SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-12-446686
DATE: 20130618

RE: Bombardier Inc., Plaintiff

– and –

AS Estonian Air and The Republic of Estonia through its Ministry of Economic Affairs and Communications, Defendants

BEFORE: E.M. Morgan J.

COUNSEL:
Douglas Harrison and Vanessa Voakes, for the Plaintiff

Jonathan Lisus and James Renihan, for the Defendants

HEARD: May 17, 2013

costs ENDORSEMENT

MORGAN J.

[1] The Defendants were the successful party in the judgment rendered May 24, 2013 and deserve their costs on a partial indemnity basis.

[2] Counsel for the Plaintiff raises three objections to the costs contained in the Costs Outline submitted by counsel for the Defendants: a) the Defendants have no right to recover the costs of cross-examining Bombardier’s affiant, Robert Baseggio; b) Defendants’ counsel brought two lawyers to London, England for the cross-examination of one of their own affiants, Deputy Minister Ahti Kuningas of the Estonian Ministry of Economic Affairs, when one would have sufficed; and c) the two lawyers attending the London cross-examination flew business class but should only recover the cost of economy class travel.

[3] Turning first to the cross-examination of Mr. Baseggio, counsel for the Defendants points out that the court has discretion to award costs of an opposing affiant’s cross-examination if it sees fit to do so. Rule 39.02(4)(b) of the Rules of Civil Procedure provides that a party that cross-examines on an affidavit “is liable for the partial indemnity costs of every adverse party on the motion…unless the court orders otherwise.”

[4] In my view, it was entirely reasonable and predictable for Defendants’ counsel to seek to cross-examine Mr. Baseggio. He was the Plaintiff’s main affiant, and was the chief negotiator for the Plaintiff at all material times in the transaction at issue. The Defendants’ motion was not a pleadings motion, but required a careful review of the evidence, much of it supplied by Mr. Baseggio, in establishing the character of the transaction and the dealings of the parties.

[5] Most importantly, I specifically relied on the cross-examination evidence of Mr. Baseggio in coming to my decision. He conceded in his cross-examination that an article in an Estonian magazine was a significant factor for the Plaintiff and its understanding of the events in issue. This point was then referenced, and the transcripts of the cross-examination quoted, at paragraphs 79 -83 of my reasons for judgment.

[6] The Court of Appeal has specifically identified the usefulness of the cross-examination as a factor in exercising the discretion given to a motions court judge under Rule 39.02(4)(b). Her Majesty the Queen in Right of Ontario v Rothmans Inc., 2013 ONCA 353, at para 140. I can only repeat what Nordheimer J. said in Hague v. Liberty Mutual Insurance Co. (2007), 2005 13782 (ON SC), 13 C.P.C. (6th) 37, at para 18 (SCJ): “I consider it unwise for the court to be too ready to second guess counsel's decision to cross-examine on any of the affidavits filed.” It is all the more true where, as here, the cross-examination played a significant role in helping me arrive at my conclusion.

[7] As the for attendance in London for the cross-examination of Mr. Kuningas, I find it hard to fault Defendants’ counsel for having two lawyers travel overseas for the session. The Deputy Minister was not only the Defendants’ central witness but is an important official of a foreign state. He had to produce a large quantity of documents for his examination on short notice, all of which had to be reviewed by counsel while in London. Defendant’s counsel was defending a foreign government against a $24.5 million claim in relation to a lost contract for the supply of aircraft, and much potentially turned on Mr. Kuningas’ testimony.

[8] Given all of this, very few law firms would have sent only one lawyer to shoulder all of the responsibility on this cross-examination. I find it fair and reasonable that two lawyers representing the Defendants attended the session in London.

[9] The only point raised by Plaintiff’s counsel that gives me pause is the fact that the two lawyers for the Defendant flew business class to London. Counsel for the Plaintiff was under the same time constraints, was handling the same large case, and was flying the same long distance as Defendants’ counsel, but flew economy.

[10] As this court has said on previous occasions, “[p]roportionality has become an ever increasingly important factor in assessing costs.” Hamfler v Mink, 2011 86201, at para 1 (SCJ). In fact, the proportionality principle has become more important than the concept of indemnity in measuring costs. To this end, the Court of Appeal has said that “costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.” Zesta Engineering Ltd. v. Clo, 2002 25577.

[11] Along these lines, it has also been said that the expectations of the parties with respect to the amount of a costs award is a relevant factor. City of Toronto v First Ontario Realty Corporation (2002), 2002 49482 (ON SC), 59 OR (3d) 568, at 574 (SCJ). Beyond those general propositions, however, the Court of Appeal has expressed reluctance to refine the test any further: “[t]he notions of fairness and reasonableness are embedded in the common law. Judges have been applying these notions for centuries to the factual matrix of particular cases.” Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 OR (3d) 291, at para 37.

[12] I agree with Edwards J. in Hamfler, supra, at para 7, that while these principles “are most often quoted in relation to the assessment of the fees a costs award, they are in my opinion, equally applicable to the determination of whether a disbursement is properly assessable and reasonable in the amount claimed.” The question is, how does a test that is stated in a series of abstract concepts such as fairness, reasonableness, and proportionality, apply to a specific item such as business class airline tickets?

[13] In the context of the present motion, I commend the Plaintiff’s legal team for their prudence with resources. They made due with one lawyer instead of two in the U.K., and endured the trip in the back of the plane.

[14] On the other hand, I do not think that business class travel is an extravagant expense for lawyers representing a foreign government in a multi-million dollar claim and facing the cross-examination of a senior official. I note that if they had been working for the Ontario government, the official guidelines on business travel would permit business class air tickets for international assignments. See Travel, Meal and Hospitality Directive, Management Board of Cabinet, Ontario Ministry of Government Services, April 1, 2010. I have little doubt that the Defendants expected their lawyers to be at the top of their game upon arrival in London for the cross-examination of Deputy Minister Kuningas.

[15] That said, the question in a costs award is not what is reasonable to bill to one’s client but what is reasonable to bill the opponent. The idea is to partially reimburse the winner without chilling further litigation. McNeil v. Kansa General International Insurance Co. (1997), 1997 12208 (ON SC), 37 OR (3d) 464, at 475 (Ont Gen Div). As a matter of policy, costs do not award the most intensive level of preparation by counsel, even where that investment of time and expense pays large dividends in a victory in court. Here, the Defendants flew smoothly through the motion and avoided a bumpy ride. For costs purposes, however, the notion of ‘fair and reasonable’ must be seen from the opposing side’s point of view as much as from the successful side’s. Moon v Sher (2004) 2004 39005 (ON CA), 246 DLR (4th) 440, at para 34 (Ont CA).

[16] In my view, business class tickets are much like a lawyer’s over-preparation; it may be a worthwhile expense for the client, but cannot be imposed on the opponent. For that reason, courts and assessment officers have determined that economy fare is the standard for costs purposes. ITV Technologies, Inc. v WIC Television Ltd., [2000] FCJ No. 67, at para 7 (Fed Ct).

[17] The Defendants have submitted a Costs Outline seeking an overall award of costs in the amount of just under $75,500. The economy class ticket to London purchased by counsel for the Plaintiff was in the range of $1,200, while the business class tickets purchased by counsel for the Defendants were in the range of $7,000. I will therefore reduce the Defendants’ costs award accordingly.

[18] The Plaintiff shall pay the Defendants a total of $64,000, inclusive of HST and disbursements.

Morgan J.

Date: June 18, 2013