Rule 57.03 can apply as can the judicial policy mentioned. This is particularly so when the remedy is granted or refused regardless of the outcome at trial, as in most cases the issue there will be tried on perfected evidence and on the basis of credibility of conflicting testimony
6 The same policy was endorsed by Hoilett J. in Applied Systems Technologies Inc. v. Sys-Net Computer Systems, Inc. (1992), 41 C.P.R. (3d) 129 (Ont. Ct. (Gen. Div.)) where at page 131 he states:
The emerging policy in the courts of fixing costs and making them payable forthwith is receiving, increasingly, the approbation of the Court. Nowhere is that policy better exemplified than in the recent decision of Henry J. in Apotex Inc. v. Egis Pharmaceuticals (1991), 37 C.P.R. (335), 4 O.R. (3d) 321, 28 A.C.W.S. (3d) 26 (Gen. Div.). Apart from endorsing the above policy, Henry J. addressed an equally important point, and, that is, in fixing costs the court is not purporting to assess costs; for reasons that should be axiomatic. The fixing of costs and making them payable forthwith is an instrumentality aimed at expedition. It serves as well the twin objective in the salutary purpose of focusing the minds of litigants on the cost of litigation.
7 The defendants submit that the enactment of the Federal Court Rules, 1998, SOR/98-106, which make express provision for the award of costs on motions, renders Thurston Hayes no longer applicable or binding. The plaintiff says that since the only thing that has occurred after the coming into force of the new Rules on April 25, 1998 was the dismissal of the motion for judgment, the new Rules do not apply to the determination of costs.
8 Rule 501(1) of the Federal Court Rules, 1998 provides:
Subject to subsection 2, these Rules apply to all proceedings, including further steps taken in proceedings that were commenced before the coming into force of these Rules.
9 Rules 501(1) of the Federal Court Rules, 1998 brings into consideration paragraph 44(c) of the Interpretation Act, R.S.C. 1985, c. I-23, as amended, which provides:
44. Where an enactment, in this section called the "former enactment", is repealed in another enactment, in this section called "new enactment", is substituted therefor,
. . . .
c) every proceeding taken under the former enactment shall be taken up and continued under and in conformity with the new enactment insofar as it may be done consistently with the new enactment;
Paragraph 44(c) coincides with, and must be interpreted consistently with paragraph 43(c) which provides:
43. Where an enactment is repealed in whole or in part, the repeal does not
. . . .
c) affect any right, privilege, obligation or liability acquired, accrued, accruing or incurred under the enactment so repealed;
10 Rule 501(1) provides that prima facie, the new Rules should apply to the award of costs in proceedings commenced before the new Rules came into force but in which the award of costs takes place after the coming into force of the new Rules. Of course, Rule 501(1) should be interpreted not to affect rights accrued or accruing when the former Federal Court Rules ceased to have effect. However, there were no rights accrued or liabilities incurred with respect to costs of the plaintiff's motion prior to the old Rules ceasing to have effect. Such rights or liabilities could not arise until the Court dealt with the question of costs, which in this case was after the new Rules came into effect. I am satisfied the new Rules apply to the award of costs in this case.
11 Rule 401 of the Federal Court Rules, 1998 provides:
401.(1)The Court may award costs of a motion in an amount fixed by the Court.
(2)Where the Court is satisfied that a motion should not have been brought or opposed, the Court shall order that the costs of the motion be payable forthwith.
While Rule 401(1) still requires that the discretion to award costs be judicially exercised, I interpret the Rules as providing that the discretion is to be exercised in accordance with the policy for awarding costs on motions set out in Apotex and Applied Systems - that the issue on a motion may not be the issue at trial and that the fixing of costs on a motion is an instrumentality aimed at expedition and focusing the minds of litigants on the costs of litigation. If Thurston Hayes still applied, the new Rules would not provide for the awarding of costs on a motion as all costs of motions would have to await the outcome at trial. Rule 401(2) requires the Court to order that the costs of the motion be payable forthwith where the Court is satisfied the motion should not have been brought or opposed. Rule 401 therefore implies that this Court should adopt a policy in respect of costs on motions that is consistent with the dicta in Apotex and Applied Systems. For these reasons I think the ratio of Thurston Hayes has been displaced by Rule 401. In any event, if Thurston Hayes still had application, I would restrict that application to costs in respect of interlocutory injunctions and would not extend it to the present motion for judgment which, being based on an alleged settlement agreement, was clearly discrete from the issue at trial which will be the merits of the plaintiff's claim.
12 Accordingly, costs may be awarded to the defendants as the successful parties on the plaintiff's motion for judgment.
13 The plaintiff also relies on Smith and Nephew v. Glen Oak Inc. (1995), 64 C.P.R. (3d) 452, to argue that costs should not be awarded until after the appeal of the decision on the motion is determined. Smith and Nephew is an unusual case based on its particular facts. I do not think it is a case of general application insofar as the awarding of costs is concerned, as the general practice is not to await the outcome of an appeal before costs are dealt with in Trial Division proceedings.
14 The defendants ask for party/party costs in the sum of $57,705.57. In determining appropriate costs in this case, I note that the argument took some twenty hours over the course of one week as the Court found time to deal with it. The material was voluminous as there were a number of affidavits filed together with transcripts of cross-examinations. The case was factually complex. The Court had to draw numerous inferences from the evidence, a number of which were the subject of argument. The amounts involved and issues are significant. Defendants' counsel submitted their time dockets which were provided to plaintiff's counsel which indicated solicitor/client fees of approximately $90,000. The plaintiff does not suggest that these fees are unreasonable although the plaintiff says that party/party costs in the range of $20,000 to $25,000 would be appropriate. Having regard to the importance of the issues and the amount of work involved on the motion, as well as disbursements of close to $3,000, I would award the defendants a lump sum amount of $43,000 inclusive of disbursements.
(Sgd.) "Marshall E. Rothstein"
Judge
Vancouver, British Columbia
June 10, 1998
FEDERAL COURT TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
HEARING DATED: June 5, 1998
COURT NO.: T-1712-97
STYLE OF CAUSE: AIC Limited
v.
Infinity Investment Counsel Ltd. and others
PLACE OF HEARING: Toronto, ON
REASONS FOR ORDER OF ROTHSTEIN, J.
dated June 10, 1998
APPEARANCES:
Mr. Gordon Zimmerman for Plaintiff
Mr. David Hager
Ms. Stephanie Chong for Defendants
SOLICITORS OF RECORD:
Borden & Elliott
Toronto, ON for Plaintiff
Lang Michener
Toronto, ON for Defendants
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