Date: 20021213
Docket: T-1227-96
Neutral citation: 2002 FCT 1293
BETWEEN:
671905 ALBERTA INC. and
M-I DRILLING FLUIDS CANADA INC.,
Plaintiffs
(Cross-Defendants by Counterclaim)
- and -
Q' MAX SOLUTIONS INC.,
Defendant
(Cross-Plaintiff by Counterclaim)
INTRODUCTION
[1] By motion filed the 1st of October, 2001, the Defendant, Cross-plaintiff by counterclaim, Q'Max Solutions Inc., seeks the following relief:
An Order directing the assessment officer to assess and allow the costs of QMAX for performance of the following services pursuant to the highest unit of Column III of Tariff B:
1. Preparation of Written Representations filed in response to the Plaintiffs' Response to a Notice of Status Review, pursuant to item 27 of Tariff B;
2. Preparation of and presence at re-attendance for examinations for discovery, pursuant to items 8 and 9 of Tariff B;
3. All pre-trial procedures, pursuant to items 10 to 13 of Tariff B;
4. All trial procedures, pursuant to items 14 and 15 of Tariff B;
5. Travel by counsel for pre-trial preparation and to attend trial, pursuant to item 24 of Tariff B; and
6. Assessment of costs, pursuant to item 26 of Tariff B;
B. An Order directing the assessment officer to award QMAX double costs as of the service of its offer to settle on November 21, 2000, pursuant to Rule 420(2)(b) of the Federal Court Rules, 1998.
C. An Order directing the assessment officer to assess and allow fees for:
1. one senior and one junior counsel for all pre-trial and trial procedures, pursuant to items 10 to 15 of Tariff B;
2. travel by one senior and one junior counsel for trial preparation and to attend trial, pursuant to item 24 of Tariff B; and for
3. work performed by students-at-law throughout these proceedings, pursuant to items 27 and 28 of Tariff B.
D. An Order directing the assessment officer to assess and allow all disbursements to be taxed at their full cost, including:
1. all travel and accommodations by QMAX's representative for attendance at examinations for discovery in Toronto and at Final Arguments in Ottawa;
2. all travel and accommodations by one senior and one junior counsel for pre-trial preparation and attendance at trial;
3. the full amount of all expert fees and disbursements; and
4. the full cost of computerised legal research charges disbursed by QMAX.
[2] The motion is brought pursuant to Rule 403 of the Federal Court Rules, 1998,[1]. That Rule reads as follows:
403. (1) A party may request that directions be given to the assessment officer respecting any matter referred to in rule 400,
(a) by serving and filing a notice of motion within 30 days after judgment has been pronounced; or
(b) in a motion for judgment under subsection 394(2).
(2) A motion may be brought under paragraph (1)(a) whether or not the judgment included an order concerning costs.
(3) A motion under paragraph (1)(a) shall be brought before the judge or prothonotary who signed the judgment.
403. (1) Une partie peut demander que des directives soient données à l'officier taxateur au sujet des questions visées à la règle 400 :
a) soit en signifiant et en déposant un avis de requête dans les 30 jours suivant le prononcé du jugement;
b) soit par voie de requête au moment de la présentation de la requête pour jugement selon le paragraphe 394(2).
(2) La requête visée à l'alinéa (1)a) peut être présentée que le jugement comporte ou non une ordonnance sur les dépens.
(3) La requête visée à l'alinéa (1)a) est présentée au juge ou au protonotaire qui a signé le jugement.
[3] While the motion as filed indicates that it was to be heard at the premises of the Court in Montreal on the 15th of October, 2001, by letter dated the 10th of October, 2001, counsel for Q'MAX Solutions Inc. ("Q'MAX") requested that the motion "...be decided on the basis of written representations in order to facilitate its adjudication by the Court."
BACKGROUND
[4] Judgment and related reasons in this action issued the 15th of August, 2001. The substance of the judgment was in the following terms:
The plaintiffs' claim is dismissed.
The defendant's counterclaim is allowed.
As between the defendant and the plaintiffs, Canadian Letters Patent 2,101,884 as reissued the 24th of March, 1998 are void ab initio.
The defendant is awarded costs of the plaintiffs' action and of its counterclaim, assessed in accordance with Column III of the Table to Tariff B of the Federal Court Rules, 1998.
[5] An appeal from the foregoing judgment was filed by 671905 Alberta Inc. and M-I Drilling Fluids Canada Inc., on the 26th of September, 2001. A cross- appeal from the judgment was filed by Q'MAX on the 9th of October, 2001.[2] Neither the appeal nor the cross-appeal concerns itself directly with the question of costs at trial, albeit that the plaintiffs seek costs both at trial and on the appeal, presumably only if they are successful on the appeal, and Q'MAX seeks confirmation that costs in the action and in the counterclaim are awarded to it.
[6] At this point I must confess to a significant oversight on my part when I signed judgment. At the close of the last day of trial, a day devoted entirely to argument, the following exchange is recorded in the transcript[3]:
THE COURT: Nobody, interestingly enough, in the course of all of this has addressed the question of costs.
I presume that it would be entirely appropriate or satisfactory to Counsel, since I am going to reserve, which I am sure will come as no surprise, if I were to distribute reasons and a judgement with the question of costs to be dealt with by supplementary judgement.
Is that agreeable?
MR. PLUMLEY [counsel for the plaintiffs]:
I would consider that appropriate, my lord.
MS. GAUTHIER [counsel for Q'MAX]:
Very much, sir. Thank you, my lord.
THE COURT: ...
I will certainly come back to you on the question of costs.
I simply lost sight of my foregoing undertaking and issued judgment, including judgment as to costs without consultation. For this I sincerely apologize to counsel. It is this oversight on my part that has led to the motion now under consideration.
[7] Counsel did not press the issues raised by the motion but rather, apparently, engaged between themselves in extensive negotiations. As a result, the range of issues left for consideration by the Court has been substantially narrowed. What remains for adjudication only came forward for my consideration in late October and early November of this year.
THE ISSUES
[8] Referring back to the directions sought through Q'MAX's motion, as quoted above, only item B remains in dispute. That is, whether or not Q'MAX is entitled to an Order directing the assessment officer to award Q'MAX double costs as of the service of its offer to settle on November 21, 2000, pursuant to Rule 420(2)(b) of the Federal Court Rules, 1998. In relation to all other directions sought, counsel have presented a draft consent order for my consideration. A copy of the draft consent order appears as a Schedule to these reasons.
THE LAW
[9] Rule 420(2) reads as follows:
420.(2) Unless otherwise ordered by the Court, where a defendant makes a written offer to settle that is not revoked,
(a) if the plaintiff obtains a judgment less 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 the defendant shall be entitled to double such costs, excluding disbursements, from that date to the date of judgment; or
(b) if the plaintiff fails to obtain judgment, the defendant shall be entitled to party-and-party costs to the date of the service of the offer and to double such costs, excluding disbursements, from that date to the date of judgment.
420.(2) Sauf ordonnance contraire de la Cour, lorsque le défendeur présente par écrit une offre de règlement qui n'est pas révoquée et que le demandeur :
a) obtient un jugement moins avantageux que les conditions de l'offre, le demandeur a droit aux dépens partie-partie jusqu'à la date de signification de l'offre et le défendeur a droit au double de ces dépens, à l'exclusion des débours, à compter du lendemain de cette date jusqu'à la date du jugement;
b) n'obtient pas gain de cause lors du jugement, le défendeur a droit aux dépens partie-partie jusqu'à la date de signification de l'offre et au double de ces dépens, à l'exclusion des débours, à compter du lendemain de cette date jusqu'à la date du jugement.
[10] Counsel for Q'MAX urges that the opening words of Rule 420(2) and paragraph (b) of that Rule are here applicable by virtue of a letter from counsel for Q'MAX to counsel for the plaintiffs dated the 21st of November, 2000. The substance of that letter[4] is in the following terms:
Further to our telephone conversation of last week, we confirm that we have been authorized to offer you to settle your infringement action on a basis of a discontinuance with each party paying its own costs.
We feel that such settlement would have the advantage of facilitating the upcoming trial which then would focus only on the counterclaim and the allegations of invalidity.
No response to this "settlement offer" was received. By letter dated the 13th of December, 2000, the "settlement offer" was withdrawn[5].
[11] In Apotex Inc. v. Syntex Pharmaceutical International Ltd.[6], Justice Stone, for the Court, noted that Rule 420(1), relating to offers to settle by a plaintiff, requires a genuine "offer to settle", "...not something that might or might not be viewed as an offer to settle by the opposite party." He continued at paragraph [10] of his reasons:
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.
In paragraph [8] of his reasons, Justice Stone noted the objective of Rule 420(1) in the following terms:
The consequences under the rule of ill-advisedly rejecting an offer to settle are severe and, indeed, were intended to be severe so as to encourage settlement and put an end to litigation that is of dubious outcome.
[12] I am satisfied that Justice Stone's comments regarding offers to settle by a plaintiff apply equally to the substance of Rule 420(2) dealing with offers to settle by a defendant.
ANALYSIS
[13] I am satisfied that Q'MAX's claim to double costs from the 21st of November, 2000 to the date of judgment must fail. While Q'MAX's offer to settle of the 21st of November, 2000 was, I am satisfied, a "written offer to settle" and a genuine offer, it could not be said to have been an offer that would have "put an end to litigation that is of dubious outcome." Further, it was not an offer that remained unrevoked to the date of judgment.
[14] The offer related only to settlement of the plaintiffs' "infringement action" and Q'MAX was not successful on the issue of infringement[7]. Additionally, I simply am not satisfied that, if the offer had been accepted, the result would have had a significant impact on post-offer costs since Q'MAX made it clear that its offer related only to the plaintiffs' infringement action and that Q'MAX was determined to continue with its counterclaim which required the presentation of essentially all of the same evidence adduced in the plaintiffs' infringement action and essentially all of the same argument.
[15] Rule 420(2) is unequivocal in its reference to "a written offer to settle that is not revoked", and paragraph (b) of that Rule refers to costs "to the date of judgment" which would be quite inconsistent with an award of double costs to that date in respect of an offer which is revoked before that date and, indeed, before the completion of trial. I am satisfied that the fact situation that was before my colleague Justice MacKay in Monsanto Canada Inc. v. Schmeiser[8] is clearly distinguishable from the facts of this matter. Here, while Q'MAX's offer might be said to have expired at the commencement of trial, I cannot conclude that such was unequivocally the case. It therefore remained open for Q'MAX to revoke its offer as it did.
[16] In Canadian Olympic Association v. Olymel, Société en Commandite et al.[9], my colleague Justice Lemieux wrote at paragraphs 14 and 15 of his reasons:
I make another observation. Rule 420 only applies where the offer to settle is not revoked. Olymel's offer to settle terminated at the hearing of the appeals before the Court.
In any event, the words "unless otherwise ordered by the Court" under paragraph [Rule] 420(2) confer a discretion upon the Court to award or direct less than the doubling of party-and-party costs from the date of the service of the offer. In my view, in the circumstances, Olymel is not entitled to doubling of its costs from the date of the offer to settle.
[17] I reach the same conclusion on the facts before me.
CONCLUSION
[18] In the result, an order will go in the form consented to by the parties. Q'MAX's motion, as it relates to direction to the assessment officer regarding double costs after the 21st of November, 2000, will be dismissed. As, in my opinion, success is divided on Q'MAX's motion that is here under consideration, there will be no order as to costs of the motion.
POSTSCRIPT
[19] On the motion that is under consideration, counsel for the plaintiffs tendered "surrebuttal" submissions for consideration of the Court that were received by the Court on the 13th of November, 2002. On the same date, the Court received a letter from counsel for Q'MAX objecting to the filing and consideration of the plaintiffs' surrebuttal representations. As noted by counsel for Q'MAX, the Federal Court Rules, 1998 do not provide a right of surrebuttal and to accept surrebuttal representations for filing and for consideration of the Court would invite an open ended series of surrebuttal submissions from both sides, potentially extending litigation indefinitely.
[20] The plaintiffs' surrebuttal submissions have not been taken into account in arriving at my decision on Q'MAX's motion. The Registry is directed to return the surrebuttal submissions received on 13th of November, 2002, to counsel for the plaintiffs.
_________________________________
J. F.C.C.
Ottawa, Ontario
December 13, 2002
SCHEDULE
PRESENT: The Honourable Mr. Justice Gibson
BETWEEN:
671905 ALBERTA INC. and M-I DRILLING FLUIDS CANADA INC.
Plaintiffs
(Cross-Defendants by Counterclaim)
AND:
Q'MAX SOLUTIONS INC.
Defendant
(Cross-Plaintiff by Counterclaim)
DRAFT ORDER
UPON a Motion made in writing on behalf of the Defendant for an award of Special Costs pursuant to the Order of Mr. Justice Gibson in the Plaintiffs' action and the Defendant's counterclaim, rendered August 15, 2001;
AND UPON being advised that the Plaintiffs consent to part of the Defendant's Motion:
THIS COURT ORDERS THAT:
A. The assessment officer shall assess and allow the costs of QMAX at rates pursuant to the highest unit of Column III of Tariff B, for performance of the following services.
1. Preparation of Written Representations responding to the Plaintiffs' Response to a Notice of Status Review (pursuant to item 27 of the Tariff B);
2. All pre-trial procedures, including for the preparation and re-attendance for examinations for discovery (pursuant items 10 to 13 of the Tariff B);
3. All trial procedures (pursuant to items 14 and 15 of the Tariff B);
4. Travel by counsel for pre-trial preparation and to attend trial (pursuant to item 24 of the Tariff B); and
5. Assessment of costs (pursuant to item 26 of the Tariff B);
B. The assessment officer shall assess and allow fees for:
1. one senior and one junior counsel for pre-trial preparation and all trial procedures;
2. travel by one senior and one junior counsel for trial preparation and to attend trial; and for
3. work performed by students-at-law throughout these proceedings.
C. The assessment officer shall assess and allow all reasonable disbursements, including:
1. all travel and accommodations for Q'MAX representative for attendance at examinations for discovery in Toronto and at Final Arguments in Ottawa;
2. all travel and accommodations for one senior and one junior counsel for pre-trial preparation and attendance at trial;
3. experts fees and disbursements; and
4. Costs of computerized legal research.
D. The award of costs pursuant to paragraphs A, B and C, above, will apply mutatis mutandis to the Plaintiffs' costs at trial, should they succeed in overturning Mr. Justice Gibson's decision dismissing their action and awarding costs against them.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1227-96
STYLE OF CAUSE: 671905 Alberta Inc. and M-I Drilling Fluids Canada Inc.
MOTION DEALT WITH IN WRITING WITHOUT THE APPEARANCE OF PARTIES
REASONS FOR ORDER OF THE HONOURABLE MR. JUSTICE GIBSON
DATED: December 13, 2002
WRITTEN REPRESENTATIONS BY:
Mr. Donald Plumley FOR THE PLAINTIFFS
Mr. Mark Mitchell (Cross-Defendants by Counterclaim)
Ms. Johanne Gauthier and FOR THE DEFENDANT
Mr. Frédérique Amrouni (Cross-Plaintiff by Counterclaim)
SOLICITORS OF RECORD:
LANG MICHENER FOR THE PLAINTIFFS
Toronto, Ontario
OGILVY RENAULT FOR THE DEFENDANT
Montréal, Québec
[1] SOR/98-106.
[2] Court File: A-560-01.
[3] Transcript, Volume 9, Friday, February 2, 2001, pages 272-3.
[4] Exhibit JG-4 to affidavit of Johanne Gauthier sworn the 1st of October, 2001.
[5] Exhibit JG-3 to affidavit of Johanne Gauthier sworn the 1st of October, 2001.
[6] (2001), 12 C.P.R. (4th) 413 (F.C.A.).
[7] See paragraph [112] of the reasons for judgment herein.
[8] See: (2002), 19 C.P.R. (4th) 524 (T.D.); affirmed: [2002] F.C.J. No. 1603 (online: QL)(C.A.)
[9] (2000), 195 F.T.R. 216.