Actuate v. Symcor, 2015 ONSC 1667

COURT FILE NO.: CV-13-10098-00CL

DATE: 20150313

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Actuate Canada Corporation and Xenos IP Partnership

Plaintiffs

– and –

Symcor Services Inc.

Defendants

Matthew P. Gottlieb, Daniel A. Schwartz and Laura M. Wagner for the Plaintiffs

Daniel Murdoch, Patrick Duffy and Sean Gibson for the Defendants

HEARD: November 21 and 27, 2014

Penny J.

COSTS ENDORSEMENT

[1] The plaintiff seeks its partial indemnity costs of the motion for summary judgment and the action to date in the amount of $391,000.

[2] There were three main issues on the motion:

(1) Was the d2e software licence restricted to:

(a) use on one server only?

(b) use on AIX only? and/or

(c) use on CMOD only? and

Was Symcor’s eventual use of the software in breach of the license agreement?

(2) Did the non-compliant uses of the software infringe Xenos’ copyright? and

(3) Could the claim for breach of contract/copyright infringement be estopped or limited by Xenos’ knowledge of non-compliant uses and is the record on the motion sufficient to deal with that issue?

[3] The plaintiff was successful on issues 1(b) and (c), issue 2 and mostly on issue 3.

[4] The defendant was successful on issue 1(a) and, to a very limited extent, on issue 3 (the limitation defence was not sufficient to warrant a trial on liability but remains, theoretically at least, a live issue on the extent of the damages).

[5] Overall, the result on the motion was that the defendant was found to have breached its licence agreement with the plaintiff and to have infringed the plaintiff’s copyright. The issue of damages remains to be decided at a trial.

[6] The defendant argues that:

(1) costs cannot be resolved at this stage because the defendant has outstanding a monetary offer to settle the entire action. It cannot be known until after the damages trial whether the offer is relevant to the assessment of the plaintiff’s costs of the motion;

(2) the plaintiff is, in any event, not entitled to costs of the action, only the motion; and

(3) any costs should be reduced on account of the plaintiff’s partial success.

[7] The plaintiff was substantially successful on the motion and is prima facie entitled to partial indemnity costs of the motion. I do not think, however, that the costs of the action should be awarded at this stage. I am, therefore, only dealing in this endorsement with the costs of the summary judgment motion itself.

[8] The plaintiff says that the defendant’s request to defer costs until after the damages trial is contrary to the principle underpinning Rule 57.03(1), that unless another order would be “more just,” a successful party’s costs of the motion should be fixed and ordered payable within 30 days.

[9] The plaintiff argues that it would frustrate the policy intent of Rule 57.03(1) to permit “defendants to escape the adverse cost consequences of opposing a meritorious summary judgment motion finally disposing of all issues of liability simply by serving a Rule 49 offer for the entire action in advance of the motion, no matter how reasonable the offer.”

[10] I am not persuaded that the policy underpinning Rule 57.03(1) is necessarily governing in this case. Rule 49.10(2) is equally relevant. It provides that if the defendant makes an offer and the plaintiff obtains judgment, but the judgment is merely as favourable or is less favourable than the terms of the offer, the plaintiff is entitled to partial indemnity costs to the date of the offer and the defendant is entitled to partial indemnity costs thereafter, unless the court orders otherwise.

[11] In my view, a deferral of the award of costs in this circumstance by virtue of the defendant having made a Rule 49 offer does not permit the defendant to “escape” anything. If entitlement to the costs of the motion is left to be decided until after the damages trial and the plaintiff is right, its recovery of costs is merely deferred. Interest, however, will accumulate on the costs and there is no suggestion that the defendant is not able to make good on its financial obligations.

[12] If entitlement to costs of the motion is decided now, the defendant is deprived of the right under Rule 49.10(2) to seek the cost consequences benefit of having made a monetary offer to settle the entire action.

[13] The only reason the issue comes up at all is because plaintiff chose to bifurcate the issues of liability and damages by bringing a motion for summary judgment on liability alone. The defendant had no control over that choice.

[14] Given the bifurcated approach inherent in a motion for summary judgment on liability alone, and given the defendant’s outstanding monetary offer to settle, it is, therefore, premature to award costs of the motion. In the circumstances of this case, I think the “more just” approach is to defer the grant of costs of the motion until the parties (and the court) can know whether any judgment obtained by the plaintiff is more or less favourable than the defendant’s offer.

[15] I do, however, believe it is appropriate to fix the partial indemnity costs of the summary judgment motion assuming such costs were to be awarded to the plaintiff.

[16] In round numbers, it appears to me that approximately $280,000 of the partial indemnity costs claimed are directly associated with the motion for summary judgment. This is a significant sum for a one day (total) motion.

[17] Nevertheless, the stakes were high, the motion was very important and, unquestionably, a great deal of work went into initiating, bringing forward, defending and arguing the motion. There were many issues, multiple affidavits and numerous cross examinations. The preparation of both sides was exceedingly thorough and the quality of the work on both sides was extremely high. Both parties are sophisticated entities and, one assumes, sophisticated consumers of legal services. They knew what they were dealing with.

[18] The defendant has not argued that the amount claimed is, of itself, excessive nor has the defendant put forward its own bill of the costs it would have sought had it been successful. In my view, in all the circumstances, partial indemnity costs of the motion for summary judgment should be fixed at $280,000 (inclusive of fees, disbursements and all applicable taxes). Whether the plaintiff should actually be awarded those costs shall await the determination of its success at the damages trial.

Penny J.

Released: March 13, 2015