Date: 19991117
Docket: T-2991-93
BETWEEN:
PHARMACIA INC. and
FARMITALIA CARLO ERBA S.R.L.
Applicants,
- and -
THE MINISTER OF NATIONAL
HEALTH AND WELFARE and
DAVID BULL LABORATORIES (CANADA) INC.,
Respondents.
ASSESSMENT OF COSTS - REASONS
G.M. Smith,
Assessment Officer
[1] On March 20, 1995 the Court dismissed the applicants' Originating Motion seeking to prohibit the Minister of National Health and Welfare (the "Minister") from issuing a Notice of Compliance to the respondent David Bull Laboratories (Canada) Inc. ("David Bull"), pursuant to the Patented Medicines (Notice of Compliance) Regulations, SOR/93-113, in relation to a pharmaceutical preparation containing doxorubicin hydrochloride. David Bull applied to the Court for costs pursuant to Rules 344 and 1618. On October 13, 1995 the Court allowed the respondent's motion granting costs on a party-and-party basis to David Bull both for the motion for costs and for the original application for prohibition. The Court also directed those costs be determined in accordance with Amending Order No. 17, SOR/95-282. In other words, the respondent's costs were to be assessed following the provisions of the current Tariff and Rules structure which came into force on September 1, 1995.
[2] Appeals were launched by the applicants against both the judgment dismissing the application for prohibition and the costs award. The former was dismissed by the Court of Appeal on November 21, 1995 and the latter was also dismissed, on September 9, 1998, except insofar as the requirement that those costs be determined other than as provided by Tariff B of the former Rules, C.R.C. 1978, c. 663.
[3] The assessment of the respondent's costs proceeded on September 29, 1999 after the bill was revised on June 11, 1999. The applicants and David Bull were both represented at the assessment hearing. Counsel for the co-respondent Minister declined to participate. Agreement between the parties on the bill of costs was scarce. The few items that went on consent will appear later throughout these reasons.
[4] The respondent's costs were supported by the affidavit of Susan D. Beaubien sworn on July 29, 1997. Counsel also produced an Assessment Record and a Book of Authorities. The applicants filed the affidavit of Gunars A. Gaikis, sworn September 24, 1999, in opposition to the respondent's bill and they also produced authorities on selected points of contention surrounding the respondent's claims.
[5] The applicants referred to Procter & Gamble Inc. v. Unilever PLC, 61 C.P.R. (3d) 499 to support the premise that the maximum rate of costs for the services of counsel is not automatic in a case of this nature. The onus is on the respondent, counsel argued, to justify the rate being claimed. At page 527 of the Procter & Gamble decision, this Court said:
| In my view, an increase in costs of the appeal on the basis of the complexity of the issues is not justified. This is a patent case as was the case of TRW Inc., supra. In dealing with an application for an increase of costs pursuant to Rule 344(6) and (7) in TRW Inc. v. Walbar of Canada Inc. (1992), 43 C.P.R. (3d) 449, I had the following to say, at pages 456-457, for declining to allow increased costs on the basis of the complexity of the issues: |
| Apart from the fact that patent litigation, by its nature, is often difficult as compared with other types of litigation, the action and counterclaim in this case centred on infringement and validity, both of which are rather commonplace in litigation of this kind. Doubtless the technology was complex...but it is the complexity of legal issues raised by the litigation rather than the technology involved that the court is to consider under Rule 344(3)(j). |
| Here, as in that case, I am not persuaded that there should be allowed an increase of costs on the appeal based upon complexity of the issues. |
[6] Counsel for David Bull responded by noting that the course of these proceedings ran a very busy gauntlet of several interlocutory motions, cross-examinations on affidavits, including one supporting the respondent's motion for costs, and appeals. Travel was undertaken to interview witnesses, attend cross-examinations and motions, and to attend the hearing of the application for prohibition. In addition to $4,400.00 in fees for the services of counsel, the respondent also claims $29,661.90 for disbursements, $648.16 for Goods and Services Taxes and post-judgment interest (compounded) in the sum of $11,358.25. Respondent's counsel pointed to the fact that a very considerable amount of work was required to defend against the motion for prohibition. This was not a "usual" summary proceeding, counsel explained, and the case had profound economic implications for David Bull - it could not be handled lightly.
[7] After reviewing the Court record, and the material submitted by counsel, I have concluded that this matter was complex but not unusually so. It nevertheless imposed a considerable amount of work on the respondent and the economic impact was conceivably great, but most importantly I appreciate that the Court's award of costs was based on "special reasons". Accordingly, having considered the criteria set out in Rule 346(1.1), I have assessed fees as follows.
[8] The first of the items claimed is $250.00 for preparation of the respondent's evidence under B1(a) of the Tariff. Applicants' counsel correctly pointed out that this item is exclusive to services for preparing and filing pleadings. No pleadings were prepared by the respondent and this claim must therefore be refused. An amount of $75.00 is also claimed for David Bull's motion to extend time for filing evidence. Rule 346(4) stipulates that the costs of an application to extend time shall be borne by the party making that application, unless the Court otherwise orders. The Court did not provide special directions regarding this motion and I therefore disallow this claim as well.
[9] Fees of $125.00 are claimed for preparation and attendance on the respondent's motion for further evidence. Applicants' counsel argued that neither of the Court's orders dated March 21 and 25, 1994 awarded costs in respect of this motion. Amendments made to the rules on April 2, 1987 (SOR/87-221) mean that there is no longer a rule that costs follow the event unless otherwise ordered. Rule 344(1) provides that the Court alone has the "full discretionary power over payment of the costs of all parties involved in any proceeding" (my underline). The costs of this motion, counsel therefore contended, cannot now be assessed against the applicants.
[10] In reply, counsel for the respondent relied on Merck Frosst Canada Inc. v. The Minister of National Health and Welfare, 136 F.T.R. 95, 76 C.P.R. (3d) 501, to support its contention that an award of costs in a judicial review is one of a special nature that effectively envelopes the whole of the steps which precede the Court's final conclusion and has retroactive effect to the interlocutory proceedings as well. In the Merck Frosst case, Mr. Justice Rothstein, as he then was in the Trial Division, wrote:
| In this case, there were no specific awards of costs in any event of the cause in interlocutory proceedings. All interlocutory orders made in this case are silent as to costs or where costs are mentioned, they are payable in the cause. While silence may itself be a disposition as to costs, such as when a judge, based on the circumstances, exercises his or her discretion not to award costs, I think in judicial review proceedings that is not to be presumed. Under Rule 1618 of the Federal Court Rules, no costs shall be payable unless the Court for special reasons so orders. I would think that in judicial review proceedings, absent an express statement as to costs, the presumption would be that silence indicates that the judge hearing the interlocutory matter did not consider there were special reasons for ordering costs. Further, when costs are ordered in the cause in judicial review proceedings, in the absence of an express finding of special reasons, effect cannot be given to such an order. See Everett v. Canada (Minister of Fisheries and Oceans), (1994) 25 Admin. L.R. (2d) 112 (F.C.A.). In all these circumstances, when, at the conclusion of proceedings, the Court is persuaded that special circumstances justify an award of costs, the award, in my view may include amounts applicable to interlocutory proceedings in which, at the time, no award or no effective award was made. |
[11] I note the Merck Frosst case was also a judicial review procedure (Rules 1600 et seq) concerning the Patented Medicines (Notice of Compliance) Regulations. Justice Rothstein's comments are compelling, in my view, in their application to the present case. I allow $115.00 for the costs of the motion for further evidence.
[12] Fees are claimed at the maximum rate of $125.00 for "(p)reparation and attendance" on each of the cross-examinations of five witness: four patent agents and a representative of David Bull. The applicants opposed these claims arguing that much of the costs stem from activities undertaken by David Bull which did not even address the main issue in this case; that is to say, whether David Bull's composition contained essentially only the two ingredients doxorubicin and lactose. Moreover, the affidavits contained identical opinions by the four patent agents, counsel argued, and that evidence was essentially worthless because David Bull's own representative admitted the issue of the respondent's formulation had not even been disclosed to the four patent agents. It would be perverse, counsel suggested, to hold the applicants responsible for the costs of these cross-examinations when no weight whatsoever was given by the Court to that evidence and none of the patent agents were even skilled in the art of the relevant patent.
[13] In further support of the applicants' position, counsel referred to the Court's judgment, reported at (1995) 60 C.P.R. (3d) 328 (F.C.T.D.), dealing with the issue of non-infringement:
| Basically, the patented product at issue is a lyophilized powder which contains: the medicine Doxorubicin; an inert-excipient, which is often lactose; and a cosolubilizer as claimed in the patent. The cosolubilizer is the inventive ingenuity of the '453 patent. The respondent's product, also a lyophilized powder, as described in the detailed statement, contains "essentially only" Doxorubicin and lactose. |
The burden of proof rested on the applicants and not David Bull, applicants' counsel suggested. The expedition into totally irrelevant evidence was more likely intended to encourage settlement than to get on with the case at bar, she added, and the evidence of the four patent agents was therefore superfluous to the main issue of the judicial review.
[14] Counsel for the respondents replied that the evidence of the four agents was certainly relevant and necessary, having regard to the particular circumstances of these proceedings. Pursuant to section 5 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, David Bull had forwarded to Adria Laboratories of Canada Inc. a notice of allegation and supporting detailed statement alleging that a proposed product for which David Bull was seeking a notice of compliance, namely a lyophilized powder comprising doxorubicin and lactose, would not infringe Canadian Patent No. 1,248,453. The Originating Motion in these proceedings alleged that Pharmacia Inc., successor in title to Adria Laboratories of Canada, sells the medicine doxorubicin in Canada with the consent of Farmitalia Carlo Erba S.R.L. ("Farmitalia"), the owner of patents 1,248,453 and 1,291,037 said to contain claims to the medicine doxorubicin and its use. The effect of that motion by Pharmacia and Farmitalia seeking to prohibit the Minister from issuing a Notice of Compliance to David Bull placed an onus on the respondent to file its own affidavit evidence pursuant to Rule 1603(2) and (3). David Bull was faced with a predicament, counsel explained, because it had no clue as to the nature of the applicants' complaint regarding the respondent's notice of allegation and detailed statement. It was even suspected that the motion for prohibition had the ulterior motive of delaying David Bull's entry into the lucrative market for its product.
[15] According to respondent's counsel, the limited information proffered by the applicants' motion for prohibition meant that David Bull could only guess as to the nature of the case it was supposed to meet. It was either purely speculative or the applicants were somehow taking issue with the legal conclusion of non-infringement. The respondent had little choice but to prove the facts in the detailed statement it had filed, and then tackle the issue of non-infringement. Those facts were addressed in the affidavit of Richard Palangiewicz, David Bull's representative, and the conclusion of non-infringement was the focus of the opinions sought from four independent patent agents.
[16] Respondent's counsel further explained that David Bull was being careful to ensure that none of the agents knew in advance where the respondent's interests lay. This effectively alleviated the possibility of even unconscious bias in their opinions. In the eventuality, all of the agents reached the same, unequivocal conclusion of non-infringement. This was powerful and demonstrative proof, counsel emphasized, that David Bull's allegation of non-infringement pursuant to section 5 of the Patented Medicines (Notice of Compliance) Regulations was justified.
[17] As for the Court's judgment and the lack of reference to the evidence in question, respondent's counsel cautioned against drawing a conclusion that the evidence was without weight or merit. Counsel referred to Carruthers v. The Queen, [1983] 2 F.C.R. 350 at 353:
| In the judgment under appeal, no special direction was sought or made respecting costs, which were not spoken to. Had this been done, I would no doubt have made a special direction with respect to costs of Mr. Bowman of Price Waterhouse. The fact that in the reasons for judgment I indicated a preference for the approach to evaluation of shares by Mr. Dalgleish, defendant's expert, and in fact based my decision on an earlier report of Mr. Clayton made for the defendant, should not be considered as detracting from usefulness of Mr. Bowman's report, nor is it any reflection on his competence. In cases in which experts are called by both parties and they give conflicting opinions, the Court has to choose the opinion of one of the experts as preferable to the other, unless the Court chooses to reject both opinions and substitute its own based on the evidence, but the fact that one expert's report is rejected, or not accepted in full, would not justify non-payment of his fees for the preparation of same, unless the Court finds that the requisitioning of such a report was entirely unnecessary or the contents useless. |
And then in Riello Canada, Inc. v. Lambert, 15 C.P.R. (3d) 257 at 258, this Court said:
| The most important issue is that with respect to the costs involved in the appearance of the witness Paolo Mori. It would be within my powers under paragraphs 344(4) and (5) to direct that the costs of this witness not be allowed if it should appear that his presence was unnecessary. To so find, I would have to be satisfied that the plaintiff could not reasonably have thought his evidence to be relevant to, and supportive of, the case to be presented on behalf of the plaintiff. I am not so satisfied in this case. |
[18] Counsel for David Bull also relied on Rothmans, Benson & Hedges Inc. v. Imperial Tobacco Ltd. 50 C.P.R. (3d) 59 at 65 to support its claims for costs of the witnesses:
| There are two comments I wish to make concerning the applicants' request for the fees, disbursements and living expenses of their witnesses. First, the court should not disallow the costs of a witness as unnecessary unless it is satisfied that the party could not reasonably have considered the witness' evidence to be relevant to and supportive of the case. The court must consider what would have appeared rational to the parties at the time of the trial. I am satisfied that the witnesses called by the plaintiffs meet the criteria and accordingly reasonable fees and disbursements relating to them should be allowed. |
[19] In deciding this issue, I think it important to consider the Court's reasons for awarding costs to David Bull, reported at 102 F.T.R. 207, 64 C.P.R. (3d) 5, which read in part:
| As might be expected, each party vigorously contends that the other is responsible for elevating the costs of this proceeding. For example, David Bull contends that because Pharmacia provided no grounds in its Originating Notice of Motion, the filing of the Notice simply operated to impede, unnecessarily and for an extended period of time, David Bull's entry into the market place. Moreover, David Bull contends that four patent agents were retained because Pharmacia filed absolutely no evidence upon which the Court could determine David Bull's allegations to be other than justified. This was because David Bull had no notice as to the grounds upon which the proceeding was commenced. Therefore, David Bull assumed that Pharmacia was challenging the legal conclusion underlying the statement of allegations. Pharmacia, on the other hand, contends that David Bull would not provide a sample; if it had, it is submitted, the issues could have been resolved one way or the other, expeditiously. Pharmacia attempted to obtain a sample by Court order but was unsuccessful. While paragraph 7(1)(e) of the PMNOC regulations impedes market entry as described therein, the regulations do not prescribe what evidence is required to satisfy the Court that an order of prohibition should issue. That decision is left to the applicants. |
| David Bull filed a detailed statement of allegations. In addition, David Bull provided a knowledgable Canadian witness for cross-examination. Obviously, Pharmacia disagrees with the extent of the witness's knowledge. David Bull also filed evidence of four patent agents. While Pharmacia cross-examined, it provided no evidence by way of expert opinion or otherwise. Pharmacia filed one brief affidavit, which merely established standing to commence this proceeding. Pharmacia simply advanced a number of legal arguments which, while responsible, the Court upon consideration declined to accept. |
| In my opinion, this case is essentially a private dispute where the Court becomes the battleground rather than the market place. In the circumstances of this case, I have decided that there shall be an award of costs. David Bull requested an award of costs on a solicitor-and-client basis, but argued, in the alternative, that other types might be appropriate if the Court declined to grant solicitor-and-client costs. I see no reason in this case to award costs on any basis other than a party-and-party basis. David Bull shall also be awarded the costs of this motion on a party-and-party basis. Costs are to be determined in accordance with Amending Order No. 17. |
[20] It is evident that the Court was quite aware of the applicants' objection to the costs for the witnesses in question, and the absence of any explicit instruction to the effect that those costs should be excluded is conspicuous, in my view. At the very least, I consider the evidence adduced by the respondent was not completely without impact. At the end of the day, it was the applicants who chose to cross-examine them and the respondent is therefore entitled to fees for that service.
[21] I note that some of the cross-examinations occurred on the same day. Preparation time was nevertheless required for each. I have reduced the respondent's claim to $100.00 for each of the cross-examinations of Robert J. Little, James R. Lake and David M. Rogers. The same amounts will be allowed for the cross-examinations of each of Richard Palangiewicz and David J. McGruder. Fees in an amount of $115.00 are allowed for the cross-examination of Peter Kirby. The amount of $125.00 with respect to the cross-examination of Jonathan Cohen was unopposed, except as to quantum. I have allowed it in full.
[22] David Bull claimed $125.00 for preparing and attending on its motion to strike the Originating Motion. This too was opposed, on the grounds that the Court's order disposing of that motion made no award of costs. As already noted, the rule that costs follow the event unless otherwise ordered no longer exists. That is not to say, however, that the underlying principle inscribed in the former Rule 344(1) no longer follows. The jurisprudence cited in the text Federal Court Practice, 1995, Carswell, David Sgayias, Q.C., at 337, suggests otherwise; see Hodson v. M.N.R., [1988] 1 C.T.C. 2, 88 D.T.C. 6001, 46 D.L.R. (4th) 342, 82 N.R. 308 (Fed. C.A.); Lubrizol Corp. v. Imperial Oil Corp. (1989), 27 C.I.P.R. 147, 26 C.P.R. (3d) 461, 103 N.R. 237 (Fed. C.A.), and the respondent provided no cases establishing a different view.
[23] The "event" in this instance was the Court's disposition of respondent's motion to strike (see IBM Canada v. Xerox of Canada, [1977] 1 F.C. 181 at 184). The respondent was unsuccessful on that event and, absent any direction from the Court to the contrary, I conclude that those costs cannot now be assessed against the applicants.
[24] Fees for services relating to the motion to compel the reattendance of Richard Palangiewicz and for the subsequent cross-examination appear reasonable. They are allowed as claimed. The fees requested for attendance on August 23 and 24, 1994 of a motion to review the Associate Senior Prothonotary's decision and to strike the Notice of Allegation are supported by the Abstract of Hearing on the Court file. They are also allowed.
[25] The respondent claims $250.00 under Tariff item B1(1)(b) for preparation of its record and memorandum of fact and law. The applicants oppose this claim because "David Bull did not perform any services prior to examination for discovery, as required by this Tariff item, as the present proceeding was not an action (and hence there was no discovery)." I agree with the applicants' view on this point, and their reliance on Bayer AG v. Minister of National Health and Welfare, 51 C.P.R. (3d) 329. This claim is refused.
[26] David Bull claims $500.00 under Tariff item B1(h) for "preparation of judicial review hearing (3 days (or part thereof) duration)" and $1,200.00 under B1(i) for "attending judicial review hearing". The applicants correctly point out that Tariff B1(h) and (i) apply to a "trial" (or hearing in the Court of Appeal), which was not the case here. These claims will therefore be assessed at $100.00 under Tariff item B1(g) for matters incidental to the Originating Notice of Motion and $900.00 as suggested by the affidavit of Gunar A. Gaikis for counsel's appearance.
[27] The respondent combined two claims of $125.00 and $250.00 in respect of its own Notice of Motion seeking costs and the applicants' cross-motion. The respondent's bill mistakenly refers to these items under Tariff B1(c), but I have considered them under B1(e) for services relating to an opposed interlocutory motion. The applicants objected to the first amount of $125.00 because the event concerned was a conference call rather (presumably) than a "hearing"; the call only took one-half hour; it was not followed by an order of costs; and the respondent's motion had not even been filed by the time of the call.
[28] I disagree with the applicants regarding these claims and have assessed both of these amounts in the respondent's favour, based on three half-day periods of appearance. The parties were served with David Bull's Notice of Motion before the teleconference took place. Applicants' counsel took that motion seriously - why else would they have filed their cross-motion and why otherwise would the Court have agreed to the conference call? These services, including the teleconference, were conducted in direct response to a motion (and cross-motion) which the Court disposed on October 13, 1995, with costs explicitly awarded to the respondent.
[29] An amount of $125.00 was claimed in the respondent's bill for "(s)ervices after judgment", but counsel for the respondent agreed at the assessment to remove this item. Fees of $125.00 claimed for this taxation are allowed. A further claim was raised by the respondent pursuant to Rule 344.1 for an assessment approaching double fees as a result of an alleged offer made by the respondent to settle the case. The offer in question is referred to in the affidavit of Jonathan C. Cohen sworn April 19, 1995. A letter dated March 1, 1994 had been conveyed by the respondent to applicants' counsel expressing a willingness to pay costs in an amount of $1,250.00 in exchange for the discontinuance of these proceedings and an undertaking that the applicants would not take any further action to block or otherwise interfere with the issuance of the Notice of Compliance. David Bull's counsel argued that Rule 344.1 comes into play because the result of the judgment eventually obtained was more favourable than the offer. Counsel relied on the case of Jesionowski v. Gorecki and Ship Wa-Yas, 58 F.T.R. 275, where the Court said at page 276:
| It is clear that when a reasonable offer of settlement has been refused and when an amount equal to or in excess of that amount is recovered at trial, the trend is to allow an award of costs which more closely reflects the actual costs incurred by the successful party than would otherwise be the case. In the circumstances of this case, I have decided that a lump sum award of three times the tariff is appropriate ($23,925) plus disbursements which include the amounts paid for experts ($10,262.50). |
[30] Counsel for the applicants opposed the respondent's claim under Rule 344.1 on two grounds: first, the offer contained in the letter of March 1, 1994 was not one that the applicants could have accepted and, second, Rule 344.1 has no application to judicial review proceedings. Applicants' counsel referred to PWA Corp. v. Gemini Group Automated Distribution Systems Inc., 101 D.L.R. (4th) 15, affirmed at 103 D.L.R. (4th) 609, in support of the proposition that something more than a mere offer of a nominal amount for costs is required to trigger Rule 344.1. The Jesionowski case (supra) supports that view, counsel added, because it suggested that, for an offer to be considered reasonable, it must at least be one that can be weighed by the receiving party in a manner which implies negotiation. That was not the case with respect to the March 1 letter from respondent's counsel, and in any event, counsel pursued, the language used in Rule 344.1 clearly restricts those provisions to "actions" and not judicial review proceedings.
[31] On the evidence, I agree with the applicants that the March 1, 1994 letter had little chance of being accepted. The conditions prescribed by the respondent went well beyond these judicial review proceedings alone and seemed unlikely, given the less than nominal amount offered for costs, to have expected an affirmative response. I also agree with the view that Rule 344.1, as it then was (SOR/94-41, s.3), is applicable primarily, if not exclusively, to actions. Unlike the current Rule 419 of the Federal Court Rules, 1998, the former Rule 344.1 refers to "plaintiff" and "defendant" without the benefit of any reference to other types of proceedings associated with "applicants" or "respondents". Counsel for the respondent presented no convincing argument at the assessment to counter this view and I therefore decline to increase fees as a result of the March 1, 1994 letter.
[32] Disbursements in a total amount of $14,489.39 are claimed by David Bull in respect of the patent agents Kirby, Lake, Rogers, McGruder. As discussed above, those costs were opposed by the applicants as having been, inter alia, unnecessary and irrelevant. Counsel urged, however, in the event I should decide to assess these costs, that the applicants should at least not be held responsible for duplication costs of the four agents who all said the same thing.
[33] In reply, counsel for David Bull relied on Nekoosa Packaging Corp. v. MACA International Ltd., 29 C.P.R. (3d) 540 where this Court said at 543:
| Counsel must also decide what expert witnesses should be called to make the point they wish to make. I listened quite attentively to them as is always necessary in a patent trial, read their affidavits and read the transcript of this hearing. Each witness had a point or points to make. It is not unheard of that one expert witness in the course of his affidavit or evidence will corroborate what was said by another expert witness, but that is no reason to discount his or her usefulness as an expert witness. I cannot accept the arguments advanced by counsel for the plaintiffs that any of these experts were unnecessary. |
[34] I accept the applicants' pointed that the four agents were not experts, at least not in the sense of Rule 482. Subsection 4(2) of Tariff A therefore does not apply, and no statement of payment to these witnesses was filed under subsection 3(2). While I have allowed counsel fees for the cross-examination of these witnesses because, as already explained, those services were required of counsel, the test for disbursements is somewhat different. Subsection 1(2)(b) of Tariff B states "such other disbursements may be allowed as were reasonably necessary in the proceeding". (my underline) For similar reasons discussed above, I am willing to allow expenses for these witnesses, but I am not convinced that all of the $14,489.39 claimed is a reasonable amount which the applicants should be required to pay.
[35] The circumstances of these disbursements were somewhat unusual, most obviously of course because these proceedings are in the nature of a judicial review, rather than an action. The witnesses were neither required, nor expected, to give vive voce evidence at a hearing. Given the circumstances explained by David Bull's counsel at the assessment, I appreciate the burden faced in conducting a full and proper defense against the motion for prohibition - David Bull's counsel could not lightly disregard all possible twists and angles of this case. I am equally in agreement with the view that the process of assessing costs cannot, in all fairness, be guided strictly by hindsight. The flip side to that approach, of course, is that reasonable austerity must not be ignored either.
[36] Although the Court did not exclude the costs of the four patent agents, I cannot avoid reaching the conclusion, from reading the judgment and the order awarding costs (supra), that their evidence had less impact than the respondent suggests. Counsel for the respondent argued at the assessment that the effect of an identical opinion from four separate patent agents was "powerful". Applicants' counsel countered that the same effect could have been achieved with only two agents, and maybe even one.
[37] In my view, the dictates of the party-and-party context should apply here; any obvious excesses or luxuries in establishing the opinion in question, particular regard to its degree of relevance to the motion for prohibition, should not be imposed on the applicants. Without commenting on the quality of the work performed by the four patent agents or its value to David Bull, I do not think the applicants should have to pay for the respondent's decision to set a nail, so to speak, using the proverbial sledgehammer. I have concluded that a reduction of 33% against this disbursement will result in a reasonable assessment of $9,707.89 for the expenses paid for the patent agents.
[38] As for the disbursement of $435.70 for Janis Apse, counsel for David Bull agreed at the assessment that that evidence could have been tendered by means of its own counsel. This item is therefore removed.
[39] The applicants oppose the disbursement of $1,965.98 for transcripts, particularly the cost for the transcript of the applicants' motion on August 23 and 24, 1994 and the expedited transcripts of cross-examinations. The applicants filed an appeal against the Court's disposition of its motion heard in August 1994. It is not unreasonable for David Bull's counsel to want to review arguments before the motion Judge. As for the expedited transcripts, however, as helpful that quick turnaround time may have been to David Bull, I do not see that they were necessary in the circumstances of the case. This disbursement of $1,965.98 will be reduced by the cost factor for expedited transcripts which I estimate as $382.70.
[40] The applicants oppose expenditures for travel on the grounds that in-person interviews were unnecessary; more economical airfares could have been arranged; travel by second counsel at the judicial review hearing is not recoverable against the applicants; there is no evidence as to who was interviewed and the reason; and in any event, as discussed earlier, the evidence of the four patent agents was irrelevant. In response, David Bull's counsel referred to Windsurfing International Inc. v. Bic Sports Inc., 6 C.P.R. (3d) 526. At page 532, the Court had this to say:
| There was, in my view, an error in principle. As I understand it, the time spent by the solicitors with these witnesses was included, and allowed, in the item "preparation for trial". It is not always possible to obtain accurate information and evidence, by correspondence, from a witness outside the jurisdiction, or far from the solicitors, place of business. face to face interviews are often necessary in order to assess the quality of evidence, and the impression, good or bad, a potential witness might make in testifying at trial. Further, one must weigh the relative costs of the solicitor travelling to the witness, or vice-versa. Those costs are factors a taxing officer ought to consider in allowing or disallowing claims of this type. |
| Disbursements of this kind are not completely excluded by para. 2(2)(a) of Tariff B. Rather they can be claimed, and if proper and reasonable, allowed, under para. 2(2)(b). |
As to the question of reduced airfares, counsel for David Bull relied on an earlier taxation decision in this Court in Dableh v. Ontario Hydro, unreported, Court file no. T-1422-90, Stinson A.O., November 2, 1994, which, counsel argued, amply supports the proposition that economy airfares are acceptable.
[41] The Windsurfing International decision (supra) can be distinguished from the present case to some extent because the witnesses here were giving evidence in a judicial review and not expected to testify at trial. It also seems to me that after having interviewed the first of the patent agents, subsequent meetings with the others on the same point was, as I have already suggested, an expense which the applicants should not be required to suffer. On reviewing the respondent's disbursements more closely, however, it turns out that this is somewhat a moot point because a total of only $736.64 ($131.26 and $605.38 - exhibits D1 and D2 to Susan Beaubien affidavit sworn July 27, 1997) is claimed for interviews and finalizing the affidavit of David Rogers. This amount is quite reasonable and will be allowed, with the exception of the unidentified American Express invoice of $33.88.
[42] Travel expenses identified at exhibit D3 to the Beaubien affidavit for travel to Toronto for the motion of March 21, 1994 will also be allowed. As expressed earlier in these reasons, the Merck Frosst ruling (supra) permits me to assess costs in respect of that motion. I also agree with David Bull's counsel on the point of airfare. Just as the luxury of business class is an exorbitant expense which should not, in normal circumstances, be transferred to the unsuccessful party, counsel should not be forced to have their very busy schedules driven by the expectation that their bill will later be subjected to seat sale or excursion type airfare limitations. I have again excluded an unidentified credit card invoice of $44.17 and allow $589.60 for these travel expenses.
[43] An amount of $1,186.81 is claimed (exhibit D4 of the Beaubien affidavit) for attendance at Toronto from June 13 through 16, 1994 to prepare for and attend on cross-examinations of Messrs. Lake and Rogers and to conduct the cross-examination of Mr. Little. I agree with applicants' counsel that personal items of expense should be removed from this claim and that it should be reduced to more appropriately reflect the single day of attendance on June 15th. I allow $953.81. The costs separately claimed for travel to Toronto on July 12, 1994 are reasonable. They will be allowed in the amount of $562.50, including the unidentified credit cards slips because they appear to me to be proper in this case and reasonable.
[44] Expenses of $3,058.55 are claimed by David Bull for travel to Toronto on January 15 through 19, 1995 to prepare for and attend the hearing of the motion for prohibition. The applicants argued that expenses relating to the additional day of January 15 should not be allowed because the hearing only began on January 17. They also contended that the costs of second counsel, and replacement later by an articling student, cannot be allowed in the absence of an express direction from the Court to that effect.
[45] In the case of case of McCain Foods Ltd. v. C.M. McLean Ltd. 51 C.P.R. (2d) 23 at 28, this Court took a very strict view indeed in deciding to exclude the costs of students. I take notice, however, of the current trend in the courts, including this Court, toward adopting tariffs which more closely reflect the realities of modern practice of law and allowing the costs of articling students in given circumstances. I also note subsection 1(2)(b) of Tariff B which provides an assessment officer with the authority to allow such other disbursements "as were reasonably necessary in the proceeding." In my view, this can include second counsel and students, if justified. In the present case, however, the respondent has not revealed any circumstances which, in my opinion, would support extending my discretion to include the costs of a student. I have reduced the costs of travel to the judicial review hearing at Toronto by amounts which, from my examination of the evidence, appear to relate to those costs. I agree as well that expenditures relating to the extra day of travel (January 15, 1994) are not a reasonable claim against the applicants and I remove again items of personal expense. I decline to disturb the contested hotel rate of $250.00, however, because respondent's counsel were obviously obliged to pay that amount. The costs of second counsel are justified - I note that co-counsel appeared for the applicants. This claim is assessed in total at $1,447.39.
[46] David Bull submitted a claim of $3,731.25 for in-house binding and photocopies. The evidence produced in support of this claim is thin. It provides little information as to how the respondent arrived $ .25 per page for photocopies, or the cost for binding. As I have said in previous assessments (see for example, Taylor Made Golf Company, Inc. v. Sully Imports Ltd., unreported, Court file no. T-2637-96, dated October 23, 1997), somewhat more substantiation than the evidence provided by the respondent in this case is needed to assess an amount attributable to photocopies made in-house, or binding, for which the applicants should be held responsible. I note that the Court reached a similar conclusion in Faulding (Canada) Inc. v. Pharmacia S.P.A., 138 F.T.R. 73, where Mr. Justice McKeown said:
| Notwithstanding the recent Rule changes which are intended to bring costs more in line with actual costs of litigation, I agree with the plaintiff that many of the disbursements are calculated on a scale more appropriate on a solicitor/client bill than on a party and party bill. For example, with respect to photocopying, as Teitelbaum, J. said in Diversified Products Corp. v. Tye-Sil Corp. (1990), 34 C.P.R. (3d) 267 (F.C.T.D.) at 276: |
| ... The item of photocopies is an allowable disbursement only if it is essential to the conduct of the action. Therefore, this is intended to reimburse a party for the actual out-of-pocket cost of the photocopy ... |
| The defendant provided me with no information on the actual out-of- pocket cost of the photocopying and I have allowed nothing in this respect. I am also unable to calculate the out-of-pocket cost of facsimile transmission charges. |
[47] I appreciate, on the other hand, that the rules call for "acceptable" evidence to be led in support of disbursements, not for irrefutable evidence. In other words, the party whose bill is being taxed must satisfy the assessment officer on balance, not beyond doubt, of the necessity and reasonableness of the expenses being claimed. But I am persuaded in this case by the more cogent argument of counsel for the applicants that 50% of the amount claimed by the respondent for in-house copies and binding is reasonable. The remaining disbursements for photocopies which are supported by invoices are allowed as claimed in the amounts of $990.67, $39.84 and $193.10.
[48] On-line search charges are claimed at $332.70. This item was opposed by the applicants as being part of the respondent law firm's overhead. Counsel further suggested that, if I decide to allow this item, the respondent's claim is, in any event, flawed by lack of evidence to substantiate what was searched and its necessity.
[49] The applicants relied on All Canada Vac Ltd. v. Lindsay Manufacturing Inc., unreported, Court file no. A-185-90, Parlee T.O., April 9, 1992 in support of the proposition that computer research charges should be considered as overhead. I note however that this disbursement has been allowed when justified in other assessments in this Court (see for example CNR v. North Pacific Steamship Co., [Q.L. 1992 F.C.J. No. 664] (T.D.); Canastand Industries Ltd. v. The Lara S [Q.L. 1995 F.C.J. No. 1157] (T.D.); Ager v. International Brotherhood of Locomotive Engineers, unreported, Court file no. A-310-97, Stinson A.O., May 21, 1999; and IPSCO Manufacturing v. Stewart, unreported, Court file no. T-344-98, Stinson A.O., July 23, 1999).
[50] The expense of computer research is being seen in assessments with increasing frequency. In Maison Des Pâtes Pasta Bella Inc. v. Olivieri Foods Ltd., unreported, Court file no. T-1518-97, Parlee A.O., August 18, 1998, the same assessment officer as the All Canada Vac case (supra) had this to say:
| Counsel for the applicant, still referring to Energy Absorption Systems Inc. (supra), objected to the claim of $38.20 plus G.S.T. for computer search charges suggesting it be disallowed as overhead. |
| [17] In juxtaposition to Energy Absorption, assessment officer Stinson of this Court, in CNR v. North Pacific Steamship Co., [Q.L. 1992 F.C.J. No. 664] (T.D.), recognized the extraordinary growth of computers in the workplace and the fact that part of the fees for research have metamorphosed to disbursements. |
| If this tool does represent a shift in onus for certain costs from the successful to the unsuccessful party (because fees are partially indemnified but disbursements, to the extent of reasonable necessity, are fully indemnified), it is a reality to which litigants must adjust. Unless it was apparent that the search was unnecessary, the fact that nothing of use was found should not be a critical consideration for allowance, disallowance or reduction. Rather, the critical consideration is whether the decision to incur the disbursement and to pay the amount presented was prudent representation of the client in the circumstances existing at the time and consistent with the criteria of reasonable necessity in Tariff B 1 (2) (b). |
| [18] In Canastand Industries Ltd. v. The Lara S, [Q.L. 1995 F.C.J. No. 1157] (T.D.) assessment officer Stinson also allowed a Quicklaw disbursement as reasonable and necessary. |
| [19] Other recent Federal Court assessment officers allowing search costs include |
| - Volkswagen Aktiengesellschaft v. Global Auto Service, T-1535-96, Pace T.O., Feb. 18/97 |
| - The Queen v. W. Ralston & Co. (Canada) Inc., T-3765-82, Lamy T.O., Mar. 11/97. |
| [20] In view of these precedents, and acknowledging what I now accept as a change in research needs and techniques, the computer search charges, having been reasonable and necessary, at least in the present case, are allowed. |
I note that the Maison Des Pâtes assessment was later reviewed by the Court (86 C.P.R. (3d) 356), but the assessment officer's finding on computer search charges was left undisturbed.
[51] More recently, the issue of computer searches was considered in this Court in the case of Ferguson v. Arctic Transportation, unreported, Court file no. T-1941-93, July 29, 1999. Assessment Officer Stinson decided:
| [11] Computer-assisted research represents a transition in one area of the practice of law. This was the subject of an analysis published by the Vancouver Bar Association in The Advocate, Vol. 55, Part I, January, 1997, page 79 entitled Recovery of Legal Research Expenses and Assessments of Costs by Lisa A. Peters. This paper examined the approach in several jurisdictions and urged (p. 85) that "computer database providers should be treated for all purposes as disbursements, rather than as a component of lawyer"s fees for preparation of a case, or, worse yet, as a non-recoverable component of overhead". At pages 83-84, it quoted from my decision in CNR v. Norsk Pacific Steamship Co.7 : |
| If this tool does represent a shift in onus for certain costs from the successful to the unsuccessful party (because fees are partially indemnified but disbursements, to the extent of reasonable necessity, are fully indemnified), it is a reality to which litigants must adjust. Unless it was apparent that the search was unnecessary, the fact that nothing of use was found should not be a critical consideration for allowance, disallowance or reduction. Rather, the critical consideration is whether the decision to incur the disbursement and to pay the amount presented was prudent representation of the client in the circumstances existing at the time and consistent with the criteria of reasonable necessity in Tariff B 1(2)(b). |
| [12] My view of computer-assisted research has not changed. I do not find charges associated with an employer-employee relationship in a law firm, such as those for secretarial services disallowed above, comparable to charges such as these representing a shift to contracts with third parties for access to various data bases. |
| 7 [Q.L. 1994 F.C.J. No. 1293] (T.D.) |
[52] I agree with the view expressed in the Ferguson case. The practice of law is rapidly evolving to keep pace with technology. The result will be manifested in greater efficiencies and economies for all concerned. I therefore accept computer searches as a proper disbursement, when justified, and will allow it here in favour of the respondent. The question now arises as to the amount to be assessed against the applicants. In other words, what portion, if not all, of David Bull's claim for computer searches should be considered reasonable?
[53] Again, applicants' counsel challenged the sufficiency of the evidence produced by the respondent in support of this claim. This is an issue which has been discussed in a number of assessments in this Court: see for example, F-C Research Institute Ltd. v. H.M.Q., 95 D.T.C. 5583; Grace M. Carlile v. H.M.Q., 97 D.T.C. 5284; AlliedSignal Inc. v. Du Pont Canada Inc., unreported, Court file number A-600-93, Reinhardt T.O., July 16, 1997; Taylor Made Golf Company Inc. v. Sully Imports Ltd., unreported, Court file no. T-2637-96, Oct. 23, 1997, Smith T.O.; and Country Curtains Inc. v. Country Curtain and Gift Shoppe, T-703-96, December 5, 1997, Smith T.O.). My understanding of that jurisprudence, as it applies to the present case, is that the onus lies with David Bull to lead evidence establishing the reasonableness of its disbursements and not with the applicants in establishing unreasonableness. I also understand that jurisprudence, in combination with the words "acceptable evidence" in section 3 of Tariff B, to suggest again that absolute proof is not the rule.
[54] The process of taxation is such that an element of reasonable accommodation is appropriate in considering the evidence. As Lord Russell said in Re. Eastwood (deceased), (1974) 3 ALL E.R. 603 at 608:
| ... In our view, the system of direct application of approach to taxation of an independent solicitor's bill to a case such as this has relative simplicity greatly to recommend it, and it seems to have worked without it being thought for many years to lead to significant injustice in the field of taxation where justice is in any event rough justice, in the sense of being compounded of much sensible approximation. |
I would add to those comments that it seems inherently logical to the assessment (taxation) process that the assessing party should not be placed in the position of having to incur greater expense to prove its costs than are intended to be recovered from the unsuccessful party. Approximations, as Lord Russell suggested, based on experience and best evidence is a reasonable accommodation and equitable in the circumstances.
[55] The respondent provided copies of printouts from its law firm's accounting reports listing the disbursements made for on-line computer searches. Admittedly, the evidence does not shed exacting light on whether the on-line charges were strictly for the present case, or that the information obtained was for no other purpose than this case. Enough information can be garnered from the evidence, however, to justify a significant portion of the computer search charges as having been directly related to these proceedings where David Bull was awarded costs. I allow $219.58 for this item, being approximately two-thirds of the amount claimed by the respondent, as a fair representation of that amount.
[56] Disbursements for courier charges ($259.23), long distance charges ($162.62), conduct money paid to the witness Robert Little ($75.00) and for a copy of Canadian Patent 1,295,525 exhibit to the Strauss affidavit ($12.65) were unopposed by the applicants. They are allowed. Applicants counsel took issue with David Bull's claim for in-house facsimile transmissions of $408.50. Similar to in-house photocopies, applicants' counsel argued that the $ .50 per page charge for facsimiles appears arbitrary and unsupported by evidence as to actual cost. In the circumstances, counsel suggested, a reasonable charge would be 50% of respondent's claim. I have reviewed the evidence presented by the respondent for facsimiles and conclude that the amount of $204.25 agreed to by the applicants is reasonable.
[57] The applicants objected to a claim of $387.00 for 129 pieces of correspondence. This, counsel asserted, is clearly an item of overhead. Although neither of the parties provided jurisprudence on this point, I note an earlier decision of this Court which deals with correspondence in Teledyne Industries Inc. v. Lido Industrial Products Ltd. (1981), 56 C.P.R. (2d) 93 (F.C.T.D.):
| Strictly speaking, the writing of letters is in the nature of secretarial and administrative services and ought not be taxed as a disbursement. Correspondence forms an integral part of the operation of a law practice, part of the overhead. There are no specific provisions under Tariff B for allowing costs on letters. Subsection (2) is for disbursements. |
| (2) Disbursements |
| (a) all disbursements made under Tariff A may be allowed, except that payments to a witness under paragraph 4(2) may only be allowed to the extent directed by the Court under Rule 344(7), |
| (b) such other disbursements may be allowed as were essential for the conduct of the action. |
| I am informed that it is the usual practice of Federal Court taxing officers to tax letters under that heading. Some letters have been taxed at $10, or more. Yet, there are no specific provisions in the Tariff to cover such expenditure. |
| Rule 5 of the Federal Court ("the Gap Rule") provides that where any matter arises otherwise not provided for by any provisions, the practice shall be determined by analogy to the practice in force in the courts of the relevant province. |
| The province of Ontario's Tariff "B", Tariff of disbursements payable in the Supreme Court and County Courts, includes an item 7 which reads as follows: |
| 7. For making up and forwarding papers, documents and exhibits (postage or carriage charges to be paid extra on the excess over five pounds)...................... 2.00 |
| Perhaps the Federal Court Tariff should be amended to deal properly with the matter. In this instance I believe the decision of the prothonotary was appropriate in analogy to the practice in force in Ontario. As to quantum, the sum of $3 per letter (in the year 1981) is most certainly not excessive. |
[58] Only three other occasions since the Teledyne decision have assessed correspondence as a disbursement in this Court: Diversified Products Corp. v. Tye-Sil Corp. unreported, Court file no. T-1565-85, Reinhardt T.O., October 30, 1990; Energy Absorption Systems Inc. v. Y. Boissoneault & Fils Inc., unreported, T-2263-86, Reinhardt T.O., January 30, 1991; and Hancor Inc. v. Systèmes de Drainage Modernes Inc., unreported, Court file no. T-2126-85, Daoust T.O., October 1, 1991. Two later assessments refused this item: Penthouse Internatinal Ltd. v. 163564 Canada Inc., unreported, Court file no. T-1479-93, Lamy T.O., March 17, 1995 and Molson Breweries, A Partnership v. Pernod Ricard, Une Société Anonyme, unreported, Court file nos. T-1478-90 and A-1269-92, Lamy T.O., October 6, 1995.
[59] As I read the Teledyne case (supra), the Court's decision not to interfere with the allowance for correspondence was not because it agreed with that allowance, which it obviously did not, but because the jurisprudence guiding reviews of taxations suggested that a taxing officer's discretion should not be disturbed unless there was an error in principle. Since Rule 5 (the "gap rule") provided a valid authority for deferring to the provincial practice for allowing correspondence, the underlying assessment was therefore left undisturbed.
[60] In my opinion, the rules and tariff of this Court, combined with the applicable jurisprudence on party-and-party costs, provide ample guidance for the assessment of services and disbursements in this Court. That the preparation of letters is not expressly delineated in those provisions, like others of the services performed in a law firm's offices, does not mean that function is not represented elsewhere in the fees provided for counsel. I believe that view is supported by the very instructive comments in the Teledyne case, that "the writing of letters ... ought not be taxed as a disbursement". I am not prepared to assess this case differently, and therefore refuse the claim for correspondence.
[61] The remaining issue in this assessment was the respondent's request for post-judgment interest, compounded at 8%. I expressed the view at the conclusion of this hearing that I am without authority to assess interest. In Minister of National Revenue v. Bethlehem Copper Corporation Ltd., [1977] 1 F.C. 577, this Court said:
| Section 40 of the Federal Court Act provides for the payment of interest on a judgment from the time of giving the judgment. It was not disputed in argument that a judgment for costs is a judgment for purposes of section 40. |
| At the moment a judgment for costs is given, its amount is, of course, not precisely fixed unless the judgment is for a lump sum. Taxation is, however, essentially an administrative process although there are, sometimes, as there were in this case, discretionary elements involved. The presence of such elements of discretion in the taxing of costs does not seem to me to place any real barrier in the way of reading the words of section 40 in their ordinary sense: interest on costs taxed in due course pursuant to a judgment should run from the time the judgment is delivered subject, of course, to a contrary order. There was no such order in this case. |
| It is not strictly necessary to decide whether sections 13 to 15 of the Interest Act are made applicable to this case by section 12 of the Act. Assuming that they are - and I am inclined to view that in the relevant particulars they are applicable - they reinforce the judgment I have formed on the effect of section 40 of the Federal Court Act, reading that section by itself. By section 15 of the Interest Act, costs made payable by any judgment of any court whatever in a civil proceeding are, for purposes of the Act, deemed to be a judgment debt. By virtue of section 13, every judgment debt is to bear interest, and under section 14 such interest is to be calculated from the time of giving the judgment. |
[62] In Byers Transport Limited v. Kosanovich, unreported, Court file no. A-333-94, June 3, 1996, Taxing Officer Stinson explained:
| Finally, Kosanovich asked for interest on taxed costs. To put that request in context, I note that, generally, these headings describe the various types of relief available in the disposition of the substantive issues of litigation: (a) liability; (b) directions; (c) damages; (d) costs and (e) interest. Taxation and Taxing Officers are a function of (d) and no other types of relief. Taxing officers do not, despite appearances to the contrary, award costs. That authority is reserved to the Court or legislation. The Taxing Officer, via taxation, translates said award to a dollar figure. Assignment and/or calculation of interest is not part of that process. Put another way, interest is a function of the Court's decision as embodied in the Judgement. It is not a function of the Taxing Officer's Certificate. The entitlement to the interest calculation may become an issue in the enforcement stage of litigation. If a dispute arose, jurisdiction would lie with the Court and not with the Taxing Officer... |
[63] In conclusion, the costs of the respondent David Bull Laboratories (Canada) Inc. are assessed and allowed in the amounts of $2,980.00 for fees, $19,569.80 for disbursements and an adjusted amount of $368.86 for G.S.T. A Certificate of Assessment in the total amount of $22,918.66 will issue accordingly.
Sgd. (Gregory M. Smith)
Gregory M. Smith
Assessment Officer
Ottawa, Ontario
November 17, 1999
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF SOLICITORS AND SOLICITORS OF RECORD
Docket: T-2991-93
PHARMACIA INC. and
FARMITALIA CARLO ERBA S.R.L.
Applicants
- and -
THE MINISTER OF NATIONAL
HEALTH AND WELFARE and
DAVID BULL LABORATORIES (CANADA) INC.,
Respondents
PLACE AND DATE OF ASSESSMENT: Ottawa, Ontario, September 29, 1999
REASONS BY: G.M. Smith, Assessment Officer
DATE OF REASONS: November 17, 1999
APPEARANCES:
Shonagh L. McVean for the Applicants
Victoria Harrington
| Adele Finlayson for the Respondent |
David Bull Laboratories (Canada) Inc.
| No one appearing for the Respondent |
The Minister of National Health and Welfare
SOLICITORS OF RECORD:
Smart & Biggar
Barristers & Solicitors
Toronto, Ontario for the Appellants
Shapiro Cohen
Barristers & Solicitors
| Ottawa, Ontario for the Respondent |
David Bull Laboratories (Canada) Inc.
Morris A. Rosenberg
Deputy Attorney General
of Canada
| Ottawa, Ontario for the Respondent |
The Minister of National Health and Welfare