COURT FILE NO.: 06-23359
DATE: 20210111
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Canada Forgings Inc.
Plaintiff/Responding Party
– and –
Atomic Energy of Canada Limited
Defendant/Moving Party
Geoff R. Hall, Mira Novek, and Madeleine Brown, for the Plaintiff/ Responding Party
Roger J. Gillott and Catherine Gleason-Mercier, for the Defendant/Moving Party
HEARD: In Writing
COSTS DECISION
THE HONOURABLE JUSTICE L. C. SHEARD
Overview
[1] The defendant, Atomic Energy of Canada Limited (“AECL”), moved successfully to strike the jury notice served by the plaintiff, Canada Forgings Inc. (“CanForge”).
[2] The motion was brought in writing and without affidavit evidence; the material on the motion was comprised mainly of the pleadings in this and a related action, and orders and judgments made earlier in the proceedings.
[3] AECL advanced three main grounds in support of its motion to strike the jury notice:
The action was too complex for a jury.
As a federal Crown corporation and Crown agent, a jury trial against AECL was not permitted; and
Canforge’s position that the limitation period is tolled based on fraudulent concealment constituted equitable relief and under s. 108(2)(1)(xi) of the Courts of Justice Act, an action in respect of a claim in which equitable relief is claimed shall be tried without a jury.
[4] On the basis of the first two grounds advanced by AECL, I struck the jury notice. I did not accept the third ground put forth by AECL.
[5] In finding that the action was too complex for a trial, I considered, in part, the position that had been taken by Canforge in response to AECL’s 2013 motion for summary judgment that “the issue is a factually complex one for which a full appreciation of the evidence cannot be obtained on a paper record”. I did not accept CanForge’s assertion on this motion that the evidence in this case is not technical and complex, and that the factual chain of events is straightforward; I found otherwise.
[6] I also considered the observations made by other judges who had been involved in this matter: Matheson J. Arrell J. and Carpenter-Gunn J., who had noted the complexity of the issues for trial. After conducting a six-day motion for summary judgment brought by AECL, which he dismissed, Matheson J. stated that the issues for trial were complex legally and factually[^1]. A similar view was expressed by Arrell J., who refused to grant AECL leave to appeal Matheson J.’s dismissal of the summary judgment motion; he noted that the action was a very “complex and complicated matter”.
[7] I found the pleadings to be complicated and that the issues raised would require the trier of fact to understand the tendering process involving a federal Crown agent, and, given AECL’s limitation period defence, the trier of fact would also be called upon to consider factual and legal issues relating to duties owed by Canforge or its lawyers to inform themselves of Canforge’s claim of breach of duty of fairness.[^2]
[8] On the second ground put forth by AECL - that a jury trial was prohibited by operation of the section 26 of the Crown Liability and Proceedings Act, R.S.C. 1985, c.C-50, - the court was asked to consider a significant body of jurisprudence concerning the availability of jury trials in actions against a Canadian Crown corporation.
Positions of the Parties
[9] AECL seeks its costs on a substantial indemnity basis in the amount of $80,461.65 or, in the alternative, $61,175.38 on a partial indemnity basis.
[10] AECL’s submissions focused on two of the factors listed under at r. 57.01(1): the complexity of the motion and the conduct of Canforge.
[11] AECL submits that i) the complexity of the motion justified the time spent by AECL counsel and accompanying costs, and ii) Canforge acted unreasonably in refusing to withdraw its jury notice and requiring AECL to bring this motion, especially in view of the likely delay in the hearing of a jury trial, due to the impact of COVID-19 on the scheduling of jury trials.
[12] Canforge submits that the costs claimed by AECL are “unreasonable, disproportionate and far exceeds what the unsuccessful party could have reasonable expected to pay for a motion of this type.” Canforge submits that a cost award of $15,000, on a partial indemnity basis, would be fair and reasonable.
[13] Canforge’s arguments on costs include that: 1) costs should be awarded on a partial indemnity basis; 2) no costs should be awarded for the preparation of costs submissions; 3) Canforge should not be penalized with substantial indemnity costs for refusing to “forfeit” its right to a jury trial due to the impact of COVID-19 – an argument that was not advanced by AECL; 4) substantial indemnity costs are the exception, and reserved for cases in which there has be “reprehensible, scandalous, or outrageous conduct” (Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 SCR 3 (SCC), at p. 134.); and 5) and excessive number of hours was docketed, and also, excessive time was docketed by senior counsel, when much work ought to have been delegated to the junior counsel, who also worked on the brief.
[14] Canforge invites the court to compare its Bill of Costs, which records fees, disbursements and HST of $45,538.72 on a substantial indemnity rate and $30,359.15 on a partial indemnity rate to AECL’s Bill of Costs. The latter shows costs on a substantial indemnity rate at $80,461.65, which includes $7,508.85[^3] for preparation of the costs submissions and $61,175.38 on a partial indemnity rate.
The Law
[15] The general principles applicable to party and party costs are well settled. The successful party is presumptively entitled to its costs, which are in the discretion of the court. (Courts of Justice Act, RSO 1990, c. C.43, s. 131(1) “the CJA”)
[16] Rule 57.01 of the Rules of Civil Procedure sets out factors I may consider in exercising my discretion. Overall, the objective is to fix an amount that is fair and reasonable, having regard for, among other things, the expectations of the parties concerning the quantum of costs: Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (ON CA), [2004] O.J. No. 2634, 71 O.R. (3d) 291 (C.A.) at paras. 26, 38.
[17] Certain general principles have now been expressly articulated in Rule 57.01: the principle of indemnity; the amount of costs that the unsuccessful party could reasonably expect to pay; the complexity of the proceeding; the importance of the issues; and the conduct of any party.
[18] Boucher, a leading authority, makes clear that in assessing costs, the overriding principle is that of reasonableness (at para. 27).
Analysis
[19] Applying the principles of reasonableness and expectations of the parties as per Boucher, the starting point of my analysis is a consideration of the time/fees of each party on this motion. By any measure, the fees incurred by each party are significant. That observation is particularly so given that the motion was in writing and did not require the preparation of affidavits and/or the cross-examinations on them that often increase legal costs. The time spent by the parties was primarily on legal research and the drafting of the legal arguments (facta) applying the law to the facts and circumstances of this case, as seen through its litigation history and framework.
[20] As stated in my Decision on the Motion, AECL was the successful party and is presumptively entitled to its costs. That AECL succeeded only on the first two grounds it advanced and not on the third ground does not detract from AECL’s success. Canforge’s submission that AECL had “mixed success” on the motion is simply not accurate.
[21] It is true that AECL’s fees exceeded those of Canforge. As the moving party, AECL carried a heavier burden than Canforge and, as such, it is reasonable to expect that AECL’s fees would be higher than those of Canforge.
[22] AECL’s Bill of Costs also includes time spent on its costs submissions. I do not accept Canforge’s submissions that it was inappropriate for AECL to have included that time. The determination of costs is important to the parties and the costs submissions were requested by the court. I see no principled basis to exclude the time spent on costs submissions in my determination of costs.
[23] I accept AECL’s submissions that aspects of the motion were complex.
[24] I do not accept AECL’s submission that it is entitled to costs on a substantial indemnity basis because Canforge did not withdraw its Jury Notice in light of the impact on the scheduling of the trial by reason of COVID-19. Firstly, AECL did not advance that argument on the motion. Secondly, until recently, there has been no caselaw respecting how a pandemic does or ought to affect a party’s right to have its civil trial heard by a jury. In light of the uncertain and changing landscape on that issue, I cannot conclude that Canforge was acting unreasonably in not giving up on its wish for a jury trial prior to AECL’s motion or afterward. To date, there has been no definitive appellate decision on the issue.
[25] I find that AECL’s costs should be awarded on the usual partial indemnity basis.
[26] Canforge asserts that too much time was spent by senior counsel on behalf of AECL and that most or more of the legal work should have been performed by a more junior lawyer or charged at the more junior lawyer’s hourly rate. I am of the view that the principles in Boucher respond to Canforge’s assertion: regardless of who performed the work, the court’s task remains the same - what is a fair and reasonable amount to fix for costs?
[27] I am of the view that it is reasonable to use Canforge’s partial indemnity costs as a reference point: both parties are represented by a legal team in large, top tier, Toronto firms. I would increase that figure by a reasonable amount to reflect the extra time incurred by a moving party. I also include an amount for the preparation of the costs submissions, which are not included in Canforge’s Bill of Costs. With those notional adjustments in mind, I conclude that, as the unsuccessful party, Canforge could have reasonably expected to pay partial indemnity costs of no less than $40,000.
Disposition
[28] While Canforge’s Bill of Costs is a reference point, it is not the only consideration. I conclude that after applying the applicable r. 57 factors and the Boucher principles, to exercise my discretion under the CJA to fix AECL’s costs of this motion at $42,000, on a partial indemnity basis, inclusive of fees, disbursements and HST.
Date: January 11, 2021 Justice L. Sheard
COURT FILE NO.: 06-23359
DATE: 20210111
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Canada Forgings Inc.
Plaintiff/Responding Party
- and –
Atomic Energy of Canada Limited
Defendant/Moving Party
COSTS DECISION
Released: January 11, 2021
[^1]: Reasons for Decision, November 26, 2020, 2020 ONSC 7310, at paras. 25-28.
[^2]: Reasons, at pars. 61, 62.
[^3]: Inclusive of HST.