Citation: Sensor Technology Ltd. v. Geospectrum Technologies Inc.,
2009 NSSC 213
Date: 20090703
Docket: Hfx. No. 283040
Registry: Halifax
Between:
Sensor Techonlogy Limited
Applicant
v.
Geospectrum Technologies Inc.
Respondent
Decision on Costs
Judge: The Honourable Justice Arthur J. LeBlanc.
Heard: August 27, 2008, in Halifax, Nova Scotia
Final Written
Submissions: February 18, 2009
Counsel: Darlene Jamieson, Q.C. & Tammy Manning,
for the applicant
Mark Tector & Jennifer Ronalds,
for the respondent
By the Court:
[1] This is a decision on costs arising from an application by the defendant (Sensor) for a stay of a proceeding commenced by the plaintiff (Geospectrum). The application was brought under Rule 14.25 of the Civil Procedure Rules 1972. I ordered a stay on the basis that a license agreement required the parties to submit disputes to arbitration and to proceed under Ontario law. Further, I concluded that Nova Scotia was a forum non conveniens, and that Ontario was clearly a more convenient forum for the proceeding than Nova Scotia: see 2009 NSSC 13.
[2] On this costs application, the defendant (hereafter the applicant) seeks “an increased lump sum award in addition to (or in lieu of) the amount provided under the appropriate tariff.” The plaintiff (hereafter the applicant) submits that no costs should be awarded, or, in the alternative, that the costs and disbursements claimed by the applicant are excessive and outside the range prescribed by the Civil Procedure Rules.
Applicable law
[3] Notwithstanding that the main application was conducted under the Civil Procedure Rules 1972, the applicant seeks costs pursuant to the current Rule 77. The respondent takes the view that because the application was heard in August 2008, “the old (pre January 1, 2009) cost considerations would apply,” but adds that “there does not appear to be any substantive difference in the applicable Tariff.” Given the parties’ positions, I am satisfied that I should proceed under the current Rule 77.
[4] Costs are under the general jurisdiction of the court, as provided by Rule 77.02:
77.02 (1) A presiding judge may, at any time, make any order about costs as the judge is satisfied will do justice between the parties.
(2) Nothing in these Rules limits the general discretion of a judge to make any order about costs, except costs that are awarded after acceptance of a formal offer to settle under Rule 10.05, of Rule 10 ‑ Settlement.
[5] It is open to the court to order that “parties bear their own costs, one party pay costs to another, two or more parties jointly pay costs, a party pay costs out of a fund or an estate, or that liability for party and party costs is fixed in any other way”: Rule 77.03(1). As a rule, costs “follow the result, unless a judge orders or a Rule provides otherwise”: Rule 77.03(3). Costs on motions – and chambers applications under the former Rules – are governed by Tariff C, unless the judge orders otherwise: Rule 77.05(1). The judge has a discretion to “add an amount to, or subtract an amount from, tariff costs,” pursuant to Rule 77.07(1). Examples of the considerations that may affect such an application are provided at Rule 77.07(2):
(2) The following are examples of factors that may be relevant on a request that tariff costs be increased or decreased after the trial of an action, or hearing of an application:
(a) the amount claimed in relation to the amount recovered;
(b) a written offer of settlement, whether made formally under Rule 10 ‑ Settlement or otherwise, that is not accepted;
(c) an offer of contribution;
(d) a payment into court;
(e) conduct of a party affecting the speed or expense of the proceeding;
(f) a step in the proceeding that is taken improperly, abusively, through excessive caution, by neglect or mistake, or unnecessarily;
(g) a step in the proceeding a party was required to take because the other party unreasonably withheld consent;
(h) a failure to admit something that should have been admitted.
[6] The judge may also award lump sum costs instead of tariff costs, pursuant to Rule 77.08. Party and party costs include “necessary and reasonable disbursements pertaining to the subject of the award”: Rule 77.10(1).
[7] A successful party will usually be entitled to costs. In Bennett v. Bennett (1981), 45 N.S.R. (2d) 683 (T.D.), Hallett J. said, at para. 9:
Costs are a discretionary matter. It is normal practice that a successful party is entitled to costs and should not be deprived of the costs except for a very good reason. Reasons for depriving a party of costs are misconduct of the parties, miscarriage in the procedure, oppressive and vexatious conduct of the proceedings or where the questions involved are questions not previously decided by a court or arising out of the interpretation of new or ambiguous statute....
[8] The tariffs are intended to advance the principle that “the recovery of costs should represent a substantial contribution towards the parties' reasonable expenses in presenting or defending the proceeding, but should not amount to complete indemnity”: Landymore v. Hardy (1992), 112 N.S.R. (2d) 410 (T.D.), at para. 16; Williamson v. Williams (1998), 223 N.S.R. (2d) 78 (CA), at para. 24.
[9] The applicable tariff for costs on an application is, as noted above, Tariff C, which provides, in part, as follows:
For applications heard in Chambers the following guidelines shall apply:
(1) Based on this Tariff C costs shall be assessed by the Judge presiding in Chambers at the time an order is made following an application heard in Chambers.
***
(3) In the exercise of discretion to award costs following an application, a Judge presiding in Chambers, notwithstanding this Tariff C, may award costs that are just and appropriate in the circumstances of the application.
(4) When an order following an application in Chambers is determinative of the entire matter at issue in the proceeding, the Judge presiding in Chambers may multiply the maximum amounts in the range of costs set out in this Tariff C by 2, 3 or 4 times, depending on the following factors:
(a) the complexity of the matter,
(b) the importance of the matter to the parties,
(c) the amount of effort involved in preparing for and conducting the application.
[10] (such applications might include, but are not limited to, successful applications for Summary Judgment, judicial review of an inferior tribunal, statutory appeals and\ applications for some of the prerogative writs such as certiorari or a permanent injunction.)
Length of Hearing of Application Range of Costs
Less than 1 hour $250 ‑ $500
More than 1 hour but less than ½ day $750 ‑ $1,000
More than ½ day but less than 1 day $1000‑$2000
1 day or more $2000 per full day
[11] The applicant points out that Tariff C contemplates that, where the tariff amounts would not provide a “substantial contribution” to the successful party’s costs, there are several means by which the court can supplement the amount awarded. Paragraph 3 permits the judge to “award costs that are just and appropriate in the circumstances,” notwithstanding the provisions of the Tariff. Paragraph 4 permits amounts in the range to be multiplied by two, three or four, in circumstances where the order determined the entire matter at issue and the supplementary amount is justified by the complexity or importance of the matter, or the effort involved.
[12] In addition to the discretionary considerations in Tariff C, Rule 77.07 provides that costs may be supplemented by adding an amount to the tariff amount, and Rule 77.08 permits the award of “lump sum” costs in place of tariff costs.
Positions of the parties
[13] The applicant seeks “an increased lump sum award in addition to (or in lieu of) the amount provided under the appropriate tariff.”
[14] The applicant refers to Cherubini Metal Works Ltd. v. Nova Scotia (Attorney General), 2008 NSSC 322, [2008] N.S.J. No. 511 (S.C.), where the issue on an application for summary judgment was whether the plaintiff’s claims against the defendant arose from a collective agreement and were within the exclusive jurisdiction of an arbitrator. In ordering costs on the basis that the application had succeeded, Coughlan, J. held that the issues were complex. He considered the application, which involved two days of argument, to be at the “high end” of the considerations in para. (4) of Tariff C. He also took into account other applications made in the proceeding. In the circumstances, he awarded costs of $40,000.00 to the union (of which $6000.00 had been awarded in an appeal proceeding). The respondent says Cherubuni is distinguishable in that it involved a summary judgment application that was finally determinative of the issues between the parties. It also involved multiple applications, disclosure and extensive examination of witnesses, two days of hearings and an amount involved of about $5 million. I agree that Cherubini is not of particular guidance in the present circumstances.
[15] In Williamson v. Williams, [1998] N.S.J. No. 498, the Court of Appeal held that costs of $8575.00 in an action involving damages of over $74,000.00 did not represent a “substantial contribution,” a phrase of which the Court said, at paras. 24-25:
The present tariffs were adopted in 1989 to replace the antiquated Costs and Fees Act then in effect. In Landymore v. Hardy (1992), 112 N.S.R. (2d) 410 Saunders J. stated:
The underlying principle by which costs ought to be measured was expressed by the Statutory Costs and Fees Committee in these words:
" . . . the recovery of costs should represent a substantial contribution towards the parties' reasonable expenses in presenting or defending the proceeding, but should not amount to a complete indemnity."
In my view a reasonable interpretation of this language suggests that a "substantial contribution" not amounting to a complete indemnity must initially have been intended to mean more than fifty and less than one hundred per cent of a lawyer's reasonable bill for the services involved. A range for party and party costs between two‑thirds and three‑quarters of solicitor and client costs, objectively determined, might have seemed reasonable. There has been considerable slippage since 1989 because of escalating legal fees, and costs awards representing a much lower proportion of legal fees actually paid appear to have become standard and accepted practice in cases not involving misconduct or other special circumstances.
[16] The Court of Appeal increased the damages to $97,200.00 and ordered costs of $44,180.00, including costs of the appeal.
[17] In this case, as noted, the applicant seeks an increased award by way of lump sum, in addition to or in place of the amount established under Tariff C. The relevant considerations include the complexity of the matter, the importance of the matter to the parties and the amount of effort involved in preparing for and conducting the application.
Complexity
[18] The applicant submits that the questions of whether the dispute was subject to arbitration under the agreement and whether the parties agreed to apply Ontario law and forum non conveniens “ought to be considered complex for the purposes of determining costs.” The respondent says the matter was not overly complicated and required submissions of only a half-day. Further, the respondent says the matter is not finally resolved, and thus there should be no multiplication of costs based on the outcome. I am satisfied that the application was not a complex one, either as to the law involved or the facts.
Importance
[19] The applicant says the stay application was of “utmost importance” to it. The applicant says the application could have been avoided had the respondent not insisted on pursuing the Nova Scotia proceeding in the face of the applicant’s requests that the matter be submitted to arbitration in accordance with the agreement. Further, the applicant says, the purpose of the arbitration clause was to minimize legal costs should a dispute arise between the parties. Finally, the applicant submits that it was important to avoid the increased costs and inconvenience of being required to defend an action in Nova Scotia.
Effort
[20] The applicant alludes to the efforts to have the dispute referred to arbitration and to prepare for and conduct several chambers applications, including drafting affidavits, conduct telephone conferences, prepare written submissions and appear in court. The applicant also raises the efforts involved in discovering Dr. Prasad (by the respondent) and Mr. Armstrong (by the applicant), reviewing records and drafting and negotiating a protective order. The respondent maintains that it was prepared “all along” to agree to a “reasonable resolution,” provided that the applicant agreed to a timely hearing with full disclosure as to what it was producing for WesternGeco. After the hearing, the parties submitted extensive affidavit evidence respecting the course of discussions prior to the stay application. I am not prepared to make any findings based on these affidavits.
[21] The applicant says the respondent imposed unnecessary costs by requiring an affidavit from Dr. Prasad reiterating evidence already given on discovery, and by requiring a chambers application for production of documents where the applicant was willing to produce the requested documents if a protective order was in place. The respondent says the application for production was made necessary by the position taken by the applicant, and that it should, if anything, reduce the applicant’s costs entitlement.
Positions
[22] In summary, the applicant seeks an increased lump sum award in addition to (or in lieu of) the amount provided under the tariff. The respondent says no costs should be awarded, on the basis that it was reasonable to bring an action in Nova Scotia against the applicant, which had been doing business in the province for more than 20 years. In addition, the respondent says, the main issue is still in dispute, awaiting arbitration. Further, the respondent says, it was only through the litigation process that Sensor agreed to submit all matters in dispute (not limited to the N5 argument) to arbitration and to apply Ontario law to the entire dispute. The respondent’s primary argument, then, is that the court may exercise its discretion not to order costs on a stay application involving an arbitration clause.
[23] In the alternative, the respondent submits that an appropriate award would be $750.00, pursuant to Tariff C. The matter, it is submitted, was not overly complicated, being argued in half a day, without viva voce evidence. While the applicant has claimed the $750.00 – $1000.00 range for applications lasting more than half a day but less than a full day, the respondent says the application commenced at 2 p.m. and took no more than a half-day. On this point the respondent refers to Weir v. National Bank of Canada, 2008 NSSC 372, Burgess Transfer v. Helipro International, 2003 NSSC 159, National Construction Ltd. v. Tippins Inc., [1991] N.S.J. No. 14 (S.C.A.D.) and Canadian Life & Health Insurance Compensation Corp. v. Blue Cross of Atlantic Canada (1997), 156 N.S.R. (2d) 384 (C.A.). The respondent also notes that the applicant’s claim for costs does not support the amounts claimed to have been incurred with itemized accounts, and their affidavit refers to an affidavit by Ontario counsel that amounts to hearsay. The respondent says the amounts claimed are excessive and that no lump sum award is justified.
Disbursements
[24] The applicant claims disbursements of $3003.56, comprising billed disbursements of $2814.05 and unbilled disbursements of $189.51. While maintaining its primary position that no costs or disbursements should be allowed, the respondent submits, in the alternative, that the amount claimed is excessive and unreasonable, not being “necessary and reasonable” as required by Rule 77.10.
[25] The respondent submits that the applicant’s disbursements should be limited to its actual costs incurred, rather than the amounts billed to the client. The respondent thus suggests a reduction of the claim for photocopying, from $1343.25 to $250.00, citing Knox v. Interprovincial Engineering Ltd., [1993] N.S.J. No. 103 (S.C.), where Goodfellow, J. said, at p. 16 (QL version):
The matter of photocopying is one of real concern to me, because again, there has to be some limitation and control over it. Sometimes the degree of photocopying is related to the personality of one's client, who may demand and require, indeed professionally the wisest course is often to provide a copy of everything and sometimes clients want two copies of everything, but it seems to me that you cannot have a complete license to simply Xerox at will, even if it is important for the case and lay the cost at the foot step of the unsuccessful party, the defendants. The Xerox bill here would indicate items in excess of 8,000 copies. I don't know whether included in the cost of twenty‑five cents per copy, is administration or overhead: I suspect it does, but in any event, I think that a claim of $2,067.00 for Xeroxing in a case of this nature, even where it has required more paper than for example, most motor vehicle cases and a lot of other cases, it is just far far too high and that there has to be some kind of limitation. It seems to me there is a general application, counsel are going to have to do something more than just indicate they have done what they have to do, if they are going to get anything above some reasonable limit on photocopying and I think a reasonable limit is $1,000.00. I award $1,000.00 for photocopying.
[26] In addition, in Bank of Nova Scotia v. Scotia Capital Inc., [2002] N.S.J. No. 531 (S.C.), Goodfellow, J. reduced a claim for photocopies by half, to $205.33.
[27] The respondent submits that costs relating to electronic research – for which the applicant claims disbursements of $250.00 – are not recoverable, citing Scotia Capital, supra, Goodfellow J. followed Elliott v. Nicholson (1999), 179 N.S.R. (2d) 264 (S.C.), in the view that “computerized legal research fees are (1) work that the lawyer would expect to do and possibly bill to a client, but not party and party; and (2) part of office overhead expense” (para. 15).
[28] The respondent also takes issue with claimed disbursements for conference calls ($15.81), the Nova Scotia Barristers’ Library ($31.10), scanning ($7.50), as well as two undifferentiated entries for Verbatim Inc. ($45.60 and $178.99). With respect to the Verbatim disbursements, the respondent does not dispute that costs for transcripts are recoverable, but claims that these amounts are unexplained and thus unrecoverable.
[29] The respondent submits that the total disbursements claimed should be reduced from $3003.56 to $1200.00, with a further reduction to account for the respondent’s success on the production application before Boudreau, J. The final total, the respondent submits, should be $600.00.
Conclusion
[30] While I am satisfied that the applicant should have its costs, I see no basis in this case to depart from the basic tariff amount, other than to acknowledge the time required to prepare for and conduct examinations for discovery. I am aware of the parties’ positions respecting the attempts to resolve the matter prior to the hearing. I am also satisfied that the claim for disbursements should be reduced, though not to the level advocated by the respondent.
[31] As such, I award costs of $4000.00 and disbursements of $1500.00.
J.