Date:
20120411
Docket: A-375-11
Citation: 2012 FCA 111
CORAM: EVANS
J.A.
SHARLOW
J.A.
DAWSON J.A.
BETWEEN:
TREVOR NICHOLAS
CONSTRUCTION CO. LIMITED
Appellant
and
HER MAJESTY THE QUEEN,
AS REPRESENTED
BY THE MINISTER FOR
PUBLIC WORKS
Respondent
REASONS FOR
JUDGMENT
DAWSON J.A.
[1]
In
1995, Trevor Nicholas Construction Co. Limited (plaintiff or appellant) sued
the federal Crown (defendant or respondent) in respect of four tenders
advertised by Public Works Canada. By order dated January 20, 2011, the Federal
Court granted summary judgment dismissing the plaintiff’s action. In reasons
cited as 2012 FCA 110 we have dismissed the plaintiff’s appeal from that order.
[2]
Now
before the Court is an appeal from a subsequent, unreported decision of the
Federal Court which awarded costs to the defendant for the action as a whole,
fixed in the amount of $32,955.11.
[3]
The
appellant raises the following five issues on this appeal:
1. Did
the Judge have jurisdiction to deal with or assess costs incurred before the
Federal Court of Appeal?
2.
Did
the Judge err in law by dealing with costs of prior motions that were before
other judges and prothonotaries, when only a trial Judge may deal with such
costs?
3.
Did
the Judge act unfairly, or err in law by assessing some costs in excess of that
contemplated by Column III of Tariff B to the Federal Courts Rules,
SOR/98-106, or by awarding costs that were in excess of the defendant’s actual
costs?
4.
Did
the Judge act unfairly, or in a biased manner, by permitting the defendant to
file an affidavit of disbursements, when the plaintiff had argued that the
defendant had failed to prove their disbursements by affidavit as is required
in law.
5.
Did
the Judge err in law by disregarding the fact that the security for costs
ordered to be paid into Court were a fraction of the amount awarded?
[4]
In
my view, this appeal should be dismissed for the following reasons.
[5]
With
respect to the appellant’s first ground of appeal, relating to costs in this
Court, the bill of costs submitted to the Judge by the defendant improperly included
claims to fees and disbursements in respect of two appeals decided by this
Court (appeals A-321-01 and A-154-03). While this Court dismissed both appeals
with costs payable to the defendant, it was an error of law for the defendant
to have asked that those costs be assessed by the Federal Court. Costs awarded
by this Court are to be fixed or assessed by this Court.
[6]
It
does not appear that the Judge excluded these items when fixing the costs in
the Federal Court. His brief endorsement simply states “I have been guided by
the fees calculated under the heading ‘Column III’ of [the defendant’s bill of
costs], with the following four exceptions”. None of the enumerated exceptions
related to the claim for fees and disbursements awarded, but not fixed or assessed,
by this Court. Given that the Judge made no exception on account of the claims
for fees and disbursements in respect of Court files A-321-01 and A-154-03, I
conclude that these claims were erroneously included when the Judge made his
award of costs.
[7]
The
question then arises as to how this error should be remedied. To answer this
question, it is important to consider the process followed by the Judge when
determining the costs to be awarded.
[8]
The
Judge dealt separately with the costs of the summary judgment motion and the
costs of the action. He allocated $11,380.74 for fees and disbursements on the
summary judgment motion and $21,574.37 for fees ($19,500.00) and disbursements
($2,074.37) for the balance of the action. The allowances claimed in respect of
the costs awarded by this Court were contained in that part of the bill of
costs which dealt with assessable services not related to the summary judgment
motion, but related to the action in general.
[9]
To
reach the lump sum in respect of services rendered in respect of the action,
the Judge reviewed the bill of costs submitted by the defendant. He was
generally guided by the fees calculated under Column III, but he made certain
upward revisions to the amounts claimed as he described in his endorsement. He
then slightly rounded up the revised total from $19,260.00 to $19,500.00 in
respect of fees relating to the conduct of the action.
[10]
During
oral argument counsel for the respondent conceded that the award of costs
should be decreased by the amount of the fees and disbursements claimed in the
bill of costs in respect of costs awarded by this Court. This would result in a
reduction of the cost award by $2,210.00 in respect of fees and $121.18 on
account of disbursements.
[11]
On
a practical level, however, the appellant would remain liable to pay those sums
after this Court’s two outstanding costs awards were assessed. This is because
the cost awards made by this Court were not qualified in any way. It follows
that they are to be assessed in accordance with Column III (Rule 407). The
costs included in the bill of costs submitted to the Federal Court in respect
of the two appeals to this Court were calculated on the basis of Column III,
and the disbursements were established in the affidavit as to disbursements. In
other words, reducing the amount of the costs awarded by the Federal Court
would simply entitle the respondent to claim that same amount in this Court.
[12]
In
order to avoid the delay and expense inherent in the assessment of the costs
ordered by this Court in A-321-01 and A-154-03, I would not intervene to vary
the costs ordered payable by the Judge. I would instead order that the
respondent is not entitled to pursue any claim for costs in this Court in
respect of Court files A-321-01 and A-154-03 on the ground that they have been
taken into account in the order under appeal.
[13]
With
respect to the second ground of appeal, concerning the Judge’s ability to deal
with interlocutory costs, the Judge reasoned that:
AND UPON being
satisfied that, having dismissed the within action, (i) I have the jurisdiction
to make such orders as may be necessary to dispose of the action, including by
awarding costs of the entire proceeding, in respect of any reasonable legal
services and disbursements incurred by the Defendant; and (ii) it would be in
the interest of the efficient administration of justice that I exercise such
jurisdiction.
[14]
In
my view, the Judge was correct in his conclusion about his authority. In
substance, the Judge stood in the same position as a judge who had dismissed
the action after a trial. A trial judge may deal with prior interlocutory cost
orders, subject to one caveat. Once a judge or prothonotary issues an order for
costs on an interlocutory motion without expressly varying the general default
provision of Rule 407, the issue of the scale of the costs is res judicata
(subject to a motion to vary under Rule 403) (Merck & Co. v. Apotex
Inc., 2006 FCA 324, 354 N.R. 355 at paragraph 15 and following). Thus, the
Judge was entitled to award costs in respect of the entire proceeding. The
defendant did not seek interlocutory costs in excess of that contemplated by
Rule 407.
[15]
Turning
to the third ground of appeal, relating to the quantum of the Judge’s award,
the Judge possessed a broad discretion to award costs in excess of the level
set in Column III. A discretionary order as to costs may only be overturned by
this Court where the judge failed to give sufficient weight to all relevant
considerations, considered irrelevant factors, erred in law or misapprehended
the facts (Merck & Co. at paragraphs 3 to 4).
[16]
In
the present case, when the Judge departed from Column III to increase the
costs he gave reasons for his departure, including the plaintiff’s unreasonable
approach to the summary judgment motion and to the conduct of the action as a
whole. The appellant has not shown that the Judge misapprehended the evidence,
gave insufficient weight to relevant factors, considered irrelevant factors, or
otherwise committed any error of law in the exercise of his discretion over
costs.
[17]
Further,
there is no evidence that the costs exceeded the defendant’s actual expense so
as to constitute any form of windfall. The costs were set with reference to
Column III of Tariff B. In Trevor Nicholas Construction Co. v. Canada (Minister
for Public Works), 2006 FC 42, [2006] F.C.J. No. 69 Justice von
Finckenstein wrote at paragraphs 5 to 7:
5. According to the Plaintiff, only
if the Crown discloses what it actually pays its solicitors can the Assessment
Officer be assured the Defendant is compensated rather making a profit on the
award of costs on the basis of $110.00 per unit.
6. There are several things wrong
with this argument. First Rule 407 of the Federal Courts Rules provides that,
unless otherwise ordered, costs shall be awarded in accordance with column III
of the table to Tariff B. Secondly, Rule 400(2) provides that costs may be
awarded against the Crown. Third there is no evidence that the Crown will
profit from an award of $110 per unit. Finally, s. 28(2) of the Crown Liability
and Proceedings Act provides:
“28(2)
Costs awarded to the Crown shall not be disallowed or reduced on taxation by
reason only that the solicitor or counsel who earned the costs, or in respect
of whose services the cost or charge, was a salaried officer of the Crown
performing those services in the discharge of the officers duties and was
remunerated therefore by a salary, or for that or any other reason was not
entitled to recover any costs from the Crown in respect of services so
rendered.”
7. […] Clearly awards can be made
to the Crown on the basis of column III of the table to Tariff B. There is no
requirement for the Defendant to disclose the fee it pays to its solicitors in
order to demonstrate that the award does not exceed compensation.
I agree with and adopt Justice von
Finckenstein’s statement of the law. There is, therefore, no basis to interfere
with the quantum of the award of costs.
[18]
With
respect to the fourth ground of appeal, the assertion of unfairness or bias, the
Judge wrote as follows with respect to his decision to receive additional
evidence with respect to disbursements:
7. In
its Reply to the Plaintiff’s Response to the Defendant’s submissions on Costs,
the Defendant offered to “provide copies of all invoices and relevant records of
claimed disbursements.” In my Direction to the parties dated August 12, 2011, I
replied to that offer by requesting, by August 22, 2011, “an affidavit
attesting to the fact that the disbursements identified in the Bill of Costs
that it filed on February 4, 2011 were in fact made or incurred.” I also
provided an opportunity to the Plaintiff to file “any responding submissions
that it may wish to make regarding the reasonableness of those disbursements.”
The affidavit of Gabriella Plati Trotto (i) attests to the fact that the
disbursements in question were in fact incurred on behalf of the Defendant in
connection with the within proceedings; and (ii) attaches copies of
invoices/receipts for each such disbursement. In this context, and having
regard to the provisions of Rule 400(1), which grants the Court full
discretionary power over the amount of costs to be awarded in a matter, I am
satisfied that the Court does in fact have jurisdiction to award to the
Defendant the disbursements that it has claimed in this matter, which I have
determined are reasonable. The aforementioned affidavit was accepted for filing
prior to the Registry’s close of business, namely, 4:30 p.m., on August 22,
2011. However, it was not entered into the Court’s system until the following
day.
[19]
Inherent
in the appellant’s argument is the suggestion that the Judge conferred some
favour or benefit on the respondent by allowing the Crown to file an affidavit
of disbursements. In my view, the Judge’s action equally provided a benefit to
the appellant by insuring that all items of disbursement were properly
verified. A judge does not err simply by drawing a party’s attention to any gap
in the proof of its case (Rule 60).
[20]
Moreover,
Rules 405 to 414 govern the assessment of costs. They contain no requirement
that an affidavit of disbursements be filed and served. Section 1(4) of Tariff
B provides that disbursements may be “established by affidavit or by the
solicitor appearing on the assessment” [underlining added]. It follows, in my
view, that the Judge possessed discretion to receive supplementary evidence or
submissions relating to the disbursements. As the Judge gave the plaintiff the
opportunity to file responding material, I see no unfairness in the procedure
adopted by the Judge and no basis for this Court to intervene in the exercise
of discretion.
[21]
Nor
do I see any real or perceived bias on the part of the Judge. The test for bias
is well-settled: the apprehension of bias must be a reasonable one, held by a
reasonably informed person with knowledge of the relevant circumstances. The
question to be answered is “what would an informed person, viewing the matter
realistically and practically — and having thought the matter through — conclude.”
(Committee for Justice and Liberty v. Canada (National Energy Board),
[1978] 1 S.C.R. 369 at page 394). There is a strong presumption that judges
will carry out their duties properly and this presumption can only be rebutted
by convincing evidence (Es-Sayyid v. Canada (Minister of
Public Safety and Emergency Preparedness), 2012 FCA 59, [2012]
F.C.J. No. 250 at paragraph 39).
[22]
The
appellant provided no convincing evidence as to any real or perceived bias on
the part of the Judge. Given the scope of the Judge’s discretion and the
fairness of the process he used, a properly informed person viewing the matter
in the required manner would not conclude that the Judge was motivated by any
real or apprehended bias.
[23]
Finally,
with respect to the last ground of appeal, the amount of monies ordered to be
paid as security for costs is not relevant to the subsequent assessment of
costs. This is because, among other things, the amount ordered to be paid by
way of security is of necessity an estimate. Further, when exercising its
discretion as to the amount of security to be paid, the Court may consider
factors such as the possibility that the action may settle or be resolved
without a full trial, the defendant may always re-apply for additional security
and, as in this case, a party’s subsequent conduct may justify an enhanced
award of costs (see, for example, Richter Gedeon Vegyészeti Gyar RT v. Merck
& Co. (1996), 109 F.T.R. 37 (T.D.); International Hollowcore
Engineering Inc. v. Ultra-Span Technologies Inc. (1997), 137 F.T.R. 60
(Proth.)). These factors illustrate that the amount paid as security may well
fall short of the amount ultimately found to be payable and so is not relevant
to the subsequent assessment of costs
[24]
It
follows, as stated above, that I would dismiss the appeal. In the
circumstances, I would not award costs.
“Eleanor R.
Dawson”
“I agree.
John M. Evans J.A.”
“I agree.
K. Sharlow J.A.”
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