IN THE SUPREME COURT OF NOVA SCOTIA
Citation: Maritime Travel Inc. v. Go Travel Direct.Com Inc., 2008 NSSC 306
Date: 20081022
Docket: SH 192257
Registry: Halifax
Between:
Maritime Travel Inc., a body corporate
Plaintiff
and
Go Travel Direct.Com Inc., a body corporate
Defendant
DECISION ON COSTS
Judge: Justice Suzanne M. Hood
Written
Submissions: By the plaintiff on August 15, 2008
By the defendant on August 26, 2008
Decision: October 22, 2008
Counsel: John T. Shanks for the plaintiff
Peter M.S. Bryson, Q.C. for the defendant
By the Court:
[1] In my decision in this matter released on May 30, 2008, I invited the parties to make written submissions if they could not agree on costs. The parties have advised that the only outstanding issue between them with respect to costs is the disbursement for the expert retained by Maritime Travel.
ISSUE
Should the Defendant pay all or part of the disbursement with respect to the plaintiff’s expert?
FACTS
[2] Maritime Travel commenced action against Go Travel Direct for losses it alleged it suffered as a result of adverting by Go Travel Direct said to be in contravention of s. 52 of the Competition Act, R.S.C. 1985, c. C-34. To assist in its claim, Maritime Travel retained Ernst & Young.
[3] In its submissions to the court, Maritime Travel said that all of its losses sustained from Go Travel Direct’s competition with it were recoverable from Go Travel Direct. Its expert, Barbara Morton, C.B.V. addressed that issue in her report and her testimony. She said in her report at para. 1.4:
You have asked us, as independent and objective experts, to quantify Maritime Travel’s economic loss (the ‘Loss’) as a result of Go Travel competing in the Halifax, Nova Scotia market.
ANALYSIS
[4] Civil Procedure Rule 63.10 (a) provides:
Disbursements
63.10A Unless the court otherwise orders, a party entitled to costs or a proportion of that party's costs is entitled on the same basis to that party's disbursements determined by a taxing officer in accordance with the applicable provisions of the Tariffs.
[5] Tariff D of the old tariffs applies to this matter. It sets out the principles with respect to indemnifying a party for its disbursements. Clause 2 is entitled “Disbursements recoverable from opposite party.”
(1) Attendance money paid to witness.
(2) Reasonable cost of:
(a) plans;
(b) models;
(c) photographs,
when necessary to understand the evidence.
(3) Reasonable cost of:
(a) medical reports;
(b) hospital records;
(c) reports of experts,
intended to be used at trial which, unless the proceeding is disposed of beforehand, were supplied to the other parties at least ten (10) days before trial.
(4) Reasonable fees paid to an expert witness who gives evidence, up to $600.00 for each day examined and each additional day authorized by the taxing officer.
...
[6] Costs and disbursements are, of course, in the discretion of the trial judge. Maritime Travel urges the court to exercise its discretion in favour of allowing as a disbursement the entire account of Ernst & Young. Go Travel Direct submits that the court should disallow the disbursement in whole or, alternatively, allow it only in part.
[7] The case authorities establish that the amount of the disbursement must be “just and reasonable in the circumstances.” This has been articulated in decisions such as Hendrickson v. Hendrickson, [2005] NSSC 202; (N.S.S.C.); Sidorsky v. CFCN Communications Limited, 1995 CarswellAlta 86 (Alta. Q.B.); Cashen v. Donovan, [1999] N.S.J. No. 77 (N.S.S.C) and Miller v. Royal Bank of Canada, [2008] N.S.J. No. 183 (N.S.S.C.).
[8] In Cashen v. Donovan, Goodfellow, J., in para. 10., set out a non-exhaustive list of factors to be considered. I will refer to those I consider to be relevant in this case:
1. Whether the incurring of the disbursement was necessary or appropriate.
2. The amount involved in the litigation.
3. Complexity of the issues.
4. Whether or not sufficient expert opinion was readily available without incurring the cost.
5. Whether the incurring of the disbursement was necessary for the conduct of the litigation. ...
6. Whether or not the expert’s report was of any assistance to the court? This determination is to be considered with number 5 and not necessarily in isolation. ...
...
11 Examination of the nature of the work and time involved in the preparation of the expert’s report and any possible additional time requirement to respond to any subsequent expert’s reports.
[9] Goodfellow, J. concluded in para. 15 that:
15 ... it was reasonable to engage [the expert’s] services ...
[10] In coming to that conclusion, he said in para. 11:
11 In the course of my decision, I expressed some concern for the acceptance by Ms. Gmeiner of certain assumptions not born out in evidence, and on reflection, it was quite appropriate for her to produce calculations based on assumptions provided by counsel who engaged her. ...
[11] LeBlanc, J. quoted from Cashen, supra, in Miller v. Royal Bank of Canada, supra, in reducing the disbursement for the expert by $2,600.00 to $2,000.00 (para. 27) after concluding that the report was fundamentally flawed (para. 25).
[12] In Sidorsky, supra, McMahon, J. said that reasonableness should not be judged in hindsight. He said:
It is equally clear that the reasonableness of the expenditures for witnesses is based on what seemed reasonable at the time, that is during and before trial. One should not rely upon hindsight, particularly in respect of experts retained for rebuttal purposes and then not called because the plaintiffs’ evidence does not warrant it. Accordingly, I find that the defendants’ retention of Peat Marwick Thorne for these purposes was reasonable.
[13] In Hendrickson, Kelly, J. considered a disbursement for a business valuator in a divorce proceeding. He said in para. 11:
11 In my opinion, it is abundantly clear that the review of the companies reflected in the Bradley reports was prudent and necessary for the primary issue, that of determining Mr. Hendrickson’s income for purposes of child support according to the Guidelines.
[14] The Court of Appeal in Claussen Walters & Associates Ltd. v. Murphy, [2002] N.S.J. No. 44 (N.S.C.A.) cautioned that the court’s use of the report of the expert is immaterial. Saunders, J.A. said in paras. 15 and 16:
15 We cannot accept counsel for the appellants’ submission that all or a significant proportion of the Hardy invoices ought not to be recoverable because no use was made of the Hardy reports by the trial judge in his ultimate determination. In our view, this is immaterial. The particular ‘use’ to which an expert’s report or opinion may be put by a trial judge may never be discerned. the only question is, as we have noted, whether in fact the disbursement is a ‘just’ and ‘reasonable’ charge against the opposing party.
16 We also reject counsel for the appellants’ submission that by the time of trial the respondent did not ‘need’ the Hardy report in order to quantify his damages. On the contrary, having regard to the relief sought and the defences raised, we are perfectly satisfied that retaining Mr. Hardy to prepare a report and to testify at the trial was prudent and necessary. ...
[15] In this case, the position of Maritime Travel was that all of its losses from competition from Go Travel Direct were the responsibility of Go Travel Direct. It retained an expert to quantify those losses. In my decision, I disagreed with the position of the plaintiff. I said in paras. 125 and 126 of the decision:
125 Section 36 limits recovery to losses suffered as a result of false or misleading advertisements, not losses from a combination of both legitimate competition and illegitimate advertising. As a result, the evidence in support of Maritime Travel’s damage claim is compromised. It addresses the overall effects of Go Travel Direct’s competition. ...
126 It is not losses from competition that must be quantified. It is losses from false or misleading advertising. Even had I concluded all the advertising in question caused losses, the conclusions in the report would not be very helpful.
[16] However, having taken the position that it did, it was reasonable for Maritime Travel to retain Ernst & Young to prepare a report quantifying those losses. Paraphrasing the factors set out by Goodfellow, J. in Cashen, supra, it was necessary and appropriate to incur the disbursement, the damages issue was a complex one and the claim was a substantial one. In hindsight and in light of my conclusion, it was not a position that had merit. However, at the time the decision was made to retain the expert, it was prudent to retain Ernst & Young. It was relevant to the issue raised by Maritime Travel, albeit unsuccessfully.
[17] Go Travel Direct says the information in the report was available otherwise than from an expert. Much of the information was provided by Maritime Travel but Barbara Morton had to analyze it. Go Travel Direct also says that the Statistics Canada and National Bank information was available; however, its admissibility, other than as support for an expert’s opinion, is questionable.
[18] Section 8.2 of the report is entitled “Assumptions Within our Area of Expertise.” This is information which would not have been available to the court without the report of Ernst & Young and the expert opinion based upon that information. It is true that not all of the opinions were accepted but it was important to have the opinions before the court. In my conclusion on damages, I relied heavily upon the information contained in the Ernst & Young report.
[19] In spite of my comments in paras. 125 and 126 of the decision quoted above, I did use the report, but not its conclusion on damages in arriving at the amount of the damage award. Without that information, it would not have been possible to determine Maritime Travel’s market share, the utilization rate, net sale price per seat, net commission percentage and the loss caused by Go Travel Direct’s misleading advertising.
AMOUNT
[20] Not only the disbursement itself but its amount must be reasonable. In Claussen, supra, Saunders, J.A. said in para. 12:
12 A finding of relevance, however, did not end the matter. Before obliging the unsuccessful appellants to pay a significant disbursement of almost $16,500, the trial judge was required to consider whether the amount charged was just and reasonable. The proper approach was described by Chief Justice Cowan in J.D. Irving Ltd. v. Desourdy Construction ltd. (1973) 5 N.S.R. (2d) 350 at p. 362:
In my opinion, Civil Procedure Rule 63.37, clause (5) is to the same effect as the old Order LXVIII, r. 23 (vii) and the taxing master is to allow any just and reasonable charges and expenses as appear to him to have been properly incurred in procuring evidence and attendance of witnesses. Charges by experts and others who are called as witnesses or attend as witnesses are to be allowed, but the amount allowed is to be fixed by the taxing master, having regard to the test of what is just and reasonable in the circumstances.
However, in that case, Saunders, J.A said in para. 13 that the trial judge erred because:
... There was simply no evidence before him upon which to conclude that the disbursements incurred by Mr. Walters in engaging Mr. Hardy were ‘just and reasonable’. The onus was on the respondent to justify this charge against the appellants. He did not.
[21] He went on to say in para. 14:
14 ... The invoice simply records ‘for services rendered’. There is no basis upon which to deduce hourly rates, or the time spent, or the services provided. Thus, with respect, there was no evidence before the trial judge upon which he could have made the determination as to the ‘justness’ or ‘reasonableness’ of the Hardy disbursement.
[22] Accordingly, the matter was sent to the taxing master:
18 ... for the sole purpose of determining whether, upon a proper evidentiary basis, all or a portion of the Hardy disbursement totalling $16,471.39, is a just and reasonable charge against the appellants having regard to all of the circumstances.
[23] In Sidorsky, supra, the claim was $15.7 million and a disbursement for a report from Peat Marwick Thorne was allowed in the amount of $92,280.00.
[24] In Hendrickson, supra, Kelly, J. quoted Claussen, supra, in considering the accounts of the business valuator totalling $51,863.74. He said in paras. 13 and 14:
13 The evidence advanced by Mr. Bradley constituted a significant part of the trial process both in his examination and cross-examination, as well as the evidence of Mr. and Mrs. Hendrickson, Mr. Blom and Mr. Whynot on the subject of these reports. The evidence dealing with the financial information of the companies was essential to the principal matter at issue and most of the time of the trial was related to the material in these reports. The preliminary work of Mr. Bradley was necessary and prudent, considering the broad range of issues separating the parties at the early stage of pleadings, and the subsequent reports were equally necessary to properly assess the issues in dispute.
14 In conclusion, I find that it was prudent and necessary to prepare the reports in question and, after review of the facts at trial and the details of the billings of the reports, I find the charges just and reasonable, in spite of some reservations of proportionality of the charges to the matters in issue. ...
[25] Kelly, J. then concluded that the applicant should pay 70% of the disbursement for the expert, although he had otherwise ordered each party to bear his or her own costs with the exception of two interim applications where the expert was not a witness.
[26] In my decision, I said in para. 157 that:
Maritime Travel has been successful in part and Go Travel Direct successfully defended part of the claim against it. Maritime Travel is entitled to its costs based upon the amount of the award in its favour.
[27] I have reviewed the account of Ernst & Young. The hourly rates are set out and the specifics of the work done. I note that there is an engagement letter signed on May 7, 2007 before the work began which details the five phases of the work to be done and the hourly rates to be charged. The individual invoices are attached to the affidavit of Randolph DeGooyer and disclose details of the work done, the time spent and the fact that many hours of work were done at an hourly rate less than that of the principal, Barbara Morton.
[28] Maritime Travel was successful in part in its claim against Go Travel Direct. It was awarded damages in the amount of $216,842.00 and costs based upon the amount of that award. I have concluded that it is just and reasonable that it be compensated for its disbursement in retaining Ernst & Young. However, I must also be satisfied that the amount of the disbursement is just and reasonable as well. In light of the mixed success of the overall outcome, I conclude in my discretion that Maritime Travel should have the cost of its disbursement for the expert’s report and testimony in the amount of $50,000.00.
Hood, J.