COURT FILE NO.: CV-17-585866-00CL

DATE: 20180607

SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)

RE: Riverview-trenton railroad company, central transport llc, crown enterprises, inc., dibdetroit, LLC, and DETROIT INTERNATIONAL BRIDGE COMPANY, Applicants

AND:

michigan department of transportation, the windsor-detroit bridge authority, michael cautillo, linda hurdle, les martin and Marta leardi-anderson, Respondents

BEFORE: S.F. Dunphy J.

COUNSEL: Emily Sherkey, for the Applicants

Norm Emblem, for the Respondents except MDOT

HEARD at Toronto: In writing

REASONS FOR DECISION - COSTS

[1] On March 28, 2018 I released my Reasons for Decision rejecting an application to enforce Letters of Request emanating from the Circuit Court for Wayne County. The application arose in connection with litigation regarding the construction of the Gordie Howe International Bridge. I invited the parties to make written submissions as to costs by June 1, 2018. They have done so and my decision and reasons follow.

[2] There are two outstanding questions relating to costs of this application. Firstly, the parties agreed to a consent order of Hainey J. dated January 5, 2018 pursuant to which the applicants agreed to pay "the reasonable direct costs associated with collecting and producing the documents". The respondents Windsor-Detroit Bridge Authority et al claim the costs of the limited discovery they agreed to make pursuant to that order. Secondly, I must assess the legal costs of the respondents in responding to this application (the other respondent, Michigan Department of Transportation has settled its claim for costs).

Background facts

[3] The application to enforce the Letter of Request and its background are described in my reasons issued March 28, 2018 and will not be repeated here.

[4] The operative provision of the January 5, 2018 consent order of Hainey J. reads as follows:

THIS COURT ORDERS that the Applicants pay for the reasonable direct costs associated with collecting and producing the documents.

[5] This order arose from an effort to resolve the application. The application was initially supported by an affidavit of Mr. Hutchinson dated November 1, 2017 wherein the applicants offered that they "are prepared to pay for the reasonable direct costs associated with collecting and producing the information requested in the Letters of Request". The respondents were willing to take the applicants up on that offer in respect of some but not all of the documents sought and the consent order emerged. The idea was that following production of the documents the respondents consented to produce, the applicants would consider whether further legal action was needed. Ultimately, they did decide to proceed resulting in my decision of March 28, 2018.

[6] The respondents Windsor-Detroit Bridge Authority et al. submitted evidence of their total actual costs associated with collecting and producing documents responsive to the original Letters of Request of $1,055,628.50, including Canadian and US legal counsel plus third-party vendors retained to assist in clerical tasks associated with assembling, indexing and producing large volumes of documents in the litigation context. From this total, they request $260,888.72 as their "reasonable direct costs" associated with production of documents. This amount represents the total of their own actual Canadian legal fees plus the total of US and Canadian third-party vendor costs.

[7] The respondents' evidence indicates legal costs for responding to the application calculated on a partial indemnity basis of $89,172.26 from the respondents' Canadian counsel and a further $39,540.40 from its US counsel. Despite this, the respondents have advanced a claim for $75,000 all inclusive.

(i) Costs of collecting and producing documents

[8] It is no exaggeration to observe that the business of documentary discovery has evolved into a whole industry unto itself these days. The electronic era has vastly expanded the scope and volume of things that are recorded and preserved on a routine basis. As the costs of storage approaches zero, the volume of things stored approaches infinity. This is not the time or place to consider the broader questions raised by the avalanche of documents modern litigation requires to be generated in terms of access to justice, the implications of asymmetrical discovery obligations, the efficiency of the justice system or the relative costs and benefits of modern discovery. I simply observe that it is neither unusual nor groundbreaking for parties to turn to specialists for help in undertaking the task of collecting and producing documents.

[9] That is what happened here. The respondents turned to third party discovery experts to manage the process of assembling, scanning, indexing, storing, printing and boxing a large volume of documents as a necessary pre-condition to allowing lawyers to review assess and eventually produce them. The underlying project being an international one, the respondents had to undertake this onerous process on both sides of the border using professionals experienced in their local markets. The out-of-pocket non-legal costs claimed under this heading include Kroll Discovery, Polar Imaging Inc., DocuSource Discovery and Commonwealth Discovery who rendered invoices totaling US$148,096.61 (converted to CAD$191,153.67) plus CAD$5,240.30. In addition to these third-party amounts, the respondents' Canadian legal counsel Dentons Canada LLP segregated from their invoices for January through March 2018 the time of the lawyer who actually conducted the review of the documents for production. Her actual billed time charges, including HST, were $64,494.75. The total of the third-party vendor charges plus Dentons' charges for legal fees related to the production of the documents is thus CAD$260,888.72.

[10] The applicants' objections to this aspect of the claim may be reduced to three. Firstly, they suggest that a portion of the claimed expenses preceded the actual agreement to pay them enshrined in the January 5, 2018 order. Secondly, they claim that they should pay only the costs associated with producing the 2,600 documents that were produced and not the costs of reviewing, indexing etc. the unknown number of documents that were not produced. Finally (and related to the second point), they submit that it is simply not reasonable to ask them to pay what amounts to just over $1,000 per document produced.

[11] I am not persuaded by any of these objections.

[12] The January 5, 2018 order is not restricted solely to costs incurred after the date of the order either expressly or by reasonable implication. The documents were not assembled for any purpose other than responding to the demands of the applicants – demands accompanied by legal process first in the United States and then in Canada. Such expenses can only fairly and reasonably be described as the costs of collecting and producing the documents referenced in the order.

[13] I cannot agree that such costs are to be ascertained by an artificial narrowing of the inquiry to some notion of the costs of collecting only the precise documents actually produced rather than the costs of looking at the thousands of documents that had to be examined, considered and eliminated in order to identify them. If the applicants demanded the production of three needles located in haystacks stored in a barn full of hay, they can hardly claim that the costs of producing those needles is restricted to the costs associated only with the one or two bales in which the needles were actually found. Modern electronic discovery routinely demands the review of the entire barn to find needles.

[14] The respondents were required to conduct a thorough discovery process to identify the documents they were able to produce. Thousands were reviewed, 2,600 were identified, collected and produced. Hindsight cannot be deployed to say that the respondents needn't have bothered looking where relevant documents turned out not to be found. The costs of collecting and producing documents includes the costs of finding them, considering them and deciding whether production is required.

[15] I find that the reasonable and direct costs of the respondents in producing documents in response to the January 5, 2018 consent order was $260,888.72 as claimed. The applicants are ordered to pay this sum.

(ii) Costs of responding to this application.

[16] The respondent has itemized partial indemnity costs of Canadian counsel that are considerably in excess of the $75,000 claimed on a partial indemnity basis. Whether some or all of the costs billed by US counsel for responding to a Canadian application are claimable as costs is a moot point even if this particular Canadian application required a very considerable degree of understanding of the US proceedings giving rise to it. The respondents have not claimed those U.S. expenses. However, the respondents may fairly point to their US legal expenses as a component of the overall financial burden of legal costs imposed upon them by this application. Even if unclaimed, these may be considered in connection with the indemnity principle.

[17] The applicants submit that even the $75,000 claimed is unreasonable having regard to the very limited number of issues raised, the lack of any serious dispute over the background facts, the lack of cross-examination and the relatively short hearing time reserved. The respondents produced only a single substantive affidavit and a factum. While the issues were clearly important to the parties, the amount claimed is out of proportion. The applicants own bill of costs, they submit, is evidence of the reasonable expectations of the losing party and they claim that their actual legal costs (or at least those of Canadian counsel) in prosecuting the application were $50,665.11.

[18] The respondents cite Anderson v St Jude Medical, Inc, 2006 85158 (ON SCDC) for the proposition that the loser of a very expensive and important motion cannot be heard to complain that the costs of the other side are outside of the range of what they reasonably expected.

[19] The principles to be applied in fixing costs have been reviewed by many judges in many cases. Lax J. (as she then was) reviews these extensively in Anderson. The reasonable expectations of the losing party are certainly one to be considered, but they are not the only ones.

[20] The importance of the questions at issue is another. The respondents perceived – not without some justification – that the applicants were on something of a fishing expedition. The stakes for the fish are considerably higher than they are for the fishermen.

[21] I am not blind to the fact that a judge in litigation of this sort is seeing only one piece of a multi-layered conflict. Parties related to the applicants own the existing bridge between Windsor and Detroit with an obvious incentive to retain their quasi-monopoly and the associated profits for as long as they can manage. Litigation can legitimately serve more than one purpose without having its bona fides called into question. Related parties to the applicants also have a project of their own to build a second bridge. Litigation from their perspective offers the prospect of gaining access to information that may have competitive utility and, possibly, the additional prospect of delaying a rival project to allow the other to advance. The economic value of either or both of these tactical considerations to the applicants must enter into the equation when considering the reasonable expectations of the one side just as the economic consequences to the respondents of the applicants succeeding in advancing either goal through litigation must enter into consideration when examining the importance of the issues.

[22] As judges, we only see the pieces on the three-dimensional tactical chess board the parties choose to reveal. Without perhaps seeing the entire board, I can see enough of it to appreciate that the issues before me were of very great importance to the respondents and that importance dwarfs the costs incurred here.

[23] The respondents were fully justified in responding forcefully to this application. The expenses were reasonable and proportional to the stakes.

[24] The much smaller amount the applicants were able to settle with the respondent Michigan Department of Transport (the applicant in the Wayne County proceeding) is not informative of anything in my view. The Michigan DOT was a party for the purpose of being bound only and took only a minor role in this application.

[25] I consider that the $75,000 claimed by the respondents for partial indemnity costs in responding to this application to be fair and reasonable having regard to all of the factors I must consider. The applicants are ordered to pay these respondents costs in that amount.

Disposition

[26] In summary therefore, I find:

a. The reasonable costs of these respondents in collecting and producing documents requested by the applicant and referenced in the order of Hainey J. are fixed at $260,888.72 all inclusive.

b. The reasonable costs of these respondents in responding to the application assessed on a partial indemnity basis are fixed at $75,000 all inclusive.

[27] Order accordingly.

S.F. Dunphy J.

Date: June 7, 2018