BETWEEN:
and
COUNTRY FRESH ENTERPRISES INC.
and SUKHDEVPAUL DHANOA
Charles E. Stinson
Assessment Officer
[1] This action, addressing passing off under the Trade-Marks Act, R.S.C. 1985, c. T-13, s. 7(b) in relation to sesame tahini products, was dismissed on August 4, 1999, by order silent as to costs, for delay after the Plaintiff failed to respond to a Notice of Status Review requiring it to show cause. Previously, by order dated December 3, 1998, the Court had dismissed the Defendants' application for summary judgment (the summary judgment motion) with costs to the Plaintiff in any event of the cause. The Plaintiff presented its bill of costs for assessment relative to the summary judgment motion, but on May 21, 1999, I allowed the Defendants' preliminary objection to its assessment prior to judgment in the action. On May 19, 2006, the Plaintiff renewed its request for assessment of its bill of costs for the summary judgment motion. The Defendants indicated their intent to object to entitlement and to advance their own bill of costs ($10,961.00) for the action. I issued a timetable for written disposition of the assessments of the bills of costs.
I. The Plaintiff's Position
[2] The Plaintiff noted that its claimed costs, assessable under the tariff, are significantly less than one-half of the actual billed counsel fees and disbursements, the latter exceeding $24,000.00. The evidence of counsel work required, i.e. preparation (more than 100 hours) for the summary judgment motion; preparing for, conducting and attending (17 hours) on cross-examination of three affiants and preparation of a 19-page memorandum of fact and law and two affidavits, warrant maximum Column III counsel fees.
[3] The Plaintiff argued further to Sun Construction Co. v. Canada, [2001] F.C.J. No. 713 (A.O.) at para. [6], and Miller v. Six Nations of the Grand River Band of Indians, [2005] F.C.J. No. 641 (A.O.) at para. [12], that the Defendants cannot set off their costs of the action against any assessed costs of the Plaintiff because the silence as to costs in the August 4, 1999 order precludes the Defendant's entitlement to said costs of the action. The Defendants cannot rely on Sax v. Chomyn, [1999] F.C.J. No. 979 (F.C.T.D.) to justify an entitlement to costs because Forestex Management Corp. v. Lloyd's Underwriters, Lloyd's London, [2004] F.C.J. No. 1590 (A.O.) at para. [5], establishes that only the Court (a judge), and not an assessment officer, can exercise the Rule 400(1) jurisdiction for costs.
[4] The Plaintiff argued that the Federal Courts Rules do not contain a deadline within which to assess costs. Rule 4 (the gap rule), providing that on "motion, the Court may provide for any procedural matter not provided for in these Rules or in an Act of Parliament by analogy to these Rules or by reference to the practice of the superior court of the province to which the subject-matter of the proceeding most closely relates", cannot be used to invoke the British Columbia Supreme Court Rules because the gap rule is predicated on a motion, a procedure not applicable in an assessment of costs. Even if applicable, the gap rule is invoked only as a last resort if all other avenues have been exhausted: see Khadr v. Canada (Minister of Foreign Affairs), [2004] F.C.J. No. 1699 (F.C.) at para. [12]. The Federal Courts Rules preclude that, being a complete code for costs.
[5] The Plaintiff argued that the Defendants' position incorrectly creates an intermingling of entitlements to costs. That is, the Court specifically granted costs of the summary judgment motion to the Plaintiff in any event of the cause meaning that the Defendants' asserted entitlement to costs of the action cannot interfere with the Plaintiff's entitlement to assessed costs. The Defendants' failure to move the Court for costs of the action is irrelevant. As well, the Defendants were aware of the Plaintiff's entitlement to costs of the summary judgment motion, having successfully objected to the Plaintiff's initial attempt to assess them.
[6] The Plaintiff argued that the result of the action, i.e. dismissal for delay, should not be a limiting factor for assessed costs given that costs were not awarded in the cause, but rather in any event of the cause. The brevity of the motion judge's Reasons is not an indicator of complexity, particularly given their acknowledgement of the complexity of the issues. The evidence supports the time and maximum units claimed for counsel fee items 5 (preparation for the summary judgment motion), 6 (appearance) and 8 (preparation for cross-examination of three affiants). The wording for item 9 (attendance on the cross-examinations) specifies a "per hour" attendance: the Plaintiff's counsel necessarily had to be present during examination by the Defendants' counsel of the Plaintiff's affiants. That the Court did not refer to the Plaintiff's expert is irrelevant on this assessment of costs: the expert witness affidavit was properly introduced in the motion materials and was subject to cross-examination. The Plaintiff argued alternatively that, if set-off is permitted, several items claimed in the Defendants' bill of costs should be reduced or disallowed.
II. The Defendants' Position
[7] The Defendants' general position is (letter dated August 8, 2006, from their counsel):
… we enclose the Defendants' Bill of Costs resulting from the action together with the affidavit of the writer. We also attach a decision of the Court, Sax v. Chomyn, indicating that just as a defendant would be entitled to costs on a discontinuance, so, in the circumstances of that case which are similar to the circumstances here (but for the extraordinarily long delay of the Plaintiff in seeking to tax its costs of a 1998 interlocutory application), the Defendants ought to have their costs of the action which was dismissed on the initiative of the Court for delay.
The Defendants rely on the general powers provided to the Assessment Officer in Rule 409 so as to consider these costs by way of set-off to those presented by the Plaintiff without the necessity of the expense of a motion to the Court.
The application by the Plaintiff to now tax its costs arising from a 1998 application is indeed unusual. It may be one of first instance. Having lulled the Defendants into a false sense of security and constructed sufficient delay to undermine the Defendants' right to seek costs of the action, the Plaintiff now seeks to proceed to tax its costs arising from the interlocutory application. What happened here is that the Plaintiff resisted dismissal of the action on summary judgment and then stood by and allowed the action to be dismissed by reason of its own failure to prosecute the action. It then allowed some six years to pass before seeking to tax its costs. It is respectfully submitted that the Defendants' costs of the action ought to be considered by way of set-off. Alternatively, if the consent of the Plaintiff is not forthcoming, the Defendants respectfully seek leave to make application to the Court.
The Rules should not be construed so as to prejudice the Defendants by rewarding improper conduct, i.e. the Plaintiff's asserted entitlement to costs for its opposition to the same result it later allowed to occur. There are no authorities addressing such circumstances or a delay of seven years after judgment to present a bill of costs for assessment.
[8] The Defendants argued further to the gap rule and to Rule 57(43) of the Supreme Court of British Columbia:
Refusal or neglect to procure assessment
(43) If a party entitled to costs fails to assess costs and prejudices another party by failing to do so, the registrar may certify the costs of the other party and certify the failure and disallow all costs of the party in default,
that an assessment officer has jurisdiction to assess a bill of costs at nil dollars in the circumstances of this case, i.e. the Plaintiff's conduct having caused prejudice in several ways. For example, if the Plaintiff had renewed its request for assessment of costs promptly after dismissal of its action, the Defendants could have applied for their costs of the action with a view to set-off. The gap rule applies here because a registrar in the provincial system, the counterpart to an assessment officer here, would in these circumstances preclude this prejudice by disallowing the Plaintiff's costs. Alternatively, if application of the gap rule is refused, this matter should be referred to the Court particularly given Rules 409 and 400(3)(a) and (o) (result of the proceeding and any other relevant matter respectively) addressing an assessment officer's considerations.
[9] The Defendants argued that Rule 409, permitting an assessment officer to apply Rule 400(3) factors, refutes the Plaintiff's position that Rule 400(1) reserves to the Court, as opposed to an assessment officer, the jurisdiction to award costs. That is, Rule 400(3)(a) (result) and (o) (any other relevant matter) should be applied in the unusual circumstances here for set-off of the Defendants' costs of the action against the Plaintiff's costs of the summary judgment motion. The core consideration, i.e. whether assessment officers may exercise the gap rule, lies in this accepted principle of statutory interpretation in Chieu v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 84 at 102:
… This Court has stated on numerous occasions that the preferred approach to statutory interpretation is that set out by E.A. Driedger in Construction of Statutes (2nd ed. 1983), at p. 87:
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament….
Here, the circumstances of this assessment of costs have created a situation so unusual as not to be contemplated by any existing Rule. Therefore, an assessment officer should apply the gap rule or Rule 400(3) factors in favour of the Defendants to preclude an injustice. Alternatively, leave should be given to seek directions from the Court.
[10] The Defendants are entitled to costs further to dismissal of an action on the Court's initiative and were not obligated to incur costs to prod the Plaintiff to accelerate the pace of litigation: see Sax v. Chomyn, above, and Anishinabe Nations v. Canada, [2004] F.C.J. No. 1785 (F.C.). If the Plaintiff had moved expeditiously for assessment of its costs, and there is no evidence justifying the delay here, there is case law indicating that the Defendants could have obtained an extension of the 30-day deadline in Rule 403 to bring an application for directions as to their costs of the action: see Smerchanski v. M.N.R., [1979] 1 F.C. 801 (F.C.A.); Spur Oil Limited v. The Queen, [1983] 1 F.C. 244 (F.C.T.D.); Bayliner Marine Corp. v. Doral Boats Ltd., [1987] F.C.J. No. 348 (F.C.T.D.) and Carruthers v. The Queen, [1983] 2 F.C. 350 (F.C.T.D.).
[11] As the Defendants reasonably believed that all matters in this litigation, including costs of the summary judgment motion, were concluded or abandoned, the Plaintiff's delay is prejudicial to the Defendants' interests given case law indicating that extensions of time for applications for directions for costs brought several years later may not be granted: see The Queen v. Ontario Development Corporation, 92 D.T.C. 6121 (F.C.A.). As well, given the usual practice that each side bears its own costs when the Court of its own volition dismisses an action for delay, the Defendants are prejudiced because they reasonably believed that the summary judgment motion costs had been abandoned. The passage of seven years makes recollection of details and verification of estimates in the parties' respective bills of costs difficult, i.e. undermining the accuracy of records of hours of work by counsel, said accounts being estimates in the first instance. The prejudice for the Defendants is greater because they must substantiate their bill of costs as well as disprove the Plaintiff's bill of costs.
[12] The Defendants argued alternatively for a general reduction of assessed costs further to several factors. Further to Rules 409 and 400(3)(a) (result), the principle implicit in a dismissal for want of prosecution, i.e. a finding of abuse of the court system and of the administration of justice both as a function of inordinate delay, must apply here: see Trusthouse Forte California Inc. v. Gateway Soap & Chemical Co., [1998] F.C.J. No. 1937 (F.C.T.D.). As well, given that the Plaintiff did not pursue its action after successfully rebuffing the Defendants' attempt to have it dismissed, the Defendants could be considered in the broader context to have prevailed and therefore should not be liable for the full costs of the summary judgment motion.
[13] The Defendants argued further to Rule 400(3)(i) and (o) (conduct unnecessarily lengthening a proceeding and any other matter respectively) that, to the extent that the process of assessment of costs of the summary judgment motion can be considered part of the proceeding, the Plaintiff's delay of six years before presenting them again for assessment warrants reductions. The allowance of said costs in these circumstances would undermine public confidence in the administration of justice and be inconsistent with the general principle of Rule 3 requiring the "just, most expeditious and least expensive determination of every proceeding on its merits."
[14] The Defendants argued that the preparation (none of the three affidavits exceeded 14 pages) and appearance associated with the summary judgment motion were straightforward. The Court did not find it frivolous or vexatious and, although noting in para. [9] of its December 3, 1998 decision that the "evidence raises many valid and complex issues of fact and law", instead found, in para. [10], that where "as here, credibility is a fundamental issue, a trial is essential so that the evidence and demeanour of the witnesses can be observed and tested." Therefore, only the minimum value of 3 units should be allowed for item 5 (preparation) in place of the maximum 7 units claimed. As much of the actual hearing was consumed by argument on the admissibility of the Plaintiff's proposed expert evidence and by the presentation of physical exhibits, only 2 units per hour in place of the 3 units per hour claimed for item 6 (appearance) should be allowed. The evidence for item 6 justifies only six hours and not the nine hours claimed. Given the absence of directions from the Court permitting assessment of fees for second counsel, the claim for junior counsel must be disallowed: see Stewart v. Canada (Attorney General), [2003] F.C.J. No. 947 (A.O.).
[15] The Defendants argued that the evidence does not justify the maximum 5 units (item 8) claimed three times for preparation for the cross-examination of each of three affiants. Instead, a single mid-range value of 7 units would be appropriate. Given that these straightforward cross-examinations lasted less than five hours and not the eight hours claimed, and much of the conduct was by the Defendants' counsel, the record justifies only a minimal allowance of 1 unit per hour for item 9 (appearance) for five hours in place of the 3 units per hour claimed for eight hours.
[16] The Defendants argued that, just as the Plaintiff should not be entitled to costs of the summary judgment motion, it should not be allowed anything for item 26 (assessment of costs) even if allowed other assessed costs. Per Rule 408(3), the Defendants should receive maximum item 26 costs. The Defendants argued that, given their position at the hearing on the admissibility of proposed expert evidence and given that the Court did not rule on its admissibility or refer to it in its decision, the $700.00 and $273.66 claimed for expert witness fees and cross-examination transcript respectively should be disallowed.
III. Assessment
[17] Further to my conclusions in Balisky v. Canada (Minister of Natural Resources), [2004] F.C.J. No. 536 (A.O.) at para. [6] and Aird v. Country Park Village Properties (Mainland) Ltd., [2005] F.C.J. No. 1426 (A.O.) at para. [10], the decision dated December 3, 1998 disposing of the summary judgment motion is final and I cannot vary it by, for example, effectively removing its creation of the Plaintiff's entitlement to costs. As well, their conclusions indicate that I am not the Court within the meaning of Rule 4 and I therefore have no jurisdiction to apply a gap rule, i.e. by awarding to the Defendants costs not given to them in the first instance pursuant to Rule 400(1) jurisdiction reserved exclusively to the Court and not an assessment officer. It follows that Rule 409 cannot be applied for set-off. The Defendants' bill of costs, presented at $10,961.00, is assessed at nil dollars.
[18] In so concluding, I am aware of Rule 403 (providing for a motion for directions for costs within 30 days after judgment whether or not the judgment included an order for costs) and the finding in Apotex Inc. v. Bayer AG (2005), 39 C.P.R. (4th) 193 (F.C.A.) that the principles of res judicata and functus officio do not limit its application. The Defendants did not and do not require my leave to bring such an application. Given what I perceive as the likely difficulty of the Defendants meeting the threshold for issuance of an extension, after the passage of several years, of the 30-day limit for a motion to vary the August 4, 1999 order by adding a provision for costs of the action, I felt that an adjournment of the assessment of costs was not appropriate. The Defendants did not need to wait for the Plaintiff's presentation of its bill of costs for assessment before moving further to Rule 403.
[19] I will not, as the Defendants urge, deny or generally reduce the Plaintiff's costs as a function of delay, other than relative to item 26 (assessment of costs). The Plaintiff certainly tried in the first instance to expedite assessment of its costs of the summary judgment motion, but drew a successful objection from the Defendants that it was premature. The record is not clear on why the Plaintiff waited several years before again bringing forward its bill of costs, nor why the Defendants did not initiate some process in the interim to resolve costs once and for all. The Defendants raised serious issues for assessments of costs. The assessment of individual items of costs was straightforward. I am not satisfied, however, that the Defendants should not bear some responsibility for the delay in the resolution of costs. I allow 1 unit more (3 units) than the minimum value in the available range for item 26. In so concluding, I am aware of Rules 392(2) and 406 which do not impose a time limit on the effect of an order and within which to bring an assessment of costs respectively. The only limiting factor, within the circumstances here, might be the time limit in Rule 434(1)(a) (requiring leave of the Court to issue a writ of execution to enforce an order if six or more years have elapsed since the date of the order). That is, however, an enforcement matter not within my jurisdiction.
[20] My view, often expressed further to my approach in Carlile v. The Queen (1997), 97 D.T.C. 5284 (T.O.) and the sentiment of Lord Justice Russell in Re Eastwood (deceased) (1974), 3 All. E.R. 603 at 608, that assessment of costs is "rough justice, in the sense of being compounded of much sensible approximation", is that discretion may be applied to sort out a reasonable result for costs equitable for both sides. I think that my view is reinforced by the editorial comments (see: The Honourable James J. Carthy, W.A. Derry Millar & Jeffrey G. Gowan, Ontario Annual Practice 2005-2006 (Aurora, Ont: Canada Law Book, 2005)) for Rules 57 and 58 to the effect that an assessment of costs is more of an art form than an application of rules and principles as a function of the general weight and feel of the file and issues, and of the judgment and experience of the assessment officer faced with the difficult task of balancing the effect of what could be several subjective and objective factors.
[21] I concluded at para. [7] in Starlight v. Canada, [2001] F.C.J. No. 1376 (A.O.) that the same point in the ranges throughout the Tariff need not be used, as each item for the services of counsel is discrete and must be considered in its own circumstances. As well, broad distinctions may be required between an upper versus lower allowance from available ranges. I have read the Defendants' motion materials, which were extensive. The Plaintiff required careful presentation of motion materials to avert an abrupt end to its action and to ensure that the record satisfied the Court that this matter did not meet the test posed by the jurisprudence addressing summary judgment. That is not the same as having to prepare for a full trial. I allow 6 units for item 5 (available range 3 – 7 units). The record discloses a duration of just over six hours. I have consistently held that an appearance in Court necessarily means arrival some time before the prescribed start time to arrange materials and identify oneself to the assigned court registrar. Item 6 (appearance) does not provide for second counsel, but the broad discretion conferred by Rule 400(1) can permit such costs. As above, I am not the Court as that term is used in Rule 400(1) and therefore cannot presume to allow costs for junior counsel in the absence of a visible direction from the Court. I understand the Defendants' point concerning time taken with presenting physical exhibits justifying an expert, but this hearing did have the potential of precluding the Plaintiff's chance to prove, via the full arsenal of a trial, its claims against the Defendants: a serious adverse consequence. I allow the maximum value of 3 units per hour for 6.5 hours for item 6 (one counsel only).
[22] A discrete preparation for cross-examination for each of three affiants would have been required. I am not inclined to ignore the motion judge's comment about the presence of complexity. I agree that the Plaintiff's counsel had to necessarily be present at the cross-examination by the Defendants of the Plaintiff's two affiants. The demands on his professional skills for that might have differed from those for his conduct of the cross-examination of the Defendants' single affiant, but complexity, for example, as a factor for costs might have been comparable or quite different. In other words, the allowances for item 8 (preparation for cross-examination of affidavit) and item 9 (appearance) may distinguish between each affiant. In these circumstances, I simply allow 3 units (available range 2 – 5 units) for item 8 for each of the three affiants and 2 units per hour (available range 0 – 3 units per hour) for item 9 for five hours in total. The evidence led by the Defendants before me in 1999, i.e. the verbatim reporter's certificate of durations, indicated 45 minutes, two hours and 18 minutes and one hour and 43 minutes for the respective cross-examinations.
[23] In Almecon Industries Ltd. v. Anchortek Ltd., [2003] F.C.J. No. 1649 (A.O.) at para. [31], I found certain comments in the evidence, although self-serving, nonetheless to be pragmatic and sensible concerning the reality of a myriad of essential disbursements for which the costs of proof might or would exceed their amount. However, that is not to suggest that litigants can get by without any evidence by relying on the discretion and experience of the assessment officer. The proof here is less than absolute, i.e. the circumstances necessitating the use of Bryanston Cooper, a marketing and advertising consultant, as an expert on a summary judgment motion. A paucity of evidence for the circumstances underlying each expenditure makes it difficult for the respondent on the assessment of costs and the assessment officer to be satisfied that each expenditure was incurred as a function of reasonable necessity. The less that evidence is available, the more that the assessing party is bound up in the assessment officer's discretion, the exercise of which should be conservative, with a view to a sense of austerity which should pervade costs, to preclude prejudice to the payer of costs. However, real expenditures are needed to advance litigation; a result of zero dollars at assessment would be absurd.
[24] My reading of Mr. Cooper's proposed expert evidence and the Plaintiff's Memorandum of Fact and Law convinces me that counsel's decision to disburse $700.00 for Mr. Cooper's services to assist in persuading the Court that issues such as distinctiveness, confusion and passing off relative to potential consumers of sesame tahini products should not be addressed in a summary proceeding, but rather by full trial, was reasonable: I allow the $700.00. The disbursement of $273.66 for the cross-examination transcript was prudent and is allowed. I am satisfied that the other disbursements, i.e. photocopies and binding ($894.65), facsimiles ($87.50), delivery and postage ($44.51) and film processing and samples ($13.62) were reasonable in these circumstances of a commercial dispute and allow them as presented.
[25] The Plaintiff's bill of costs for its costs of the summary judgment motion, presented at $11,019.94, is assessed and allowed at $7,428.94.
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-2647-97
STYLE OF CAUSE: NATURE'S PATH FOODS INC. v
COUNTRY FRESH ENTERPRISES INC. et al.
ASSESSMENT OF COSTS IN WRITING WITHOUT PERSONAL APPEARANCE OF THE PARTIES
REASONS FOR ASSESSMENT OF COSTS: CHARLES E. STINSON
WRITTEN REPRESENTATIONS BY:
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Lawrence Chan
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David E. Turner
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SOLICITORS OF RECORD:
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Paul Smith Intellectual Property Law Vancouver, BC |
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Edwards, Kenny & Bray LLP Vancouver, BC |