Court File No. T-1391-14 FEDERAL COURT BETWEE! 1395804 ONTARIO LTD, operating as BLACKLOCK’S REPORTER, Plaintiff -and— CANADA (ATTORNEY GENERAL) Defendant ATTORNEY GENERAL OF CANADA, Department of Justice Caneda Civil Litigation Section 50.0'Cannor, Suite 5000 Otaw, Ontario Pers Alexandre Kaufman Te: 619-670-6204, mal: kaufman justice graOVERVIEW 1. The Crovn seeks a eosts order for 70% of actual costs incurred in this litigation plus disbursements ($115,702.50), oF in the alternative at the high end of column TV of the Tarift ($84,584.98). There are four reasons for this submissions. 2. Firstly, a weekafter receiving the plaintiffs Statement of Claim, the Crown offered to settle this matter for $2,000, which represents more than double the cost of Blacklock’s anual subscriptions for each one of thesix public servants who read the twoattiles that were the subject ofthis litigation, Ths offer was not withdrawn until aftr the trial commenced. Pursuant to Rule 420), the Crom is entitled to double costs (but nat double disbursements) forall the steps that occurred before September 19, 2016. 3. Secondly, the plaintiffs conduct unecessary lengthened the proceeding. ‘The plaintiff refused to answer proper and relevant qucstons on discovery, and filled to comply with ta disclosure obligations. The Crown was requited to bring a motion to compel answers to refusals Prothonotary Tabib described the plaintiffs affidavit of documents to be so “inadequate that it needed to be redone, nd thatthe “way in which it chose to understand question or construed questions was obtuse tothe pont of being obstuctive"* While the plaintif paid the Crown's costs for this motion, the plaintiff's conduct required a second round of discoveries and document productions and needlessly prolonged the action. 4. Thirdly, the plaintiff denied facts that should have been admitted. It denied that the articles were sent to Finance officials unsolicited, and that their distribution was limited to six officials. Notwithstanding the evidence to the contrary, it maintained that the settlements it "Rule 420 ofthe Federal Court Rules, Book of Authorities, Tab A 2 Affidavit of Patricia Suys exhibit “F, Onder dated October 26, 015, Tg91-4‘obtained from other departments and agencies represented the “fair market value” ofits alleged institutional subscription. Finally, it made unwarranted accusations that Crown officials behaved dishonesty. In his ‘opening statement, the plaintiffs counsel deseribed Department of Finance's officials as “mendaeious" and even asked for punitive damages. At paragraph 19 of the Statement of Claim, the plaintiff alleged thatthe Crown oficial’ conduct was unlawfuland was punishable by eiminal sanction. These allegations were spurious and should never have been made. 6. After being served with this Statement of Claim, the plaitif commenced 13 other actions against Federal departments and agencies. ‘The Crown acted reasonably in moving to stay the other actions a focusing its resources om this “testcase”, Since April 2014, the Crown incurred legal costs of $155,259.04 and paid $7,020.98 in disbursements.» Costs beyond the tariff calculated at 70% of actual fees are appropriate and fair given the actual expenses ot this ‘proceeding and the reasonable expectations ofthe parties. Costs should be awarded om the basis, ‘of one senior counsel and one junior counsel. In the alternative, costs should be assessed at the high end of columa TV, which would result in the Crown recovering roughly 50% of actual cost. PART I - FACTS “Early offer to sett 7. Blacklock’'s commenced this action on June 6, 2014. On June 1g, 2014, the Crown offered to settle this action forthe all-inclusive sum of $2,004 "Affidavit of Patricia Sup, exhbits“A", {Affidavit of tec Su, pata 5, and exhibit"8. When the offer was made, a Blacklock’s annual subscription cost $148. The cost of six subseriptions (one for each person who received the two articles) would have cost $888. Examinations for discovery 9. On February 9, 2015, the parties participated in oral examinations for discovery. At the examination, Mr. Thomas Korski, refused to answer any question about the alleged costs of an Institutional lieence, and refused to provide any information about the fees paid by any of its “institutional” liens. 10. The plaintiffs basis for refusing these questions awas that the information vas “proprietary or “commercially confidential” notwithstanding that this not a privilege known tolaw. ‘The Crown's examinetion of Mr. Koski lasted litle under two hours and was adjourned pending the Crown's motion to compel answers and for e further and better affidavit of ocuments:* ui, The plaintiff discovered Mr. Halley for discovery on the same date and that examination lasted one hourand thirteen minutes. 12, Between June 6, 2014 and October 26, 2016, the plaintiff had commenced seven more actions against Federal entities. The Crown sought leave to amend the Statement of Defence to allege that the plaintiff was abusing the Copyright Act, and requested an Order compelling the 5 Affidavit of Patricia Sus, pars 5. ‘Affidavit of Patricia Sus, para 5, and exhibit“Etranseript forthe examination of Thomas Korski dated 19 Februaty 2015 ap, lines 1,525 p3, lines 18; a5 line 1: p37 * amdavit of Parla Sus, para 5, and exhibit “E transerpt forthe examination of Thomas Korski dated, (9 February 2015 at Q 10%; p20, line 20; p50. affidavit of Patricia Sis para 8.plaintiff to comply with its disclosure obligations, and to compel answers to proper and relevant ‘questions that were refused on discovery. 13. On October 26, 2015, Prothonotary Tabb allowed the Crown's motion. She ound thatthe plaintiff construed certain questions in an “unjustifiably narrow and obtuse fashion’, and that its affidavit of documents was “inadequate and in need of being redone” Prothonotary Tabib also held that the way the plaintiff “chose to understand questions or construed questions was obtuse to the point of being obstructive”, She ordered the plaintiff to submit oa follow-up examination for discovery. 14. On December 8, 2015, Mr. Korski attended a second round of discoveries. This second examination lasted § hours and 37 minutes, ‘The plaintiff's original affidavit of documents consisted of only 30 documents. On November 4, 2035, the plaintiff produced seven additional bound volumes as a supplemental affidavit of documents pursuant to Prothonotary Tabib's Order. ‘Motion ta stay proceedings 16, Blacklock’ insisted on having al ofits actions proced simultaneously. For reasons of 5nd economy and efficiency, the Crown brought a motion to stay the other seven eases until this action could be heard. lackock’s opposed this motion but it was allowed. Blacklock’s appeated Prothonotary Tabib’s order and Justice Gascon dismissed its appl, concluding that it ‘was inthe public interest to stay the actions, Justice Gascon held that “the disproportionaliy between the amounts claimed by Blacklock and the resources neede to defend multiple actions ‘raising similar issues" eaused the Crovn prejudice. © ° Affidavit of Patricia Say, pare 5, and exhibit“, Order of Prothonotary Tabib,ps- Affidavit of Patrica Sts, para 1, and exhibit "H’, Order of Justice Gaseon, at para 60,Pretrial conferences 17. On January 29, 2036 and February 29, 2016, the parties filed pre-trial conference memoranda, 38. On March 10, 2016, pre-trial conference was held before Prothonotary Tabib and the ratte was set fr five day til. = 19, On September 19, 2016, the partis attended befor the til judge fora trial management conference. Request to admit 20. The Crown served a request to admit on the plaintiff on March 29, 046. The plaintiff lenied the rth of many fets which were ultimately found at tial, inluding 1 That the articles were sent to Finance officals unsolicited; (fact #85) That the two articles that are the subject to this action were distributed to six ‘people within Finance; (et #87) ‘ Thatthe twoaticles wer distributed out of concern that they were inaccurate and needed correction; lat #88) 21 Moreover, notwithstanding Me. Korski’s admission on discovery thatthe payment from the Privy Council Office constituted a settlement, he reneged on this admission at trial ial 22, The lasted five days, with eight witnesses and ninety-four (94) entered exhibits. "Affidavit of Patricia Suys, ' Affidavit of Patiia Suys, para 17 ‘Alida of Patria Sys, par 1, “ida of Patria Sus, para 18. ‘Alfa of Patiia Suys, para 2.23. The Crown was represented by one senior counsel and one junior counsel while the Inintiff was represented by one senior counsel and one articling student. pl ing PART IIT -LAW& ARGUMENT ‘24, This was an unsuocessfl action, The plaintiff needlessly prolonged the litigation, filed to admit facts that should have been admitted and made unwarranted allegations that Crown olficiats were deceitful and engaged in conduct warranting criminal sanction, It choose not to accept an early and generous offer for more than double the cost of six annual subscriptions, 25, _Allofthe circumstances ofthis eastly ease weigh in favour of an award of costs beyond the ‘Tariff and calculated at 70% ofthe Crown's actual fees and 100% of disbursements, Jump Sum Award 26, Pursuant to Rule 400(4) ofthe Federal Courts Rules, the Court has diseretion to award costs fixed as a lump sum in leu of, or in addition to, directing an assessment This Court has repeatedly held that, asa matter of policy, the Court should favour lump sum orders. Itsaves time and trouble for the parties and it sa more efficient method for them to know what ther lability Is for costs.” ‘Seale of Costs 27. For the reasons set out below, the eireumstances ofthis ease merit an elevated scale of costs beyond the Tariff to achieve a reasonable outcome in Keeping with the reasonable expectations of these sophisticated commercial parties. * Rule 4o0(4 of the Federal Court Rules, Rok of Authorities, Tab A ‘> Barsclex Ine. v, EAN Al Waleed (The), [3999] F.C. No. 2008 (F.C) at par, 11, Book of Authorities, Tab Bi28, The Federal Court of Appeal has commented that the Tariff is itself arbitrary, and departure from it is appropriate where strict adherence will be unsatisfactory in the circumstances." 29, It is now widely acknowledged that the Tariff is too low to adequately compensate successful parties in sophisticated litigation, Recently, the Subcommittee on Global Review ofthe Federal Court Rules recommended that the Tariff be increased to permit higher costs awards in such eases: [A majority ofthe subcommittee would lke to see the costs rule amended in order to allow for a higher quantum of costs to be awarded, when ‘warranted. For example, the current seale of costs inthe Tarif is low and thas litte effet on the conduct of litigation involving large sophisticated parties. 30. Under the Rules of Civil Procedure, by way of analogy, a successful defendant who “beats” its offer to settle against a sophisticated commercial plaintit is entitled to 60% of ts eosts to the date ofthe offer and 90% thereafter. Ths aleulation is considered to accord with the expectations of sophisticated and well-represented litigants 31. The purpose of modern eosts rules isto indemnify the successful partyin respect of its litigation expenses, as wel as to penalize @ party who has refused a reasonable settlement offer and to sanction behaviour that increases the duration and expense of litigation or advances frivolous claims ° Consorio del Proseutto di Parma, 2002 FCA 427, a para. 9, Book of authorities, Tab Ba, Report of the Subeomitte on Gabal Review ofthe Federal Court Rules, October 16,2012, p10, Book. ‘of Authorities, Tab B. 5S Stetson Oi & Ges Led. v Stfl Neolaws Canada Inc, 2013 ONSC 5239 a para. 25 Think it appropriate to aard costs at 60% of the time charged fr partial indemnity costs and 90% fr substantial indemnity ests for tie work after the offer to sstle”), Hook of Authorities, Tab B 2" British Columbia (Minister of Forests) v. Okanagan Indian Band, [2008] S.C. No. 76 at paras. 22-26, Book of Authorities, Tab Bs,32. Whilea common practices for the Court to award costs in accordance with Column IL of ‘Tariff B of the Federal Court Rules, the Court may go beyond the Tariff in order to achieve a reasonable outcome * In Ultima Foods in. Justice Simpson acknowledged the importance of predictability and certainty thatthe Tariff helps maintain, but eld that even an award of costs ‘under Column V was inadequate to compensate the successful party for its vindication :® 33: Similarly, the circumstances of this proceeding merit an elevated award of costs amounting to 70% of the Crovsn's actual costs (slightly more than partial indemnity) in order to adequately compensate the successful party and achieve the purposes of modern costs rules. Rule 400 factors 34. Role 400 of the Federal Court Rules sets out factors that are tobe taken into account in the determination of costs award.** Among other things, the following factors should be considered: the amounts claimed and the amounts recovered; 2. the complexity of the issues; the amount of work; any written Offer to Setle; and any conduct of a party that tended to shorten or unnecessarily lengthen the duration ofthe proceeding. 35. _Allof these factors weigh in favour ofa higher award of costs to the defendant in this case i) The trial should never have occurred in the fist place as a result ofthe Crown's Offer to Settle; > Ultima Pods Ine v. Canada (Attorney Genera), 2013 PC298 at para. 29, Book of Authorities Tab Bo, Ultima Foods ne, supra at para. 25, Book of Authorities Tab BO. % Rule 400() of the Federal Cour Rules, Book of Authorities Tab Aii) While the amount claimed in this action was modest, the plaintiff aimed {$601,892.11 in all the actions it instituted. Tt was reasonable for the Crown to ‘vigorously defend this “test ease”, iil) The plaintif opposed the Crown's requests to streamline thislitgation. This Court ‘ultimately found that it wa the public interest to stay the plaintiffs other actions ‘and thatthe disproportionate costs of defending an action relative to the amounts laimed was prejudicial to the Crown, jv) The action involved novel areas ofthe law and fair dealing had never been applied in the contest of government officials responding to media requests. Given the ‘extent of the discovery and pre-trial procedures, and the length of tral that this “unsuccessful action required, this is an appropriate case to award increased costs ‘beyond Column II, and on the basis of one senior counsel and one junior counsel {orall pretrial procedures. 36. Inaddition toall ofthe factors that cal fran elevated scale of cost in this ease, the Crown, is entitled to double that rate between June 13, 2014 and September 19, 2016. Rule 420(2}(6) of the Federal Courts Rules provides that: ‘Where a defendant makes a written offer to settle, ifa plaintiff fails to obtain a judgment, the defendant is entitled to party-and-party costs tothe date ofthe serviee of the offer and the costs calculated at double that rate, but not double disbursements fom that date to the day tothe day of judgment =° Agreed Statement of Facts, Court file Trg9i-ng, para 42. Rule 420(2() of the Federal Court Rules, ook of Authorities Tab Ax,‘37 Ondune xg, 2014, the Crown served an Offer to Settle by which itagreed to pay the plaintiff $2,000. The Offer remained open until the commencement ofthe trial. If accepted, the Offer ‘would have brought the dispute to an end, 38. After over two years of litigation, the Crown had incurred significant legal costs. Its offer to forego its entitlement to costs and disbursements incurred over more than two years constituted a significant compromise»? 39. The plaintiff did not accept the Crown's Offer It must now live with the consequences of ‘that decision, which entitles the Crown to double costs. 40. The amounts requested are in keping with other costs orders inthis cout for tals of comparable length. In Mercury Launch & Tuy Led. . Texada Quarring Ltd, this Court assessed costs at $88,369.73 following an eight day tral. In Carietne Ventures v, Zt Holdings day Ltd, 2 this Court assessed costs at $98,648.79 following a intellectual property trial, RELIEF REQUESTED 41, The Crown seeks an order of costs in the amount of $15,702.90, representing 70% ofits actual costs plus disbursements, or in the alternative atthe high end of eolumn IV of the Tariff: $84,584.08, ALL OF WHICH IS RESPECTFULLY SUBMITTED ‘Alexandre Kaufman 1 Mercury Launch & Tug Ltd. V, Texada Quarring L1d, 2009 FC 331, Book of Authorities Tab B. ‘ Careline Ventures v Zaty Holdings Ld, 2008 FCT 134, Book of Authorities Tab BB