COURT FILE NO.: CV-21-661011
DATE: 2022 05 17
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MEDIATUBE CORP., Plaintiff
- and -
BELL CANADA, Defendant
BEFORE: Associate Justice Todd Robinson
COUNSEL: S. Mason and J. Holtom, counsel for the defendant (moving party)
R. Chapman, counsel for the plaintiff (responding party)
HEARD: In writing
COSTS ENDORSEMENT
[1] Costs from the prior confidentiality motion before me have not been resolved between Bell Canada (“Bell”) and MediaTube Corp. (“MediaTube”). Each party has filed costs submissions. Having considered those submissions, I am awarding Bell its partial indemnity costs of the motion fixed in the amount of $28,570, including HST and disbursements.
Leave for additional costs materials
[2] In my reasons for decision, I provided what I believed to be straightforward directions on costs. I directed that the parties’ costs submissions would be made in writing with written submissions not to exceed four pages per party, excluding offers to settle and case law. I provided a timetable for those submissions and directed that there be no reply submissions absent leave.
[3] Bell served its four-page costs submissions in compliance with my directions. MediaTube thereafter served its four-page responding costs submissions by the deadline set, but served those submissions with an additional affidavit of Douglas Lloyd sworn February 11, 2022. When MediaTube sent its costs submissions to my Assistant Trial Coordinator (ATC), it included a letter requesting leave to introduce the affidavit as support for MediaTube’s reasonable expectations on costs.
[4] A few hours after MediaTube’s responding costs submissions and affidavit were submitted, Bell submitted a two-page letter to the attention of my ATC requesting leave to file written reply submissions. The letter then continued with the reply submissions.
[5] By requesting leave, both MediaTube and Bell clearly understood that they were making submissions outside the scope of my order for costs submissions. Nevertheless, both unilaterally proceeded to do what they wanted without first seeking and obtaining leave. No reasons have been provided for why leave was not first sought and the additional submissions withheld pending leave being granted. In my view, proceeding to take steps that evidently required leave without first obtaining leave was inappropriate.
[6] If MediaTube felt that a supporting affidavit was required in addition to the four pages of written submissions permitted by my directions, then the proper course would have been to first contact Bell for its position on leave and, if necessary, arrange a case conference with me to resolve any dispute. Bell evidently objects to the affidavit. Similarly, Bell ought to have known that asking for leave concurrently with filing reply submissions was no different than preparing and filing reply submissions without leave.
[7] Unilaterally proceeding to make submissions beyond the scope of clear directions given by the court is improper. Counsel ought to know better. Accepting either submission in these circumstances would, in my view, be condoning such conduct. I am accordingly denying leave for both MediaTube’s post-motion affidavit on its costs expectations and Bell’s unilateral reply submissions. I have thereby considered neither of them in my determination on costs.
[8] That said, I cannot ignore that Bell has identified an exhibit to Mr. Lloyd’s affidavit that is a document previously marked by Bell as containing confidential information pursuant to the protective order issued by the Federal Court. It is thereby subject to the procedure ordered in my reasons for decision. Bell accordingly asks that the exhibit be held confidentially under seal. I need not do so. Since I have denied leave for Mr. Lloyd’s affidavit, to the extent it has been placed in the electronic court file, I am ordering that it be expunged and deleted.
Positions of the parties on costs
[9] Bell seeks its costs of the motion in the amount of $54,000, inclusive of HST and disbursements. Bell submits that it was entirely successful on its motion, including successfully opposing MediaTube’s adjournment request, and that MediaTube ought not to have opposed the motion at all. Bell further submits that it attempted to settle costs of the motion, but those efforts were met with silence from MediaTube.
[10] MediaTube submits that a costs award should be no greater than $3,000, in line with the prior costs award made by Locke J. in the Federal Court: MediaTube Corp. v. Bell Canada, 2018 FC 355 at para. 29. MediaTube characterizes Bell’s motion as an identical motion to that previously argued before Locke J.
Guiding legal principles
[11] I am afforded broad discretion to fashion a costs award that I deem fit and just in the circumstances by virtue of s. 131 of the Courts of Justice Act, RSO 1990, c. C.43 and Rule 57.01 of the Rules of Civil Procedure, RRO 1990, Reg 194. Rule 57.01 sets out a non-exhaustive list of factors to be considered in exercising my discretion. They are in addition to considering the result and any offers to settle. Rule 1.04(1.1), which is also applicable, requires that I make orders that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.
[12] There is no dispute that the overall objective in deciding costs is to fix an amount that is fair and reasonable in this proceeding, having regard to the expectations of the parties concerning the quantum of costs: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 OR (3d) 291 (CA) at paras. 26 and 38. Costs awards are to reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), [2002] OJ No. 4495 (CA) at para. 4; Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 52.
Scale of costs
[13] I deal first with the scale of Bell’s claim for costs, which it describes as “approximately two-thirds of its actual costs – little more than partial indemnity and far less than substantial indemnity.” The case law provided by the parties is dated. There are more recent appellate decisions addressing scale of costs that, in my view, are not contentious.
[14] Partial indemnity costs are the normal scale for costs following an event. The Court of Appeal has held that amounts calculated at 55%-60% of a reasonable actual rate might more appropriately reflect partial indemnity costs than the now-dated Information to the Profession on Rule 57 costs, particularly in the context of two sophisticated litigants well aware of the stakes: Inter-Leasing, Inc. v. Ontario (Revenue), 2014 ONCA 683 at para. 5. Costs on a heightened scale of substantial or full indemnity are justified in only very narrow circumstances, namely where an offer to settle is engaged or where the losing party has engaged in behaviour worthy of sanction. Substantial indemnity costs are normally awarded to express the court’s disapproval of a party’s conduct, while full indemnity are reserved for conduct that is especially egregious: Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766 at para. 8.
[15] Bell’s costs claim is higher than partial indemnity based on its actual legal costs. I agree, though, that it is less than substantial indemnity costs, which per Rule 1.03(1) is 1.5 times what would otherwise be awarded on a partial indemnity basis. However, Bell’s costs claim is still an elevated one. Bell asserts it is justified because Bell should not have had to bring its confidentiality motion on a contested basis, since MediaTube already unsuccessfully challenged Bell’s prior confidentiality motion in the Federal Court. Bell submits that MediaTube never had any legitimate basis to oppose Bell’s motion, since the sole purpose of the motion was to restrict the public’s access to Bell’s confidential information, not MediaTube’s access.
[16] I am not convinced that elevated costs are warranted. Issue estoppel was raised and argued by Bell in the motion before me on the basis that the same confidentiality issues were already decided in the Federal Court proceedings. I held that issue estoppel did not arise, because confidentiality was only a procedural issue implicated by and raised in those proceedings. I did ultimately agree with Locke J.’s views on confidentiality of Bell’s documents and afforded deference to his determination. However, that does not equate to MediaTube’s opposition of a further confidentiality order in a separate, subsequent proceeding being unreasonable and warranting some sanction by the court through a heightened costs award.
[17] In Sherman Estate v. Donovan, 2021 SCC 25, the Supreme Court of Canada highlighted the importance of court openness and the need for the court to be cautious about making orders that limit the open court principle. Confidentiality orders do just that. Although MediaTube was unsuccessful in its opposition to Bell’s motion, I do not view MediaTube’s opposition to a fresh confidentiality order in a new proceeding in a different court as warranting disapproval by the court. I am mindful that, despite Bell’s position that this proceeding deals with the same subject matter as the Federal Court proceedings, that characterization is disputed by MediaTube. MediaTube’s position is that this proceeding deals with separate, subsequent intellectual property infringements.
[18] Another basis for elevated costs is offers to settle. Bell notes that it attempted to settle costs, but MediaTube did not respond. However, there are no details of what efforts or offers, if any, were made. The fact of an attempt to settle costs, without those details, does not assist Bell in its position on entitlement to elevated costs.
[19] MediaTube suggests that referring to an offer “offends” Rule 49.06 and that “there must be a severe result to the party breaking the Rule.” I give no effect to that submission. Rule 49.06 prevents communication of an offer to the court, or filing of an offer, until all questions of liability and the relief to be granted have been determined, other than costs. I have determined all relief on Bell’s motion, other than costs. Rule 49.13 also expressly provides me with authority to take into account any offer to settle when deciding costs. There is accordingly nothing inappropriate about Bell disclosing offers to settle at this time. While Bell’s reference to having made efforts to settle does not assist its position, it also does not hurt it.
Rule 57.01 factors
[20] I have considered the relevant factors in Rule 57.01 in exercising my discretion on costs. Although I do not intend to go through every factor in detail, I do wish to specifically discuss several of the arguments raised by the parties.
[21] MediaTube suggests that its reasonable expectation for unsuccessful opposition to Bell’s motion was for a similar costs award to that made by Locke J. in the prior confidentiality motion in the Federal Court, namely $3,000. MediaTube also submits, in any event, that Bell’s costs claim is unreasonable.
[22] I agree with MediaTube’s submission that costs must not only be reasonable, but also fair to the losing party, and that MediaTube’s reasonable expectations must be taken into account: Smith v. Ontario Human Rights Commission, 2005 CanLII 19790 (ON SCDC) at para. 2. However, I give no effect to MediaTube’s submission that an adverse costs award of $3,000 was a “reasonable” expectation.
[23] Locke J.’s costs decision has no binding effect in my determination on costs of this motion. The reasons for his decision on costs are brief. His discretion in awarding costs was governed by the Federal Court Rules, SOR/98-106. While Rule 400 of the Federal Court Rules includes similar factors to Rule 57.01 of the Rules of Civil Procedure, it is not clear from Locke J.’s reasons how he determined that $3,000 was an appropriate quantum for a costs award. I accordingly give Locke J.’s prior costs award little weight in my own discretionary decision.
[24] MediaTube’s own costs outline discloses costs in excess of Bell’s claimed amounts, namely $45,559.58 on a partial indemnity basis and $75,931,15 on a substantial indemnity basis (although appearing to be MediaTube’s actual costs). Its costs outline does raise the $3,000 costs award from the prior motion in the Federal Court, suggesting that it is an appropriate amount because Bell “should not have had much work to do to prepare for the within motion.” MediaTube submits that its own costs should not be a reference point for fixing costs of the motion because MediaTube’s counsel on this motion was not the same counsel appearing in the Federal Court. As a result, MediaTube “had to respond ‘ab initio’ to the Bell motion.” MediaTube also submits that Bell’s motion is a second, identical motion to its prior motion in the Federal Court, so only a nominal award should be made for costs.
[25] I have difficulty with MediaTube’s submission that it genuinely expected a costs award to be no more than $3,000 when its own actual legal fees on the motion exceeded $75,000. I accept that MediaTube’s costs are higher than those of Bell because MediaTube’s current counsel was not its counsel in the Federal Court proceedings. Nevertheless, both parties’ costs outlines contain signed lawyers’ certificates confirming that the hours claimed have been spent, that the rates shown are correct, and that each disbursement has been incurred as claimed. Those certificates were made about the costs incurred for this motion. To accept MediaTube’s submission that Bell should not have had much work to do disregards that the lawyers on both sides have certified that similar hours and fees have been incurred for this motion. I am not satisfied that Bell’s legal costs on this motion were clearly redundant.
[26] In my view, since MediaTube’s own legal fees incurred in response to this motion are greater than those of Bell in bringing it, I find that, as between these parties, a costs award in ballpark of what is claimed by Bell was within the reasonable expectations of both sides.
[27] That does not mean, though, that Bell’s total costs claim is reasonable and should be awarded. MediaTube argues that Bell’s extensive motion materials were excessive. I agree. Bell’s motion was booked, confirmed, and argued as a 2-hour short motion. Nevertheless, Bell prepared and served a motion record in excess of 3,000 pages divided into 14 volumes. It further served a supplementary motion record and two facta. Much of the material in Bell’s motion records was not referenced in its arguments nor, in my view, was it necessary to advance Bell’s position.
[28] Partial indemnity rates claimed by Bell are also quite high and inconsistently calculated for the lawyers, clerk, and articling student. The partial indemnity rates for the partner, clerk, and articling student are calculated at 60% of the actual rate, while the rate for the associate’s time is calculated at 49% of his actual rate. Those actual rates are significant. For example, the actual rate of Bell’s lawyer, James Holtom, who was called in 2014, significantly exceeds the actual rate of MediaTube’s lawyer, Ronald Chapman, who was called in 1972. Although limited time is claimed by Bell for time spent by Steven Mason, who was called in 1994, his actual rate is nearly double that of Mr. Chapman.
[29] As discussed above, the Court of Appeal has suggested that 55-60% of a reasonable actual rate may appropriately reflect partial indemnity costs as between two sophisticated parties. Bell is entitled to its counsel of choice. However, that does not mean that MediaTube is obliged to pay costs calculated from the actual rates of Bell’s chosen lawyers. I must still consider overall proportionality and reasonableness.
[30] Overall, taking into consideration my view that Bell’s motion materials were excessive for the nature of the motion, I find that the hours spent and rates claimed are beyond what is reasonable and proportionate in this case. However, in my view, the importance of the disputed issues and the complexities of the motion both support that it was reasonable to spend greater time preparing for and arguing this particular motion than one might generally expect for a similar confidentiality motion.
[31] I accept Bell’s submission that the issues on the motion were very important to it. It sought the confidentiality order to protect against harm to its commercial interests that may result from public disclosure of the commercially sensitive and proprietary information that Bell was obliged to disclose in the Federal Court proceedings and that it will similarly be obliged to disclose in this proceeding. As I held in my reasons for decision, proprietary information and trade secrets are hallmarks of business competition in the open commercial market. Staunch defence of Bell’s confidentiality ought reasonably to have been anticipated by MediaTube, particularly in circumstances where Bell was only arguing for restricted public access to the documents and was not arguing that MediaTube should itself be prevented from using the confidential information and documents in this litigation.
[32] Both sides also submit in their costs outlines that the issues on the motion were complex. I agree. The motion required a myriad of issues to be resolved, including the impact of prior decisions in the Federal Court in this proceeding.
Timing of payment
[33] I am not convinced by MediaTube’s argument that costs should be in the cause. I find no basis in the circumstances of this case to vary from the general rule that costs should follow the event and be payable forthwith.
Disposition and Order
[34] For the foregoing reasons, and having weighed the factors in Rule 57.01, I find that the fair and reasonable amount of costs payable by MediaTube to Bell in respect of this motion is $28,570, comprised of $25,000 in legal fees, plus HST, on a partial indemnity basis, plus the sole claimed disbursement of $320 for the motion fee.
[35] I accordingly order as follows:
(a) Leave to introduce the affidavit of Douglas Lloyd sworn February 11, 2022 is denied.
(b) Leave for reply submissions by Bell is denied.
(c) If the affidavit of Douglas Lloyd sworn February 11, 2022 has been added to the public court file, then it shall forthwith be expunged and deleted from the public court file and court staff are hereby so directed accordingly.
(d) MediaTube shall pay to Bell its partial indemnity costs of the motion fixed in the amount of $28,570.00, including HST and disbursements, payable within thirty (30) days.
(e) This order is effective without further formality.
ASSOCIATE JUSTICE TODD ROBINSON
DATE: May 17, 2022