Date: 20011031
Docket: T-2057-85
Neutral citation: 2001 FCT 1181
BETWEEN:
PORTO SEGURO COMPANHIA DE SEGUROS GERAIS
Plaintiff
- and -
BELCAN S.A.
FEDNAV LIMITED
UBEM S.A.
THE OWNERS AND ALL OTHERS INTERESTED IN
THE VESSEL "FEDERAL DANUBE"
AND THE VESSEL "FEDERAL DANUBE"
Defendants
BACKGROUND
[1] The Supreme Court of Canada ordered a new trial of this action when it released its judgment on December 18, 1997. It ruled, in terms of costs, the appellant/plaintiff Porto Seguro Companhia de Seguros Gerais was entitled to its cost of the appeal in the Supreme Court and in the Federal Court of Appeal (See: Porto Seguro Companhia de Seguros Gerais v. Belcan S.A., et al., [1997] 3 S.C.R. 1278 at 1300. The Supreme Court of Canada's judgement was silent on the costs for the first trial in which Justice Tremblay-Lamer had dismissed the plaintiff's action with costs. This is the same result I reached in the new trial by judgment dated January 31, 2000.
[2] The question to be decided in this application by the successful defendants is how are the costs of the first trial to be disposed of.
[3] Following the first trial, party-party costs in the defendants' favour were taxed on November 25, 1994 in the amount of $58,755.87 in fees and disbursements to which was added subsequently a lump sum award of $20,000.00.
[4] At the first trial, assessors were appointed to assist the Court. On July 8, 1993, Justice Joyal ordered as follows with respect to the assessors:
The application of Belcan S.A., Ubem S.A. and Fednav Limited for the appointment of assessors is granted insofar as concerns the Master Mariner Patrick R.M. Toomey and is taken under reserve with respect to the Naval Architect Pierre Boisseau. Mr. Toomey shall be informed of his appointment by the Court. The fees and expenses of the assessor(s) shall in the first instance be paid by the Registry of this Court and ultimately shall form part of the costs awarded by the trial judge. (emphasis mine)
[5] On February 21, 1994, Justice Tremblay-Lamer made the following order:
The Court is calling in the aid of an assessor specially qualified in naval architecture and marine engineering, to assist and advise this Honourable Court at the trial in this matter which will be held from April 13, 1994.
Mr. Pierre Boisseau, naval architect and marine engineer, is hereby appointed as assessor to assist the presiding judge at the trial.
The above assessor fees and reasonable expenses in attending at the said trial should be paid out initially by the Registry of this Court and ultimately by the parties in accordance with the award of costs by the Honourable Judge presiding at the trial. (emphasis mine)
[6] On April 12, 1995, Justice Rouleau made a further order in connection with the application by the plaintiff for a stay of the payment out of Court of monies paid in as security for costs. He ordered the plaintiff to pay into Court the sum of $26,231.62 to secure the reimbursement of the monies paid by the Court to the assessors.
[7] What the Supreme Court of Canada decided in Porto Seguro, supra, concerned the exclusion of the parties calling expert evidence when assessors had been appointed. The Supreme Court of Canada ruled this long-standing and recognized exclusionary rule, which had been followed by the first trial judge, should no longer be followed because it constituted a violation of the rules of natural justice and was inconsistent with the principles of modern maritime law and justice.
THE POSITION OF THE PARTIES
[8] The plaintiff does not dispute the defendants' main proposition that, as a general rule, where a new trial is ordered, the costs of the first trial will follow the results of the new trial unless it was necessitated by the fault of a particular party.
[9] The plaintiff argues the exception applies in this case because there was no obligation on the part of the defendants to oppose the introduction of expert evidence nor was that such exclusion defined by a clear line of jurisprudence.
[10] The plaintiff says the first trial judge's decision to exclude expert evidence was urged upon her by counsel for the defendants for "tactical reasons, no doubt in the belief that their clients' defence was more likely to succeed if plaintiff was precluded from calling expert evidence".
[11] Plaintiff argues it was the decision to exclude expert evidence because assessors had been appointed that ultimately necessitated a second trial.
[12] In other words, counsel for the plaintiff argues the new trial would not have been required but for the decision of counsel for the defendants (a decision characterized by counsel for the plaintiff as being an importune one) to seek a ruling from the first trial judge to exclude expert witnesses, a ruling reversed by the Supreme Court of Canada. Plaintiff concludes it should not have to bear the financial consequences of what turned out, in his view, to have been "a bad tactical judgment". Counsel for the plaintiff relies principally upon the decision of the Court of Appeal of Saskatchewan in Reid v. Kraus, [2001] S.K.C.A. 6.
[13] Counsel for the defendants acknowledges it was his decision to oppose the testimony of certain of the plaintiff's expert witnesses because they would be testifying on subject matters which were within the competence of the assessors who had been appointed. He adds no objection was taken to the testimony of one of the plaintiff's experts whose expertise was unrelated to that of the assessors.
[14] The first trial judge ruled in the defendants' favour excluding the testimony of three of the four experts put forward by the plaintiff. The defendants say the first trial judge was correct in her decision because she applied a well-known and established British rule in maritime law enshrined in this court's jurisprudence and in particular in the Federal Court of Appeal's judgment in Egmont Towing and Sorting Ltd. v. The Ship "Telandos" (1982), 43 N.R. 147.
[15] Counsel for the defendants argue the defendants were justified to object to the testimony of those experts. The Supreme Court of Canada acknowledged, he argued, the existence of the rule in a long line of English and Canadian jurisprudence. It was, he says, the Supreme Court of Canada which changed that rule which is clearly shown in Justice McLachlin's decision, as she then was, where she concluded "that the old admiralty rule appointing assessors to assist the judge in making findings of fault to the exclusion of expert evidence should be revised". (See, Porto Segura, supra, at 1299.)
[16] Counsel for the defendants makes the point that much of what was done during the first trial was used in the new trial before me. For example, discoveries and the several testimony and cross-examination of the mariners on the two ships involved formed part of the second trial's record without having to restart from the beginning. In effect, the second trial, in terms of witnesses, was confined to expert testimony.
ANALYSIS
[17] I accept, as a principle in the law of costs, that, unless otherwise provided in an appeal judgment which ordered a new trial, the costs of an abortive trial should follow the results of a new trial unless special reasons dictate otherwise.
[18] This principle seems to be well settled as illustrated in Orkin's Law of Costs, Canada Law Book, 1997 (2nd ed.), at paragraph 226, cited with approval by the Prince Edward Island Supreme Court (Appeal Division) in McGivney v. Rustico Summer Haven (1997) Ltd., [1989] P.E.I.J. No. 49 where it is quoted:
Where, on an appeal, the judgment appealed against from is set aside and a new trial ordered by reason of some error or misdirection by the judge, the usual order is that the costs of the appeal and the abortive trial should follow the result of the second trial.
[19] The British Columbia Court of Appeal endorsed this principle in Nordstrand et al. v. Olsen et al. (1968), 65 W.W.R. 9. So did the Alberta Court of Appeal in Rose v. Sargent, [1949] 3 D.L.R. 688.
[20] In Reid v. Kraus, supra, at the close of the plaintiff's evidence in a jury trial, the defendants made a submission there was no case to answer (an application for a non-suit). The trial judge ruled in favour of the defendant. The plaintiff successfully appealed with the result that a new trial was directed. One of the issues decided by the Saskatchewan Court of Appeal was whether the matter of costs of the abortive trial should follow the result of the second trial. The Court's judgment was delivered by Chief Justice Bayda. The relevant extract of his judgment reads:
In our view, where at a trial the defendant chooses a tactical course of action after the plaintiff has put in his evidence (i.e. where the defendant asks for a non-suit) and the choice turns out to be a bad one, it is only fair that the defendant, not the plaintiff, bear the brunt of the additional costs that the plaintiff was put to by that bad choice. If the bad choice precipitates a new trial, the defendant should bear the additional costs occasioned by the abortive trial. The fact that the defendant is ultimately successful at the second trial does not expiate or make right his original bad tactical choice nor does the success diminish the amount of the additional costs of the plaintiff incurred by participating in the abortive trial. The fact that the defendant's bad tactical choice was reasonable in the circumstances does not assist his cause in our view. Many a plaintiff is required to pay the costs of an unsuccessful "reasonable cause of action". Reasonableness is not necessarily a determinative criterion. Accordingly, we see nothing wrong with this Court deciding the matter of the costs of the abortive trial rather than leaving the issue to the second trial.
[21] Chief Justice Bayda also clarified that the costs which might be payable arising out of the abortive trial are costs thrown away. He said the Court was concerned with the additional costs the plaintiff was put to as a result of the abortive trial. He continued:
Many of the services performed and disbursements incurred in the preparation of the abortive trial were not in vain. Those services and disbursements are equally applicable to the new trial and constitute legitimate costs in the preparation of the new trial. The costs for those services and disbursements will, of course, be determined by the second trial judge. As for the costs thrown away by reason of the abortive trial, the taxing officer is in a good position to determine which costs fall into the category of "thrown away" and which into the "not thrown away".
As a result, what the Saskatchewan Court of Appeal determined in this case was that the plaintiff should have his costs of the abortive trial on the basis of costs thrown away notwithstanding what the result of the new trial would be.
[22] The Saskatchewan Court of Appeal in Reid v. Kraus, supra, distinguished the jurisprudence relied upon by the defendant by saying it dealt with situations where the abortive trial was occasioned by a misdirection by the judge in his address to the jury which was not the kind of application which the defendant Kraus made in the case before them, namely, a non-suit.
[23] I note, however, what Chief Justice MacDonald said in Robinson v. Point Grey, [1927] 2 D.L.R. 471 (B.C.C.A.) in a case where defendant's counsel had indicated to the trial judge that he was not sure whether he should move for a non-suit whereupon the judge took the matter in his own hands and withdrew the case from the jury.
[24] Chief Justice MacDonald said this:
In my opinion, it is counsel's right, and in many cases, his duty to move for a dismissal at the close of the plaintiff's case, and if the Judge errs in granting his motion, that is no good reason for ordering his client to pay the costs of the abortive trial. Counsel is privileged to raise any question in a trial upon which he desires the decision of the judge without incurring for his client the penalty of a special disposition of the costs.
[25] The B.C. Court of Appeal, in that case, again emphasized the limited exceptions to the general rule that the costs of an abortive trial should follow the result of the new trial.
[26] I read the Reid v. Kraus case as one where counsel for the defendant asked for a non-suit but elected not to put in a defence, a tactic commented upon by Chief Justice Davey in Nordstrand v. Olsen, supra, saying that it increased the cost of litigation and delayed judgment on the merits. He continued at page 14:
When such a motion is wrongly granted and a new trial follows, I do not think the plaintiff should have to bear the costs of the uncompleted trial, resulting from defendant's motion, if he fails on the second trial. On the other hand, it would be penalizing a defendant too severely to make him pay the costs of the abortive trial in any event, simply because his counsel persuaded the judge to grant a forensically proper motion.
[27] I do not agree with counsel for the plaintiff that by asking for the exclusion of three experts whose expertise overlapped those of the assessors, the conduct of counsel for the defendants fits within the limited circumstances which would disentitle the defendants from their costs of the abortive trial even on a cost thrown away basis.
[28] In the circumstances of this case, it was only proper for counsel for the defendants to have made the application he did to the first trial judge given the weight of the jurisprudence on the point which the trial judge followed in light of the Court of Appeal's decision in Re The Ship "Telendos", supra, and one which the first trial judge was bound to follow in the opinion of the Supreme Court of Canada. (See, paragraph 41, Porto Seguro v. Belcan, supra, at page 1300).
[29] I agree with counsel for the defendants, given the state of the jurisprudence, he had little choice but to make the application he did for otherwise he would not properly have been advising his clients.
[30] In addition, the application did not lead to the shutting down of the trial. That trial continued to judgment but without the testimony of the three experts. I see no basis for counsel for the plaintiff's argument that the exclusion application was made for tactical reasons, that is, in the belief that the defence was more likely to succeed if the plaintiff was precluded from calling expert evidence (which turned out not to be the case).
[31] I touch on one final point. Counsel for the plaintiff said I should exercise my discretion and at least carve out some of the costs thrown away from the abortive first trial, namely the fees paid by the Registry on account of the assessors which he estimated to be $35,000.00.
[32] I decline the plaintiff's request because of the previous orders made by Justices Joyal, Tremblay-Lamer and Rouleau in this case. They ruled that assessors' fees and expenses would be paid by the Registry initially but ultimately would form part of the costs awarded by the trial judge. In addition, from Justice Joyal's decision, it appears that it was on the plaintiff's request that one of the assessors was appointed.
[33] As a result, the defendants are entitled to the taxed costs and disbursements of the aborted first trial and the costs of this motion shall be assessed by the taxing officer.
"François Lemieux"
Judge
Montreal, Quebec
October 31, 2001
FEDERAL COURT OF CANADA
TRIAL DIVISION
Date: 20011031
Docket: T-2057-85
BETWEEN:
PORTO SEGURO COMPANHIA
DE SEGUROS GERAIS
Plaintiff
- and -
BELCAN S.A.
FEDNAV LIMITED
UBEM S.A.
THE OWNERS AND ALL OTHERS
INTERESTED IN THE VESSEL
"FEDERAL DANUBE"
AND THE VESSEL "FEDERAL DANUBE"
Defendants
REASONS FOR COST ORDER
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2057-85
STYLE OF CAUSE: PORTO SEGURO COMPANHIA
DE SEGUROS GERAIS
Plaintiff
and
BELCAN S.A. ET AL.
Defendants
PLACE OF HEARING: Montreal, Quebec
DATE OF HEARING: April 24, 2001
REASONS FOR COST ORDER OF
THE HONOURABLE MR. JUSTICE LEMIEUX
DATED: October 31, 2001
APPEARANCES:
Mr. George Pollack FOR PLAINTIFF
Mr. Richard Gaudreau FOR DEFENDANTS
SOLICITORS OF RECORD:
Sproule & Pollack
Montreal, Quebec FOR PLAINTIFF
Langlois Gaudreau
Quebec, Quebec FOR DEFENDANTS