SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-13-489853

DATE: 20150818

RE: Robert Teti and ITET Corporation / Plaintiffs / Responding Parties

AND:

Mueller Water Products Inc., Mueller Co., Mueller Canada Ltd., and Mueller International LLC / Defendants / Moving Parties

BEFORE: Justice Edward P. Belobaba

COUNSEL: Kenneth Hanna and Christopher Langan for the Moving Parties

Joseph Etigson and Paul Lomic for the Responding Parties

HEARD: July 7, 2015

COSTS AWARD

[1] In a decision released on July 21, 2015 I dismissed the defendants’ motion for partial summary judgment.[^1] The defendants agreed that the claims against Mueller Canada were proceeding to trial but asked that the claims against the other three defendants, namely Mueller Water Products, Mueller Co., and Mueller International be adjudicated summarily and dismissed. I concluded, after reviewing the large volume of evidence that was before me, that there were genuine issues relating to these three defendants and that it was in the interests of justice that the matter proceed to trial in its entirety.

[2] This is an intellectual property dispute that is complicated by allegations that the defendants, acting as a “group enterprise”, misappropriated the plaintiff’s technology and used it as a springboard to develop their own competitive product. Given the volume of material that was filed on this motion as well as the long and detailed written arguments, I fully expected that the costs award would be significant. But I am frankly surprised by the actual amount that is now being requested.

[3] The successful plaintiffs ask for an “elevated” costs award in the amount of $177,599 CDN and $26,929 US (to pay a U.S. expert) for an overall total of about $213,000 CDN. They say the defendants were unreasonable in bringing this motion and insisting (incorrectly) that the “group enterprise” theory does not exist in Canadian law.

[4] In my view, the defendants’ motion for partial summary judgment was certainly aggressive and probably (in hindsight) misguided, but I am not persuaded that the motion was unreasonable when it was brought and that an elevated costs award is therefore justified. The appropriate scale is partial indemnity.

[5] On a partial indemnity basis expressed in Canadian dollars, the plaintiffs ask for $180,954, inclusive of disbursements and taxes. The defendants question both the fee and disbursement amounts, including the $26,929 US payment, and submit that a costs award of $125,592 would be more appropriate.

[6] My primary obligation as a judge in fixing costs is to consider the factors set out in Rule 57.01(1) and fix an amount that is fair and reasonable to the unsuccessful party in the particular proceeding rather than an amount fixed by the actual costs incurred by the successful litigant: Boucher v. Public Accountants Council of Ontario, (2004) 2004 14579 (ON CA), 71 O.R. (3d) 291 at para. 26.

[7] I generally begin a costs analysis by reviewing the hourly rates charged in the successful party’s bill of costs to ensure that they fall within the “Grid” as set out in the Rules Committee’s Notice to the Profession. I note that the plaintiffs’ lead counsel Joseph Etigson, called in 1981 and entitled to a $350 hourly rate under the Grid, charged $300 and that his colleague Paul Lomic, called in 2004 and entitled to $225, charged $180. In other words, on a partial indemnity basis the plaintiffs could have asked for $135,605 in fees (excluding taxes) and instead have only requested $112,998 (excluding taxes). I will keep this in mind as I fix the final costs award.

[8] The defendants say that both the fees and the disbursement amounts are excessive. Given that counsel for the plaintiffs have charged less than is permitted, I do not find the fees request on its face to be excessive. Nor do I agree that Mr. Lomic’s time at the cross-examinations should be deducted. A case of this magnitude easily justifies two lawyers acting on behalf of the plaintiffs. I do, however, agree with the defendants that the $1796 in fees relating to the case management conference before Justice Himel cannot be claimed because the plaintiffs’ requests were dismissed. However, any costs relating to the motion before Master Dash that were incurred by the defendants should be deferred and claimed in the cause.

[9] In short, I would reduce the $112,998 fees request to $111,202. The defendants should understand that the most effective way for a losing party to show that the winning party’s costs request is unreasonable and excessive is to submit its own cost outline. The defendants did not do this. I therefore conclude that the fees request of $111,202 plus applicable taxes of $14,456 for a total of $125,658 is fair and reasonable.

[10] Turning next to the disbursements, the defendants make a number of valid points. I agree that the $6378 charge for photocopying is on its face excessive. The plaintiffs have provided no information about page numbers or page costs. On the assumption that law firms charge for photocopying at a profit rather than at cost (and the plaintiffs do not suggest otherwise) and estimating the amount of material filed by the plaintiffs, I will reduce this item by two-thirds leaving a photocopying charge of $2126. I agree with the defendants that a photocopying charge in the range of $2000 is reasonable. I will also reduce the “first class” travel expense claim of $8531 to $2620 which reflects the more reasonable costs that were actually incurred by counsel for the defendants for the same category of expenditures.

[11] I also agree with the defendants that the $26,929 US payment to Mr. Gilman, who is the plaintiffs’ lawyer in a related American litigation, is excessive. Mr. Gilman prepared an affidavit describing applicable U.S. law and attaching publicly available SEC documents. He also attended for an hour and a half examination. The plaintiffs are entitled to file expert evidence but in my view, on the facts herein, the most that can be reasonably claimed for the Gilman affidavit and attendance is $5000 CDN. The total disbursements claim is therefore reduced to $10,375, and with taxes, to $11,724.

[12] In sum, I find it fair and reasonable to fix costs at $125,658 for fees and $11,724 for disbursements for an overall total of $137,382. I recognize that this is a higher than normal costs award for a summary judgment motion but the issues herein were relatively complex, the volume of filed material was substantial, the plaintiffs’ costs outline charged less than was permitted and the defendants themselves suggested that a costs award of $125,592 would be appropriate.

[13] Costs are therefore fixed at $137,382 all-inclusive to be paid by the defendants to the plaintiffs within 30 days. Order to go accordingly.

Belobaba J.

Date: August 18, 2014

[^1]: Teti and ITET Corp. v. Mueller Water Products, 2015 ONSC 4434.