DIVISIONAL COURT FILE NO.: 567/02
COURT FILE NO. 00-CV-201798
DATE: 20040206
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
cunningham a.c.j.s.c., o’driscoll and caputo jj.
B E T W E E N:
BOEHRINGER INGELHEIM (CANADA) LTD.
Appellant/Plaintiff
- and -
PHARMACIA CANADA INC. (carrying on business as PHARMACIA CORPORATION) and PFIZER CANADA INC.
Respondents/Defendants
W. Sprigings, for the Appellant/Plaintiff
M M. Orkin, Q.C. and I. Nishisato for the Respondents/Defendants
HEARD at Toronto: January 12, 2004
O’DRISCOLL J.:
I. Nature of the Proceedings
[1] The Appellant/Plaintiff appeals to this Court, pursuant to leave granted by McNeely J. under s. 19(4) of the Courts of Justice Act, R.S.O. 1990, c. C. 43 and Rule 62.02(4)(b) of the Rules of Civil Procedure, from the interlocutory order of Nordheimer J., dated September 19, 2002. The Appellant asks that the impugned order be set aside, that the Respondents’ motion for directions be dismissed and that the Appellant be awarded costs on a substantial indemnity basis for the appeal, the application for leave to appeal and on the motion before Nordheimer J.
[2] For the reasons to follow, the appeal is dismissed.
II. Background and Chronology
[3] The Appellant/Plaintiff is a pharmaceutical company. It brought a motion seeking an interlocutory injunction restraining the Respondents from making alleged false statements about one of the Appellant’s products. The Respondents brought a cross-motion for an interlocutory injunction to restrain the Appellant from allegedly representing that the Appellant’s product was the equivalent of a product co-marketed by the Respondents. The Respondents stated that if the Appellant’s motion failed, they would not pursue their cross-motion.
[4] Nordheimer J. heard the motion on April 30, May 1 and May 2, 2001 and reserved judgment.
[5] On May 22, 2001, Nordheimer J. gave written reasons for dismissing the Appellant’s motion and the Respondents’ cross-motion: 2001 28351 (ON SC), [2001] O.J. No. 1911.
[6] In para. [93] of his reasons, Nordheimer J. stated that if counsel could not agree on costs, written submissions would be filed in accordance with a schedule provided.
[7] Written submissions as to costs were filed by both sides. On June 20, 2001, Nordheimer J., after hearing submissions, released a typed endorsement and said, in part:
[6] I conclude, therefore, that the defendants are entitled to their costs of the motions. I say they are entitled to the costs of both motions because the motions were very much inextricably intertwined such that it would be virtually impossible in the costs context to draw a line between them. However, because the defendants did bring their cross-motion and were unsuccessful in it, there must be some reduction in the amount of the costs for that consequence. I consider that the appropriate reduction is twenty-five percent. The defendants are entitled to seventy-five percent of their respective fees for the motions and all of their respective disbursements. These costs include the costs of all cross-examinations and this provision constitutes an order “otherwise” under rule 39.02(4)(b) of the Rules of Civil Procedure.
[7] I have not been provided with any material that would permit me to fix the costs of these motions. If either of the parties wish me to fix the costs, I am prepared to do so if I am provided with the appropriate material including a bill of costs or something akin to it. If the costs are to be dealt with in this fashion, the defendants should file its responding material within 10 days thereafter. Again, no reply material is to be filed without leave. Otherwise, the costs are to be assessed. In either event, the costs are to be payable by the plaintiff to the defendants forthwith after they are fixed or assessed.
[8] All counsel again filed submissions as to costs. The Appellant asked that costs be “assessed” under Rule 57.01(3.1) and the Respondents asked Nordheimer J. to fix costs pursuant to Rule 57.01(3).
[9] On July 30, 2001, in his second costs endorsement, Nordheimer J. said, in part:
[2] The defendant, Pharmacia, submits that its party and party costs should be fixed in the amount of $262,703.25 for fees and $104,399.98 for disbursements together with the applicable GST. The defendant, Pfizer, submits that its party and party costs should be fixed in the amount of $281,844.25 for fees and $108,014.06 for disbursements together with the applicable GST. If those were the amounts at which the costs were fixed, then under my earlier ruling the defendants would be entitled to 75% of the fees and 100% of the disbursements. This would give rise to total costs of $318,899.23 in the case of Pharmacia and $338,342.60 in the case of Pfizer.
[3] While both defendants ask that I fix the costs of the motions, the plaintiff submits that they should be referred for assessment. The plaintiff submits that due to the amount of the costs sought and the lack of supporting documentation provided by the defendants, I cannot fix the costs in a manner that would do “procedural and substantive justice” to the parties – see Murano et al. v. Bank of Montreal et al. (1998), 1998 5633 (ON CA), 41 O.R. (3d) 222 (C.A.) at p. 245.
[8] I have concluded after all that this case is one of those exceptional cases where the costs of the motion ought not to be fixed by me as the motions judge but should be referred for assessment. If there are any directions that are necessary for the assessment officer to proceed with the assessment, I may be spoken to.
[10] The factum of counsel for the Respondents states:
[35] Subsequently, counsel for the Appellant and the Respondents were unable to agree on the form of Justice Nordheimer’s order. The Respondents’ contention was that Justice Nordheimer intended them to have all their disbursements, including disbursements not provided for in the tariff. The Appellant’s contention was that the Respondents were limited to disbursements provided for in the party and party tariff.
[36] On October 2, 2001 Ira Nishisato (“Mr. Nishisato”), counsel for the Respondents, and Carol Hitchman (“Ms. Hitchman”), counsel for the Appellant, attended before Justice Nordheimer to settle the form of the order. Mr. Nishisato’s position was as stated above, namely, that Justice Nordheimer intended the Respondents to have all their disbursements. Ms. Hitchman’s position was that disbursements were limited to only those items listed in the Tariff.
[11] In his affidavit, sworn July 26, 2002, Ira Nishisato, a solicitor for the Respondent Pharmacia, states, in part:
[10] By letter dated September 17, 2001, Ms. Hitchman advised me that it was her understanding that Justice Nordheimer had “ordered costs, both fees and disbursements, on a party and party scale” and suggested that if we disagreed, an appointment before Justice Nordheimer would be appropriate. Attached hereto and marked as Exhibit “I” is a copy of Ms. Hitchman’s letter dated September 17, 2001.
[11] By letter dated September 18, 2001, I advised Justice Nordheimer of the difficulty we were having in settling our draft order and requested an appointment before him. I explained the concern of Pharmacia and Pfizer that Ms. Hitchman’s amendment might limit the recovery of our disbursements to only those items listed in the Tariff. I further advised that the disbursements in this case were extraordinary and included expert fees, videoconference examinations, travel and other expenses which are not provided for by the Tariff. I referred to expert fees of approximately $90,000 and videoconference examinations costs of approximately $12,500, as examples of these extraordinary disbursements. Attached hereto and marked as Exhibit “J” is a copy of my letter dated September 18, 2001.
[12] On October 2, 2001, Ms. Hitchman and I attended before Justice Nordheimer in chambers to settle the order. I expressed Pharmacia and Pfizer’s concerns with the wording proposed by Ms. Hitchman and particularly the fact that it might be interpreted to preclude recovery of disbursements not listed in the Tariff. Ms. Hitchman also explained her understanding of the endorsements on costs.
[13] Justice Nordheimer stated that it was not his intention to prevent Pharmacia and Pfizer from recovering non-Tariff disbursements such as expert fees, videoconference costs, and travel and accommodation. His Honour indicated that it was also not his intention to preclude BI from challenging the quantum of these disbursements, or any disbursement, at the assessment. I suggested to His Honour that it might be helpful for the order to list those categories of disbursements that were to be allowed at the assessment. His Honour suggested that rather than doing so in the order, the order could be made subject to further direction by him in the event that BI challenged Pharmacia and Pfizer’s entitlement to a specific category of disbursements. Justice Nordheimer suggested that we send a list of the category of disbursements to Ms. Hitchman in advance of the assessment and that she advise us of any categories that she would be challenging. In this way, we could re-attend before Justice Nordheimer for a ruling on the categories of disbursements which were being challenged.
[12] At the conclusion of the October 2, 2001 attendance by counsel before Nordheimer J., the judge signed the order which appears at Tab L to the affidavit of Mr. Nishisato. The order was entered on October 4, 2001; its page 1 bears the date “June 20, 2001”. The operative part of the order reads:
- THIS COURT ORDERS that the plaintiff shall pay to the defendants their costs of the motion and cross-motions herein in the amount of seventy-five (75) percent of their fees and one-hundred (100) percent of their disbursements payable forthwith, all on a party and party scale after being assessed, including the costs of all cross-examinations pursuant to Rule 39.02(4)(b), subject to any further direction that may be necessary.
[13] Counsel then obtained dates for the assessment of the costs, namely, April 23, 24 and 25, 2002.
[14] On April 5, 2002, the Respondents served their Assessment Brief on the solicitors for the Appellant.
[15] By letter, dated April 15, 2002, Mr. Nishisato wrote to Mr. Sprigings and made the following request: “Would you please advise me right away:
Whether there are any aspects of our costs that you would be willing to consent to at the assessment; and
What specific aspects of our costs remain in dispute.
As you know, Mr. Justice Nordheimer is available to provide directions as may be necessary, and we would like to determine whether an attendance will be required.”
[16] By letter, dated April 18, 2002, Mr. Sprigings responded to Mr. Nishisato’s inquiry and said, in part: “We disagree with all aspects of your bill of costs.”
[17] On April 25, 2002, the Assessment Officer, A-K Fedson released a typewritten endorsement, which said, in part:
The assessment in the above matter was commenced on April 23, 2002, and after continued submissions today is adjourned for the following two reasons:
A further breakdown of time, as discussed and noted at the hearing, is to be prepared and delivered by the defendants. A reply by the plaintiff in response to this material prior to the continuation of the hearing is encouraged.
The defendants have also requested an opportunity to return to the Honourable Mr. Justice Nordheimer for directions regarding disbursement items in the Bill of Costs that are not under Tariff A-Part II-Disbursements. The following items were identified as being outside the tariff. Accordingly, an Order/direction from the court would be required (pursuant to Item 35 of the tariff) in order to assess these items. Re: Pfizer… Re: Pharmacia…
My interpretation of the costs order of Mr. Justice Nordheimer is that costs are allowed on a party/party basis with 75% of assessed fees being recoverable and 100% of assessed disbursements (party/party tariff items only) being recoverable. The defendants believe that 100% of their disbursements are assessable (including items not found in the tariff). Mr. Justice Nordheimer in his endorsement regarding costs (June 20/01 – paragraph 6) and supplementary endorsement (July 30/01 – paragraph 1) refers to “…all of their respective disbursements”. A direction is required in order to assess the above disbursements.
I also urge counsel to review all other applicable tariff items (fees and disbursements) and consider whether any other direction may be required for the successful completion of this assessment without further adjournment.
I would ask that counsel please include this endorsement in your correspondence to Mr. Justice Nordheimer or, present it to His Honour on your attendance.
This matter is adjourned to a date to be agreed upon between counsel and confirmed by me.
[18] It was only after the assessment began that counsel for the Respondents became aware that counsel for the Appellant continued to dispute the Respondents’/Defendants’ entitlement to assess non-tariff disbursements. Had the Respondents’ counsel known of the Appellant’s position before then, counsel for the Respondents could have gone back to Nordheimer J. for directions before the assessment commenced.
[19] On July 26, 2002, Mr. Orkin, on behalf of both Respondents/Defendants, launched a motion to be heard on a date to be fixed for an order from Nordheimer J. for directions for the conduct of the assessable costs pursuant to the June 20, 2001 order. Attached to the Notice of Motion as Schedule “A” was a two (2) page list of “DISBURSEMENTS CLAIMED IN BILLS OF COSTS IDENTIFIED AS BEING OUTSIDE THE TARIFF”. (Appeal Book: p. 19)
[20] The motion for directions proceeded before Nordheimer J. on September 19, 2002.
[21] In his factum, counsel for the Respondents/Defendants states:
[50] The Respondents brought a motion for directions before Justice Nordheimer on September 19, 2002. In support of the motion the Respondents filed the affidavit of Ira Nishisato referred to in paragraph 31 supra, in which Mr. Nishisato reported Justice Nordheimer’s statement at the October 2, 2001 hearing that it was not his intention to prevent the Respondents from recovering non-tariff disbursements such as expert fees, videoconference costs, and travel and accommodation, and it was also not his intention to preclude the Appellant from challenging the quantum of these disbursements or of any disbursement at the assessment.
[51] As noted above, in responding to the Nishisato affidavit, the Appellant did not file the affidavit of Carol Hitchman who was present at the October 2, 2001 hearing before Justice Nordheimer, but instead filed the affidavit of Lisa Trabucco who was not present at the hearing. The Appellant offered no explanation for the failure to file an affidavit by Ms. Hitchman.
[52] The Trabucco affidavit did not contradict or even refer to the passage in the Nishisato affidavit wherein he described what Justice Nordheimer had said at the October 2, 2001 hearing, as set out in paragraph 30, supra.
[22] In his factum, counsel for the Respondents/Defendants further stated:
[94] As noted in paragraphs 43 to 45, supra, Justice Nordheimer had before him [on September 19, 2002] the affidavit of Mr. Nishisato deposing as to what Justice Nordheimer stated at the hearing of October 2, 2001. Mr. Nishisato’s affidavit accords with what Justice Nordheimer said he intended by his costs order. The Appellant did not file the affidavit of Carol Hitchman who was present at that hearing, but instead chose to file the affidavit of Lisa Trabucco who was not present. The Appellant offered no explanation for the failure to file an affidavit by Ms. Hitchman.
[95] In Sopinka, Lederman and Bryant, The Law of Evidence in Canada, 2nd ed. Butterworths, 1999 the authors write at page 297, ¶6.321:
¶6.321 In civil cases, an unfavourable inference can be drawn when, in the absence of an explanation, a party litigant does not testify, or fails to provide affidavit evidence on an application, or fails to call a witness who would have knowledge of the facts and would be assumed to be willing to assist that party. In the same vein, an adverse inference may be drawn against a party who does not call a material witness over whom he or she has exclusive control and does not explain it away. Such failure amounts to an implied admission that the evidence of the absent witness would be contrary to the party’s case, or at least would not support it.
[96] It is submitted that the court should draw an adverse inference from the Appellant’s failure to file an affidavit by Ms. Hitchman.
[23] In all of the circumstances, we are prepared to draw such an adverse inference against the Appellant.
[24] In his typewritten endorsement of September 19, 2002, Nordheimer J. said, in part:
[3] The plaintiff contends that I cannot now correct the Assessment Officer’s interpretation of the order either on the basis that I am functus or on the basis that it is inappropriate to provide further directions to the Assessment Officer once the assessment has commenced and the Assessment Officer has made an interpretation. I do not accept that either of those grounds preclude me from making the further direction sought by the defendants. I do not consider myself to be functus when the formal order specifically provides that it is subject “to any further direction that may be necessary”. Contrary to the assertion of the plaintiff in providing a further direction I am not varying my order. I am implementing it. While I accept that it is preferable to have any further directions dealt with before the assessment begins, the fact that the assessment began before the issue became apparent does not preclude the direction being given. The issue was not dealt with earlier because of some misunderstanding between counsel. The position of the plaintiff, if accepted, would require the parties to proceed with the assessment through to completion on an erroneous basis only to then be appealed, the further direction then made and the assessment done over. That result is to be avoided if it can be. I also note that the Assessment Officer said that a direction was required in order for her to proceed.
[4] I therefore direct the Assessment Officer to proceed with the assessment on the basis that the defendants are entitled to recover all of their disbursements, whether covered by the Tariff or not, subject only to the Assessment Officer determining the reasonableness of the quantum of those disbursements. For greater certainty, those recoverable disbursements shall include all of the disbursements set out in paragraph 2 of the Assessment Officer’s endorsement dated April 25, 2002. The parties remain entitled to seek further directions from me regarding the assessment should that become necessary.
[5] In terms of the costs of the motion, I agree with Mr. Orkin that there was no need for this issue to be dealt with by way of a formal motion with all of the attendant costs. The matter could just as easily, and more economically, have been dealt with by way of a case conference. While the plaintiff was entitled to insist that it proceed by way of a formal motion, the plaintiff must bear the costs of that decision. I therefore award the costs of the motion payable by the plaintiff to the defendants within 30 days and fixed at $2,500.
III. Conclusions
[25] The Courts of Justice Act, supra, provides:
section 131(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
Rule 57.01(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different solicitor; and
(i) any other matter relevant to the question of costs.
57.01(3) When the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs.
57.01(3.1) Despite subrule (3), in an exceptional case the court may refer costs for assessment under Rule 58.
57.01(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act,
(a) to award or refuse costs in respect of a particular issue or part of a proceeding;
(b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding; or
(c) to award all or part of the costs on a substantial indemnity basis.
57.01(5) After a trial, the hearing of a motion that disposes of a proceeding or the hearing of an application, a party who is awarded costs shall serve a bill of costs (Form 57A) on the other parties and shall file it, with proof of service.
57.02(1) Where costs are to be assessed, the court may give directions to the assessment officer in respect of any matter refereed to in rule 57.01.
(2) The court shall record,
(a) any direction to the assessment officer;
(b) any direction that is requested by a party and refused; and
(c) any direction that is requested by a party and that the court declines to make but leaves to the discretion of the assessment officer.
57.03(1) On the hearing of a contested motion, unless the court is satisfied that a different order would be more just, the court shall,
(a) fix the costs of the motion and order them to be paid within 30 days; or
(b) in an exceptional case, refer the costs of the motion for assessment under Rule 58 and order them to be paid within 30 days after assessment.
[26] Here, the costs award is that of the motions court judge (Rule 57.03(1)); he determined that this was an “exceptional case” under Rule 57.03(1)(b) and entrusted the matter to an Assessment Officer to assess, subject to the directions imposed by the judge pursuant to Rule 57.02(1).
[27] The factum of counsel for the Respondents summarizes his position with regard to jurisdiction as follows:
[74] It is submitted that the jurisdiction and discretion of an assessment officer are inherently different from the jurisdiction and discretion of the court with respect to costs. Simply put, it is the court that orders what costs are to be paid and to whom, and it is the assessment officer who assesses the quantum of those costs in accordance with the court’s directions. It is the court that is the directing hand, while the assessment officer is bound by the court’s directions as embodied in the judgment or order respecting costs, as well as by any directions given by the court pursuant to Rule 57.02(1).
[75] It follows that when the court gives directions to the assessment officer it is not “interfering with the independent decisions of the assessment officer”, but rather is carrying out the jurisdiction expressly conferred upon it by section 131 of the Courts of Justice Act and Rule 57.02(1).
[76] As Morden, A.C.J.O. wrote in Murano v. Bank of Montreal (1998), 1998 5633 (ON CA), 163 D.L.R. (4th) 21 at page 51, para. 99 (C.A.):
“The value of the trial judge’s knowledge of the case would become part of the assessment process through directions to the assessment officer, as provided for in rule 57.02.
[77] A judge who has expressly reserved in his or her judgment the right to give directions is not functus.
[28] There is no loss of jurisdiction. The motions judge did not lose jurisdiction nor is he now functus regarding his costs order. We agree with the motions judge’s words in his September 19, 2002 endorsement where he says: “…I am not varying my order, I am implementing it”.
[29] We agree with the following paragraphs of the Respondents’ Factum:
[92] Rule 57.02(1) does not impose a time limit within which a court may give directions to the assessment officer, neither does it preclude the court from giving more than one set of directions should that course become necessary. In the case of Davids v. Davids, [1999] O.J. No. 1565, para. 72 (S.C.J.) Justice Shaughnessy gave extensive directions to the assessment officer pursuant to Rule 57.02. Having done so, he concluded: “If further directions are required, the parties may contact me.”
[93] As Justice Nordheimer acknowledged in his endorsement [September 19, 2002]:
While I accept that it is preferable to have any further directions dealt with before the assessment begins, the fact that the assessment began before the issue became apparent does not preclude the direction being given. The issue was not dealt with earlier because of some misunderstanding between counsel.
[30] We are of the view that the procedure adopted by Nordheimer J. was the procedure laid down over eighty-five (85) years ago by four (4) judges of the Ontario Court, Appellate Division when, in Avery & Son v. Parks (1917), 1917 543 (ON CA), 35 D.L.R. 71, 75, Meredith C.J.C.P., in delivering the judgment of the Court, said:
Nor can I think it the duty of Taxing Officer, or Judge in Chambers, in any case of ambiguity, to make his conjecture the order which he is to obey. There is no need for conjecture, with the possible result of substituting an erroneous guess for the judgment of the Court.
The proper course is to find out, from the Court, which of the two, or several, meanings is the true one. That was very plainly laid down by the Lord Chief Justice of England and Mr. Justice Grove in the case of Abbott v. Andrews (1882), 8 Q.B.D. 648; in which it was said that: in a case of ambiguity in a judgment, upon a question of costs, the Judge who made the judgment should be applied to, to correct the ambiguity, instead of appealing.
And, even if there were no ambiguity, there is no difficulty in giving effect to the actual intention of the Court; for, if the formal judgment, whether in the words of the solicitors of one or other of the parties or of an officer of the Court, do not convey the meaning of the Court, they can and should be changed to conform to it: Kidd v. National Railway Assoc. 1916 572 (ON CA), 31 D.L.R. 354, 37 O.L.R. 381.
[31] The headnote for the case accurately states:
Where the words of a Judge’s order for costs are ambiguous, the proper course is to apply to the Judge who made the order to correct the ambiguity, and the meaning which he intended should be adopted.
[32] For these reasons the appeal is dismissed.
IV. Costs
[33] Prior to reserving judgment, counsel were asked for their submissions with regard to costs. Mr. Sprigings submitted that the costs on the appeal should be in the amount of $3,000.00 “all in” for the successful party. He said nothing about the costs before McNeely J. who granted leave to appeal.
[34] Counsel for the Respondents filed two (2) sets of bills of costs:
(A) Motion for Leave to Appeal before McNeely J.
(i) Bill of Costs of the Respondents/Defendants on a partial indemnity basis in the total amount of $7,117.28, all in.
(ii) Bill of Costs of the Respondents/Defendants on a substantial indemnity basis in the amount of $8,929.59, all in.
(B) Appeal to the Divisional Court
(i) Bill of Costs of the Respondents/Defendants on a partial indemnity basis: $12,640.27 plus a counsel fee for the attendance on the appeal in the amount of “perhaps $2,500.00.”
(ii) Bill of Costs of the Respondents/Defendants on a substantial indemnity basis: $15,264.44, all in, plus a fee of $5,000.00 for attendance to argue the appeal.
[35] All things considered, we fix the costs before McNeely J. and on this appeal in the sum of $15,000.00 plus tariff disbursements plus G.S.T.
O’Driscoll J.
Cunningham A.C.J.S.C.
Caputo J.
Released:
DIVISIONAL COURT FILE NO.: 567/02
COURT FILE NO.: 00-CV-201798
DATE: 20040206
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
cunningham a.c.j.s.c., o’driscoll and caputo jj.
B E T W E E N:
BOEHRINGER INGELHEIM (CANADA) LTD.
Appellant/Plaintiff
- and -
PHARMACIA CANADA INC. (carrying on business as PHARMACIA CORPORATION) and PFIZER CANADA INC.
Respondents/Defendants
REASONS FOR JUDGMENT
O’Driscoll J.
Released: February 6, 2004

