2012 ONSC 4780

COURT FILE NO.: CV-12-444473

DATE: 20120821

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd.

BEFORE: Mr. Justice Kenneth L. Campbell

COUNSEL: Brett Harrison and Scott Fairley, for the Applicant, Lantheus Medical Imaging Inc.

Don Jack and Matthew Diskin, for the Respondent, Atomic Energy of Canada Ltd.

ENDORSEMENT (COSTS)

A. Introduction

[1] On June 19, 2012, I released Reasons for Decision dismissing the application by Lantheus Medical Imaging Inc. (Lantheus) for the enforcement of amended letters rogatory, under s. 60 of the Ontario Evidence Act, R.S.O. 1990, chap. E.23, seeking the assistance of this court in obtaining the production of documents and testimony from Atomic Energy of Canada Ltd. (AECL). See: Lantheus Medical Imaging Inc. v. Atomic Energy of Canada Ltd., 2012 ONSC 3582.

[2] The only remaining issue is costs. Following the release of the Reasons for Decision, I received and considered written submissions and other accompanying materials from the parties on this outstanding issue, pursuant to rule 57.01(7) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[3] Having successfully resisted the application by Lantheus, the respondent, AECL, seeks its costs, on a partial indemnity basis, in the total amount of $32,647.71, including disbursements and taxes. Lantheus is opposed to any order of costs. In the alternative, Lantheus contends that any costs order in favour of AECL should be "substantially reduced" from the amount claimed. More particularly, Lantheus argues that, if AECL is awarded any costs, it should receive only $12,021.87.

[4] There are essentially two issues to be determined, namely: (1) whether the parties should be required to bear their own costs in relation to this application; and (2) if there should be a costs order in favour of AECL, the appropriate quantum of that order.

B. Should There Be A Costs Order At All?

[5] Lantheus contends that there should be no costs order in favour of AECL because although AECL was successful in resisting the application by Lantheus, the application "raised novel issues of law and statutory interpretation that required judicial guidance."

[6] There is certainly authority which supports the existence of a judicial discretion to make no order as to the costs of an action, application or motion when the matter raises a novel and important legal issue of general public importance. The rationale for this discretion is that costs should not be awarded when there is an overall public benefit in having the issue between the parties resolved. See, for example: Brown v. Durham Regional Police Force (1996), 1996 8112 (ON SC), 106 C.C.C. (3d) 302 (Ont.Ct.Gen.Div.) at p. 346; Affirmed: (1998), 1998 7198 (ON CA), 131 C.C.C. (3d) 1 (Ont.C.A.) at para. 81-83; Sutcliffe v. Ontario (Minister of Environment) (2004), 2004 31687 (ON CA), 244 D.L.R. (4th) 392 (Ont.C.A.) at p. 402; Mahar v. Rogers Cablesystems Ltd. (1995), 1995 7129 (ON SC), 25 O.R. (3d) 690 (Ont.Ct.Gen.Div.) at para. 42-50.

[7] The law on this topic is helpfully summarized as follows by Mark M. Orkin, in his text, The Law of Costs (2nd ed., looseleaf, 2012) at § 205, at pp. 2-78 to 2-81:

An action or motion may be disposed of without costs when the question involved is a new one, not previously decided by the courts on the theory that there is a public benefit in having the court give a decision; or where it involves the interpretation of a new or ambiguous statute; or a new or uncertain or unsettled point of practice; or law; or in a case of first instance; or where there were no previous authoritative rulings by courts; or decided cases on point; or where an application concerned a matter of public interest and both parties acted in complete good faith; or where both sides operated with public funds; ...

[footnotes omitted]

[8] However, even public interest litigants are often required to pay costs when they are unsuccessful. See: Sierra Club of Western Canada v. British Columbia (Chief Forester) (1994), 1994 6510 (BC SC), 117 D.L.R. (4th) 395 (B.C.S.C.); Affirmed: (1995), 1995 1448 (BC CA), 126 D.L.R. (4th) 437 (B.C.C.A.); Colony Farm Holdings Ltd. v. British Columbia (Racing Commission), [1992] B.C.J. No. 455 (S.C.). Accordingly, it appears that this discretion must be exercised with flexibility on a case-by-case basis according to the interests of justice.

[9] Moreover, the authorities suggest that this discretion is much less likely to be exercised when the unsuccessful party is a well-financed litigant who was seeking to advance their own personal interests in the litigation, and was not motivated by any coincident public interest that may have been furthered by the resulting decision. As Sharpe J. (as he then was) stated in Mahar v. Rogers Cablesystems Ltd., at para. 48, the "incentives and disincentives created by costs rules" assume that the parties are "primarily motivated by the pursuit of their own private and financial interests." Accordingly, when an unsuccessful party is motivated in the litigation by their own commercial interests, and not by the selfless ideal of advancing a greater public interest, the theoretical rationale for the exercise of this discretionary jurisdiction to make no costs order is wholly absent.

[10] In the present case, I decline to exercise the discretionary jurisdiction to make no order as to costs and require each party to shoulder the entire burden of their own legal costs of this application. In reaching this conclusion, I have taken into account all of the circumstances of this matter and have assumed that, as Lantheus suggested, the application raised novel legal issues of general public importance. In declining to exercise this jurisdiction, I rely, more particularly, on the following factors and considerations:

• Lantheus Not "Public Interest" Litigant: Lantheus is clearly not a "public interest" litigant. Rather, Lantheus is a profitable American pharmaceutical company that brought this application to further its own business and financial interests in connection with an ongoing $70 million action in New York. In bringing this application, Lantheus was not motivated by any greater public interest. Rather, Lantheus was simply seeking documents and testimony that would potentially assist it in their high-stakes New York insurance litigation. Accordingly, the theoretical rationale for the exercise of the discretionary jurisdiction to order that costs be paid to the successful litigant simply does not exist in the factual circumstances of this case.
• AECL Not a Party to New York Litigation: It is important to recall that AECL is not a party to the New York action. The main litigation in New York is between Lantheus and its insurer, Zurich American Insurance Co. (Zurich). AECL was only a responding party to this application because Lantheus sought the court-ordered production of documents and accompanying explanatory testimony from AECL. In short, Lantheus made AECL a party because it thought AECL could provide it with evidentiary assistance in their action against Zurich. As AECL has successfully resisted its proposed involvement in this insurance litigation, it follows that AECL should have its legal costs of the application.
• Discretion Not Properly Exercised in This Type of Case: The authorities suggest that the judicial discretion to award no costs is not properly exercised in this type of case, when the moving party seeks disclosure and production from a third party in connection with their own private litigation. More particularly, in Tanner v. Clark (2002), 2002 34779 (ON SCDC), 164 O.A.C. 228 (Div.Ct.); Affirmed: (2003), 2003 41640 (ON CA), 63 O.R. (3d) 508 (C.A.); Leave denied: [2003] S.C.R. viii, Epstein J. (as she then was), in delivering the judgment of the court, in response to a similar argument seeking no order as to costs, commented, at para. 4, that "not all novel issues of law give rise to such an order." Further, Epstein J. declined to make such an order as it was not appropriate when "the parties were pursuing their own disclosure interests" in the litigation [emphasis added]. This principle is directly applicable in the present case. See also: Baglow v. Smith, 2011 ONSC 6382, at para. 7-11; Den Haag Capital, LLC v. Correia, 2010 ONSC 6137.
• Costs Already Ordered Against Lantheus: Significant costs have already been ordered against Lantheus in connection with this very application. As noted in my Reasons for Decision dismissing this application, at para. 7, there was an earlier application for letters rogatory by Lantheus. That application was heard by Pollak J. on July 27, 2011. The application was dismissed, but without prejudice to Lantheus to renew it once the United States District Court had considered the potential application of the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1602 et seq. to letters rogatory. In dismissing this initial application, Pollack J. ordered Lantheus, the unsuccessful applicant, to pay costs to AECL, the successful respondent, in the amount of $40,000. Accordingly, in relation to that costs issue, it can be safely concluded that either Lantheus did not argue that there should be no costs ordered or, if such an argument was then advanced by Lantheus, it was rejected. In any event, to now order no costs would be wholly inconsistent with the original costs order of Pollak J. I decline to reach such an inconsistent conclusion.

[11] For these reasons, AECL, as the successful party on this application should have its costs on a partial indemnity basis. Having resolved that issue, I turn to the question of the appropriate quantum of the costs order to be made against Lantheus.

C. What Should Be the Precise Quantum of the Costs Order?

1. Introduction

[12] As already noted, AECL seeks a partial indemnity costs order against Lantheus in the amount of $32,647.71. Lantheus contends that this amount is excessive and, if any costs order is made in favour of AECL, it should be "substantially reduced" to $12,021.87. Lantheus argues that this reduced award of costs is appropriate given: (1) AECL has already been the beneficiary of an earlier costs order when Lantheus sought the "identical relief;" (2) AECL is seeking costs in relation to a "last minute" issue that raised "irrelevant considerations" not connected to the outcome of the matter; and (3) the number of hours spent by counsel for AECL is unjustified in all of the circumstances of this case and the partial indemnity hourly rate requested for one of the AECL counsel is beyond the maximum hourly rate proscribed in the governing Practice Direction.

2. The Significance of the Earlier Costs Order

[13] As already noted, Pollak J. ordered Lantheus to pay $40,000 in costs to AECL when Lantheus was unsuccessful on its original application for letters rogatory in July of 2011. Lantheus argues that, while the important legal issues on the application were not then resolved, the legal issues were all prepared, argued in substantially the same way, and were based on nearly identical evidentiary materials as the present renewed application.

[14] I agree with Lantheus on this issue. Having already provided $40,000 toward AECL's legal costs to respond to this application, ordering Lantheus to provide AECL with another $32,647.71 in legal costs to respond to basically the same application a second time would amount, essentially, to double recovery by AECL. While there are, undoubtedly, additional costs inherent in preparing a second time for even an identical application, it is neither realistic nor fair to expect an unsuccessful applicant to pay well over ¾ of the original $40,000 costs order when the moving applicant is unsuccessful a second time. Admittedly, the second letters rogatory application was not identical to the original application. There was additional affidavit evidence gathered, further research required, and refinement of the written and oral arguments. But, these necessary additional and repetitive costs cannot possibly justify the quantum of the costs order now sought by AECL.

3. Dealing With Access to Information and Canada Evidence Act Issues

[15] According to AECL, a "significant" amount of the time spent preparing for the second hearing of this application was spent carefully reviewing documents that had been provided to Lantheus in connection with its earlier application under the federal Access to Information Act, R.S.C. 1985, chap. A-1. Further, the renewal of the letters rogatory application by Lantheus required AECL, under s. 38 of the Canada Evidence Act, R.S.C. 1985, chap. C-5, to engage in correspondence with the federal Department of Justice.

[16] I have no doubt that counsel for AECL spent some time dealing with these various incidental issues. However, the Bill of Costs provided by AECL is so remarkably brief and non-specific that it is simply not possible to appreciate any of the details of this additional work or how much time may actually have been spent on that work. Lantheus accurately described this two page document as a "bare bones" Bill of Costs that "lumps together all preparatory work for the application into a single bucket." Indeed, apart from the "counsel fee" claimed for the hearing date, the work of counsel for AECL in connection with this application was described in a mere three lines of the Bill of Costs. More specifically, this work was described as the preparation of an affidavit, "legal research", the "preparation and delivery" of the Responding Record, Factum and Brief of Authorities, the "preparation for oral hearing," and "all other incidental matters related thereto." For this legal work, AECL claimed global counsel fees of over $25,000. While this Bill of Costs does break down the total number of hours spent by the three lawyers who worked on the application for AECL, it does not break down how much time each may have spent on each type of work. In the result, I am left to assume that at least some of the 95 total hours of legal work claimed must have been spent on the "incidental matters" related to the Access to Information Act and Canada Evidence Act work. In the circumstances, however, given this unhelpful, generic Bill of Costs, I can only assume that these "incidental matters" related to a very small proportion of the hours spent by AECL counsel on this application. In short, this "incidental" work cannot help to justify the vast majority of the total costs claimed by AECL.

4. The Hours Spent and the Partial Indemnity Rates Charged

[17] Lantheus claims that the 95 hours of legal work, divided amongst the three counsel who worked on the application, is excessive in all of the circumstances, especially given the repetitive nature of the renewed application, and the fact that the only new evidence tendered on the application was a short affidavit, upon which there was no cross-examination. Again, the brief Bill of Costs submitted by AECL, which provides no details as to what counsel may have spent their time on, is unhelpful in resolving this issue. While it was not obliged to provide one, Lantheus did not elect to submit its own Bill of Costs on the application. Accordingly, it is not possible for me to compare the number of hours spent by counsel for the respective parties.

[18] Under rule 57.01 of the Rules of Civil Procedure, there are a host of factors that should be considered in fixing costs orders. I have taken those factors into account. More particularly, there is no doubt that this application was one of considerable importance and complexity and AECL, as the successful respondent, is entitled to a partial indemnity costs order that takes into account the level of experience of their counsel, as well as their respective hourly rates and the hours their counsel collectively spent on the renewed application.

[19] That said, in my view there is one factor that merits overriding consideration. I am obliged to consider, in arriving at a costs order that is fair and reasonable, the amount of costs that Lantheus could reasonably expect to pay in relation to this matter, especially considering the renewed and repetitive nature of the application. See: Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.) at para. 24-26, 37-38. In my opinion, Lantheus could not reasonably have expected to pay, if unsuccessful, legal costs totaling more than ¾ of the $40,000 costs order on the original unsuccessful application. Accordingly, I agree that the claim by AECL for costs of $32,647.71 is excessive and must be substantially reduced.

[20] Taking into account all of the circumstances of this matter, and trying to impose a costs order that is fair and reasonable to both parties, which partially indemnifies AECL for its costs in successfully responding to this renewed letters rogatory application, and yet does not exceed the reasonable costs expectations of Lantheus, I fix the costs of AECL at $18,189.46, inclusive of disbursements and taxes.

[21] I have reached that figure by reducing the number of hours spent by each of the three AECL counsel by half, limiting the senior AECL counsel to a partial indemnity rate of $350/hour, and then recalculating the applicable taxes and the total. This calculation is hardly scientific, but it reaches, in my view, a fair and reasonable costs disposition in all of the circumstances of this case given the nature of the materials that have been provided to me.

D. Conclusion

[22] In the result, Lantheus shall pay the costs of AECL on this application, on a partial indemnity basis, and those costs are hereby fixed at a total of $18,189.46, including disbursements and taxes. Lantheus shall pay that amount to AECL within 30 days. An order shall issue accordingly.

Kenneth L. Campbell J.

DATE: August 21, 2012