Date: 20011106
Docket: T-588-00
Neutral citation: 2001 FCT 1212
BETWEEN:
EARLY RECOVERED RESOURCES INC.
Plaintiff
- and -
GULF LOG SALVAGE CO-OPERATIVE ASSOCIATION
HER MAJESTY IN RIGHT OF THE
PROVINCE OF BRITISH COLUMBIA, AND
JIM DOYLE, MINISTER OF FORESTS
Defendants
Assessment Officer
[1] The Plaintiff discontinued against the Defendant Gulf Log Co-operative Association (hereinafter "Gulf Log"). Gulf Log presents its Bill of Costs under Rule 402, including double costs further to Rule 420(2)(b). Gulf Log withdrew its claim for item 4 as the associated Order was silent on costs. The Plaintiff did not take a position on items 5, 6, 11 and the second item 10 other than to object to doubling under Rule 420 claimed from January 23, 2001 (the date of Gulf Log's written offer to settle). The Plaintiff conceded all disbursements except facsimiles ($148.00); computerized legal research ($110.29); photocopies ($557.00) and court reporting charges ($2,318.25). I suggested, and the parties agreed, that they leave item 26 to my discretion.
[2] In Reasons dated May 24, 2001, the Court provides convenient background:
[3] Gulf Log Salvage Co-Operative Association, is composed of individuals representing logging companies, insurance companies, insurance brokers, transportation companies and log brokers, which is licensed to operate a station to receive loose logs which have been recovered by beachcombers who hold permits to gather up or salvage logs, all pursuant to Part 9 of the Forest Act of British Columbia R.S.B.C. 1996 c. 157, dealing with marine log salvage and to the Log Salvage Regulations, B.C. Regulations 220/81 made under the Forest Act.
[4] At issue is a constitutionality of Part 9 of the Forest Act. The Plaintiff says that the Log Salvage provisions under the Forest Act are ultra vires the Province of British Columbia by reason of the Federal Government's exclusive jurisdiction over navigation and shipping under section 91(10) of the Constitution Act of 1867 and by virtue of section 52 of the Constitution Act of 1867: in the alternative, the Provincial legislation is said to be inoperative to the extent that it conflicts with the Canada Shipping Act and with the International Convention on Salvage of 1989.
[5] All of this is not particularly straight forward. Counsel for the Defendant, who is experienced, estimates that the trial will last five days. Counsel's estimate of the taxable cost of the Defendant, Gulf Log Salvage Co-Operative Association, making the reasonable assumption that the matter will not settle, is $28,219,65. I accept that this is a conservative value for costs and disbursements.
The Plaintiff's Position
[3] The Plaintiff noted that this action, addressing compensation for the salvage of 17 logs from the Fraser River, was commenced as a simplified action, was converted to a regular action by Order, continues against the remaining provincial Defendants and is set for hearing by way of summary judgment on the constitutional issue. The Plaintiff argued generally, further to Rules 409 and 400(3)(i), that costs should be reduced because Gulf Log's conduct unnecessarily lengthened this litigation. For example, the Plaintiff pushed throughout for an expedited or summary procedure, but could not achieve it until after discontinuing against Gulf Log. The Plaintiff disclosed its intended evidence to all parties, but Gulf Log still insisted on full discovery including a detailed oral examination of Shirley Weishun, a co-owner of the Plaintiff. The Plaintiff argued that, in particular, steps such as discovery of documents and examination for discovery are unnecessary in an expedited proceeding and therefore a reduction of costs is warranted. The Plaintiff conceded that an assessment officer cannot waive costs in the absence of a specific direction of the Court, but the costs here should be reduced further to Rule 400(3)(h) because the determination of constitutionality and other issues in this matter were in the public interest, ie. the economic viability of the statutory scheme for the salvage of logs, environmental concerns and hazards to navigation.
[4] For item 2, the Plaintiff argued that, although the Statement of Claim raised novel issues of statutory interpretation, they were not so complex as to justify the maximum 7 units claimed for the Statement of Defence. Instead, 5-6 units would be sufficient. The Plaintiff noted that Gulf Log claims an item 7 separately for preparation of its affidavit of documents, for review of the Plaintiff's affidavit of documents, and for review of the provincial Crown's affidavit of documents for a total of 13 units thereby improperly exceeding the maximum 5 units available in the range in the absence of permission from the Court. Per Registry Procedure & Assessment of Costs, chapter 11, pp. 11.1.17 - 11.1.18, Continuing Legal Education Society of British Columbia, publication October 1999, the wording of Tariff B clearly suggests item 7 can be claimed only once in an action. As the document production overall was not extensive, 3-4 units would be sufficient. For the first item 10, the Plaintiff argued that there is no specific Tariff item for Rule 257 settlement discussions and, further to Veselinovic v. Canada (Minister of National Revenue - M.N.R.) [2000] F.C.J. No. 104, an assessment officer cannot certify items absent a direction from the Court. The Plaintiff argued that such settlement discussions belong in preparation for the Rule 258 pre-trial conference (the second item 10), that they took less than five minutes as it was clear that there was no possibility of settlement short of complete dismissal of the action, and that therefore nothing should be allowed. Alternatively, if the first item 10 is allowable, the Plaintiff argued that even the minimum three units is excessive for a five minute conversation. The Plaintiff argued that the lower end of the range for the second item 10 is sufficient.
[5] The Plaintiff argued that the delay between the first day (January 24, 2001) and the second day (March 6, 2001) of Shirley Weishun's examination for discovery did not justify two claims at the maximum for item 8. The Plaintiff noted that the bill of costs does not show the number of hours under item 9 for attendance on her examination which was largely unnecessary given her sworn affidavit outlining the proposed evidence of the Plaintiff, and given the essence of this matter was one of statutory interpretation and was not factually complex. The Plaintiff argued that only 3 units, instead of the maximum 5 units claimed, should be allowed under item 8 for preparation for discovery of Douglas Cooper of Gulf Log because his discovery was brief and not complex. The Plaintiff argued that 1 unit under item 9 is sufficient for attendance on Mr. Cooper's discovery. The Plaintiff argued that only 2 units and 1 unit should be allowed under items 8 and 9 respectively, relative to the cross-examination on Shirley Weinshun's affidavit, because the affidavit simply listed assets, the attendance took 15 minutes and the transcript was only 8 pages.
[6] The Plaintiff argued further to Pratt v. Meredith [1999] F.C.J. No. 15 at para [10] and Ager v. International Brotherhood of Locomotive Engineers [1999] F.C.J. No. 909, that there is generally no evidence of reasonableness of and necessity for disbursements except for the bald statement in the supporting affidavit that they were "reasonably and necessarily incurred". The Plaintiff argued that purpose, but not reasonableness and necessity, of fees such as those for transcripts of examinations is evident on the face of the invoices, but that it is not evident what was sent or copied under facsimile and photocopy charges, although some were likely necessary, and therefore their relevance is not evident. The Plaintiff suggested an arbitrary reduction to $100 and $400 for facsimiles and photocopies respectively given insufficient evidence for the amount claimed. The rate of $0.25 per page for photocopies is acceptable. The Plaintiff argued, further to Pardee Equipment Ltd. v. Canada [1998] F.C.J. No. 751 at para. 17, that costs for computerized research are part of a lawyer's fee built into the overhead of the law office and are therefore not recoverable as disbursements. The Plaintiff argued that the amount for transcripts should be reduced because much of the discovery was not reasonably necessary. The Plaintiff argued that the net $31,990.32 asserted for solicitor-client costs is not substantiated in the evidence and therefore should not be given any weight.
[7] The Plaintiff argued that Gulf Log is not entitled to double costs under Rule 420(2) because the Trial Division in CSC Continuum Inc. v. Sterling Software Inc.[1998] F.C.J. No. 1554 at para. [10] concluded that it is unclear whether Rule 420 applies to a discontinuance. Per Williams v. Canada (Minister of National Revenue - M.N.R.) [2001] F.C.J. No. 249 at para. [23], an assessment officer has the authority to determine whether the threshold for Rule 420 has been met. The Plaintiff argued that the conclusion here should be negative because the award of costs did not flow clearly from the Rules, Tariff or an Order. The Plaintiff argued that the perceived favourability to Gulf Log is not what triggers Rule 420(2), but rather whether the judgment obtained was less favourable than the terms of the offer to settle. Given no judgment to date, that determination cannot be made so as to trigger Rule 420(2). The Plaintiff argued that the settlement offer of $302.35, relevant to only a small portion of the litigation, did not address the constitutionality of the log salvage legislation which was the main issue in this litigation. The Plaintiff argued that acceptance of that small amount would have subverted its legal position on the much more significant issues by effectively conceding the validity of the current legislative scheme. The Plaintiff noted that both Gulf Log and the provincial Crown had to be named as Defendants to permit discovery of ownership of the logs. Once that point was confirmed, thereby establishing who was obligated to compensate the Plaintiff for the logs, the Plaintiff could discontinue against Gulf Log which, in the absence of a judgment, resolved only a minor issue and did not trigger Rule 420. The Plaintiff argued that the circumstances here were not the Court telling the Plaintiff it was wrong, but rather the Plaintiff electing to discontinue against Gulf Log and to proceed against the provincial Crown. The Plaintiff asserted that Gulf Log's position on doubling equates to untenable positions. If the Plaintiff had accepted the settlement offer, it saves some $10,000.00 in costs, but subverts its legal position on the major issue. Or, if it rejects the settlement offer, Gulf Log receives some $10,000.00 extra in costs.
Gulf Log's Position
[8] Gulf Log argued that importance for the public interest should tend here to increase costs because, not only does Gulf Log cease to exist if the Plaintiff is successful, many other salvors of logs, unlike the Plaintiff, think the current system is viable. Gulf Log argued that a simplified action was inappropriate as Northern Telecom Ltd. v. Communications Workers of Canada et al. 98 D.L.R. (3d) 1 at 14-15 (S.C.C.) is clear that constitutional cases must be decided in their full factual context. The Reasons supra dated May 24, 2001, at para. [29] refer to the Plaintiff's assertion that this matter involves important constitutional issues with immense implications. Gulf Log argued that, if the Plaintiff is successful, the log salvage process in place over several decades in British Columbia changes dramatically. Therefore, Gulf Log's effort to ensure a full and unbiased factual record, not available in a simplified action, was necessary for a proper constitutional analysis and was not a delaying tactic. Gulf Log argued that the Reasons supra dated May 24, 2001, at paras. [5] and [31] respectively, indicate that $28,219.65 is a conservative estimate of costs and that there is doubt as to the merit of the case.
[9] Gulf Log argued that, although the Statement of Defence as filed was straightforward, the analysis of complex constitutional issues in its preparation was not. Gulf Log conceded that pleadings in complex aboriginal cases in this Court may be more difficult and argued that 5 or 6 units for item 2 would be appropriate with 6 units being the better choice. Gulf Log disagreed with the premise in Registry Procedure & Assessment of Costs supra limiting an action to one item 7 and argued both that the wording of the Tariff does not preclude a plural reading and that the drafters of the Tariff intended a plural reading. Gulf Log argued that each item 7 is justified separately because the listing and retrieval of documents involved substantial and complicated work for all parties. (Note: Gulf Log asked that, if I ruled against it on this point, I set out what I might have allowed for three item 7 claims). Gulf Log conceded that the settlement conference was not part of a formal hearing with the Court, but argued that the claim for the first item 10 is appropriate given several settlement discussions occurred.
[10] Gulf Log argued that, relative to item 8 for preparation for examination of Shirley Weishun (co-owner of the Plaintiff), as some log salvors were content with the current legislative scheme and the Plaintiff had carefully culled 17 logs to create a test case, it was critical to elicit the full background of all the logs even if quantum, still a relevant issue, was not the main issue. Gulf Log claimed twice under item 8 because material arising from her January 24 examination had to be reviewed in preparing for her March 6 re-attendance. Relative to item 9, Gulf Log noted the transcript for January 24 shows a duration of 4 hours 48 minutes. As the transcript for March 6 does not show the duration, Gulf Log estimated 4 hours given attendance lasting into the afternoon. For items 8 and 9 relative to the examination of Douglas Cooper (General Manager of Gulf Log), Gulf Log noted that his discovery was not simple and generated 60 pages of transcript comprising 383 questions. Gulf Log argued that 1 unit for item 9 equating to $110.00 per hour is too low in the circumstances of a constitutional test in which Gulf Log would cease to exist if the Plaintiff was successful. Therefore, 2 units per hour would be appropriate because the drafters of the Tariff intended it to achieve 50% indemnity. For items 8 and 9 relative to the cross-examination of Shirley Weishun on her affidavit, Gulf Log asserted that she deliberately gave only partial information. Gulf Log noted the Reasons supra dated May 24, 2001, at para. [17] confirming that a brief cross-examination was appropriate. Gulf Log argued that experienced counsel, aware that too many questions can run the risk of making an opponent's case, may consider, as here, that a lengthy cross-examination is not in the best interests of the client's legal position. Therefore, 2 units per hour for item 9 is appropriate.
[11] Gulf Log argued that its supporting affidavit identifies each photocopy and that the actual cost was reduced to $0.25 per page for this bill of costs. Gulf Log asserted that this litigation required service on two different parties, often on short notice, and that even the Plaintiff's reply affidavit for this assessment was served on short notice. Gulf Log argued that it would therefore be unfair to arbitrarily reduce the $557.00 claimed for photocopies in the face of an affidavit on which the Plaintiff chose not to cross-examine. Gulf Log argued that cases more recent than Pardee Equipment supra have approved computer legal research as a disbursement. The $110.29 claimed here is minimal for a matter characterized by the Plaintiff as an important constitutional test.
[12] Gulf Log asserted that the Plaintiff could never have been successful against it because Gulf Log exists only pursuant to the Log Salvage Regulation, B.C. Reg. 220/81 and argued that acceptance of Gulf Log's monetary offer would not have been prejudicial because the Plaintiff could still have pursued its constitutional issue with the provincial Crown. Gulf Log argued that CSC Continuum Inc. supra is not relevant because it did not address an action as here, but rather an appeal from a tribunal under the former Rules which did not allow costs for statutory appeals and judicial reviews. In that case, at para. [8], the Court does not say that Rule 420 is inappropriate and, at paras. [9] and [10], it awarded some costs to the respondent, despite the appellant's success, because of the appellant's failure to accept an offer to settle. Gulf Log argued that this litigation is comparable to Feherguard Products Ltd. v. Rocky's of B.C. Leisure Ltd. [1994] F.C.J. No. 2012 (T.O.) which held that Rule 344.1 (then the Rule governing costs further to offers to settle) permitted doubling in the absence of a direction or order of the Court. Paragraph [10] therein held that "the best way to administer the scheme of costs in litigation is to choose positive applications of its provisions as opposed to narrower and negative ones". Gulf Log noted that the Plaintiff's premise, that doubling is premature in the absence of a Rule 420(2)(a) judgment, is irrelevant because Rule 420(2)(b) applies here, ie. the Plaintiff failed to obtain judgment. Gulf Log argued that the filing of a discontinuance, thereby precluding any possibility of success in the action, did not shield the Plaintiff from the consequences of Rule 420 concerning the acceptance, or not, of settlement offers. Gulf Log asserted that the Tariff was intended to result in approximately 50% costs before Rule 420 is considered and argued that the drafters of the Tariff did not intend that litigants could avoid the consequences of not settling a case, which was not going well, by filing a discontinuance so as to preclude the doubling effect of a judgment.
Assessment
[13] I concluded in Bruce Starlight et al. v. Her Majesty the Queen on September 7, 2001, in T-66-86B (2001 FCT 999) that the same point in the ranges throughout the Tariff need not be used as each item for the services of counsel must be considered in its own circumstances. Public interest as a factor affecting costs is perhaps more difficult to apply than others because it could be considered to pervade the litigation as a whole whereas other factors, such as conduct tending to lengthen proceedings, can occur throughout, but could easily be attributed to portions only of the litigation. Both sides agreed that public interest was a factor, but with opposite effect: the Plaintiff urging generally reduced costs because of its initiative in creating this constitutional test, and Gulf Log urging generally increased costs because salvors other than the Plaintiff are satisfied with the current system. Gulf Log's interest includes its apprehension that, as a creature of the provincial regulation, it would cease to exist if the Plaintiff was successful. That interest had the broader effect of protecting the position of individuals whose position concerning the economic viability of the provincial scheme was contrary to that of the Plaintiff. I conclude that Gulf Log should benefit here from public interest as a factor. However, having noted the Reasons supra dated May 24, 2001, which comment at para. [29] that the Government of Canada has not intervened and may view the constitutional issues as having little merit, I have tempered that somewhat because the public interest is regional in nature. Finally, the record satisfied me that Gulf Log's position on the suitability of a simplified procedure was reasonable.
[14] I allow 6 units for item 2 as the Statement of Defence was important in framing Gulf Log's constitutional position. Counsel for Gulf Log correctly pointed out that the wording of item 7 could permit discreet allowances relative to one's own discovery and to one's opponent. In Registry Procedure & Assessment of Costs supra, I presumed a single indemnity in the nature of a merged or blended service embracing all discoveries in a proceeding. The inadequacy of that narrower construction is evident in circumstances such as this litigation in which Gulf Log's adversarial position with the Plaintiff was complicated by the need to conduct itself cognizant of the position of independent Defendants with whom it needed a separate discovery. Therefore, I will alter my previous position, but with certain reservations. I think that, as each discovery occurs, there may be a reasonable expectation, or not, that information useful for subsequent discoveries will surface thereby tending to warrant lower allowances for second and subsequent claims under item 7. In the circumstances here, I will allow an item 7 for each of the discovery of documents relative to Gulf Log, the Plaintiff and the provincial Crown, presented at 3, 5 and 5 units respectively, at 3,5 and 3 units respectively. In so doing, I note the affidavit supporting Gulf Log's motion for security for costs which estimated assessable costs necessary to defend this action and included a claim for only a single item 7. The first item 10 is not appropriate for settlement negotiations. However, the scheme of the Rules is designed to encourage settlement and any efforts in that area should be treated positively. Item 27 may be allowed more than once for any services not covered by items 1 -26 inclusive. I allow 2 units under item 27. I allow the second item 10 at the 5 units claimed.
[15] In Canadian Olympic Association v. USA Hockey Inc. et al., A-472-97 (2001 FCA 32) on February 22, 2001, at para. [14], I indicated that an allowance for a second item 8 during the interval before resumption of an examination is possible. Here, I allow only a single item 8, at the maximum 5 units in the circumstances, for preparation for the examination of Shirley Weishun. For item 9, I accept Gulf Log's estimate of time and allow the 10 units and 8 units claimed for the two days respectively. For preparation for the examination of Douglas Cooper, I allow 4 units in the circumstances, in place of the maximum 5 units claimed. The claim of 5 units for him under item 9 suggests a fraction of an hour for duration was likely used. I allow the 5 units claimed. For the preparation for cross-examination of Shirley Weishun's affidavit under item 8 and attendance under item 9, the claims of 3 units and 2 units are justified in the circumstances.
[16] Essentially, other than the assertion on information and belief in the supporting affidavit that all disbursements were reasonably and necessarily incurred for this litigation, the proof for facsimiles and photocopies consists of computer printouts displaying date, amount, client and service, but not purpose. My approach in instances of less than absolute proof for photocopies and facsimiles is outlined in Carlile v. The Queen, 97 D.T.C. 5284 and Local 4004, Airline Division of Canadian Union of Public Employees v. Air Canada on March 25, 1999 in T-323-98. Some of Gulf Log's costs may relate to the provincial Crown, but if they do, that is irrelevant because they were a function of nothing other than the Plaintiff's initiation of this litigation. I allow facsimiles at the $148.00 presented. I allow photocopies at the reduced amount of $450.00. Per Pharmacia Inc. et al. v. Minister of National Health and Welfare et al. 1999 Carswell Nat 2244 (T-2291-93, A.O.) at paras. [48] - [55], I allow computer assisted research at the $110.29 claimed. As for transcripts, I allow the $2,318.25 claimed because I accept the premise that the jurisprudence required Gulf Log to consider the implications as a whole for log salvage as an industry. The excerpts of transcript in evidence reflect a reasonable attempt to create a full factual record relative to Gulf Log's position that many salvors feel that the current legislative scheme provides adequate compensation for log salvage.
[17] Rule 402, in the absence of an order or agreement, provides for costs after discontinuance and the only reference to judgment therein is in the context of enforcement for payment of costs, ie. "as if judgment for ... costs had been given", but not in the context of assessment of those costs. Therefore, I do not think Rule 420(2)(a), which presumes a judgment exists, applies here. This phrase in Rule 420(2)(b), "plaintiff fails to obtain judgment", is not restrictive in that it does not, on a plain reading, preclude a discontinuance from triggering double costs (which refers to fees, but not disbursements). It may be that a settlement offer is not credible in the circumstances of a given proceeding. Here, I conclude that Gulf Log's offer was a reasonable function of its position in its Statement of Defence. I allow the double costs as presented. This assessment was not particularly difficult. I allow the 4 units claimed for item 26. Gulf Log's bill of costs, presented at $22,931.24, is assessed and allowed at $20,559.55.
(Sgd.) "Charles E. Stinson
Assessment Officer
Vancouver, B.C.
November 6, 2001
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-588-00
STYLE OF CAUSE:Early Recovered Resources Inc. v.
Gulf Log Salvage Co-Operative Association et al.
PLACE OF HEARING: Vancouver, B.C.
DATE OF HEARING: September 4, 2001
ASSESSMENT OF COSTS - REASONS: Charles E. Stinson
DATED: November 6, 2001
APPEARANCES:
Angela McCue for Plaintiff
M. Venton
David F. McEwen for Defendant
Gulf Log Salvage Co-Operative Association
SOLICITORS OF RECORD:
Sierra Legal Defence Fund for Plaintiff
Vancouver, B.C.
McEwen, Schmitt & Co. for Defendant
Vancouver, B.C. Gulf Log Salvage Co-Operative Association
Ministry of Attorney General for Defendants Her Majesty the Queen in right of the
Victoria, B.C. Province of British Columbia et al.