Ottawa, Ontario, January 30, 2006
PRESENT: The Honourable Mr. Justice O'Reilly
BETWEEN:
and
THE OSHAWA GROUP LIMITED, SOBEYS INC., ALIMENTATION BLANCHETTE ET CYRENNE INC., MARCHÉ ALAIN LARIVIÈRE INC., MARCHÉ JIMMY INC., MARCHÉ RÉAL CHARTIER INC., 9063-8867 QUÉBEC INC. c.o.b.a. MARCHÉ JULIEN, ARSENE GAUDREAULT INC., and 2959-1120 QUÉBEC INC. c.o.b.a. GROSSISTE DE L'ENCAN
REASONS FOR ORDER ANDORDER
[1] The plaintiff brought an action against the defendants for trade-mark infringement. The plaintiff was unsuccessful at trial and appealed to the Federal Court of Appeal. Its appeal was dismissed on October 25, 2005. The Federal Court of Appeal remitted the matter to me as trial judge to provide directions to the taxing officer on costs, or to resolve the outstanding cost issues myself. I requested written submissions from the parties on those issues.
I. Issues
[2] The Federal Court of Appeal specifically asked me to provide directions on the impact of an offer to settle that the defendants made on October 2, 2003. In addition, the following cost issues remain to be resolved:
· Counsel fees - both the level to be awarded and the question whether the defendants should be compensated for the participation of a second counsel;
· Expert witness fees - whether the defendants should be compensated for an opinion obtained from an expert who did not testify;
· Photocopying costs and agency fees - whether the amount set out in the defendants' draft bill of costs is excessive.
[3] Having received submissions on these issues, I will provide the assessment officer with the following directions.
II. Analysis
1. The defendants' offer to settle
[4] Rule 420(2)(b) of the Federal Courts Rules, 1998, SOR/98-106 sets out the consequences of an unsuccessful plaintiff's failure to accept a defendant's offer. The defendant is entitled to double its costs from the date of the offer until the date of the judgment. Until recently, this rule stipulated that the offer must not be revoked. Some judges interpreted that requirement strictly and refused to apply the rule to offers that expired at the commencement of the trial: Francosteel Canada Inc. v. African Cape(The), [2004] 4 F.C. 284 (F.C.A.); Halford v. Seed Hawk Inc., [2004] F.C.J. No. 1541 (F.C.) (QL). Others have recognized that such offers qualify under the rule: Monsanto Canada Inc. v. Schmeiser, [2002] F.C.J. No. 455 (T.D.) (QL). The rule has recently been amended to make clear that offers that remain open until the beginning of the trial can give rise to double costs (P.C. 2005-1945).
[5] Here, the defendants offer to settle expired "one minute after commencement of the hearing of this action." I feel bound by the interpretation given to Rule 420 by the Federal court of Appeal in Francosteel, above, and must, therefore, conclude that the defendants' offer to settle does not qualify for double costs. However, I also recognize that I can take the offer into account within my overall discretion regarding costs under Rule 400: Halford, above.
[6] In my view, the defendants' offer was unequivocal and contained some elements of compromise. The defendants offered not to use any trade-mark or trade-name containing the word "Tradition" anywhere west of Quebec, and not to use the word "Tradition" alone in respect of any wares described in the plaintiff's trade-mark registrations.
[7] In the circumstances, the defendants' offer should increase its costs, excluding disbursements, by a factor of 1.3, rather than double them.
2. Counsel fees
[8] The defendants submit that they should be entitled to recover costs for two counsel, one at the upper end of Column III of Tariff B and the other at 50% of that rate. Having regard for the factors set out in Rule 400(3), particularly the importance and complexity of the issues, the outcome of the trial and the amount of preparatory work involved, I am satisfied that two counsel were required and that the costs of the more senior should be assessed at the upper end of Column III. The second counsel's fees should be assessed at 50% of the assessment for the senior counsel.
3. Expert witness fees
[9] The defendants engaged an expert to assist them in responding to the plaintiff's expert evidence. The defendants' expert prepared a report and met with counsel to discuss the cross-examination of the plaintiff's expert. However, the defendants' expert did not testify. The decision not to call the expert to the stand was made after cross-examination of the plaintiff's expert.
[10] Having reviewed the expert's report, I am satisfied that it formed the foundation for the cross-examination of the plaintiff's expert and, ultimately, for my conclusions regarding the expert testimony. In my view, the defendants are entitled to include their expert's fees in their disbursements. However, I would not indemnify them for the full amount of the expert's fees, given that his written report was never placed before the Court and his testimony was not required. I would limit this disbursement to $32,500.00 (plus expenses and GST), being the amount of the expert's fees for preparing his report and for one day of meetings with counsel.
4. Photocopying costs
[11] The defendants include in their draft bill of costs an amount of $2,676.30 for in-house photocopies, as well as an amount of $12,712.72 for agency charges, including external photocopying. Regarding the former, the amount is based on a rate of $0.15 per page for 17,842 pages. This strikes me as an unusually large quantity and too high a rate. I would limit this disbursement to $1,000.00.
[12] Regarding the agency charges and external photocopies, I have too little information before me to judge whether it is a valid disbursement. The amount of $12,712.72 seems excessive, but I will leave it to the assessment officer, if the parties cannot reach a compromise, to determine the appropriate amount.
ORDER
THIS COURT ORDERS that:
1. The defendants' fees for services rendered between October 3, 2003and July 20, 2004 be increased by a factor of 1.3;
2. The defendants' costs should be assessed at the upper end of Column III of Tariff B;
3. The defendants are entitled to assess the fees of a second counsel at 50% of the rate for senior counsel;
4. The defendants are entitled to recover their expert witness fees in the amount of $32,500. (plus expenses and GST); and
5. The defendants are entitled to recover $1,000.00 for the costs of in-house photocopies.
"James W. O'Reilly"
FEDERAL COURT
NAME OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2112-99
STYLEOF CAUSE: TRADITION FINE FOODS LTD. v. THE OSHAWA GROUP, ET AL
MOTION DEALT WITH IN WRITING WITHOUT APPEARANCE OF PARTIES
REASONS FOR ORDER
APPEARANCES:
Gregory A. Piasetzki FOR THE PLAINTIFF
Sam El-Khazen
Arthur Renaud FOR THE DEFENDANTS
SOLICITORS OF RECORD:
Piasetzki & Nenniger LLP. FOR THE PLAINTIFF Toronto, Ontario
tOTTT
Bennett Jones LLP FOR THE DEFENDANTS
Toronto