Date: 20020930
Dockets: T-1709-90
T-1710-90
T-1711-90
T-1712-90
Neutral Citation: 2002 FCT 1022
Ottawa, Ontario, September 30, 2002
Present: The Honourable Mr. Justice Blais
BETWEEN:
SEASPAN INTERNATIONAL LTD.
Plaintiff
and
HER MAJESTY THE QUEEN
Defendant
REASONS FOR ORDER AND ORDER PURSUANT TO COSTS
RELEVANT FACTS
[1] On February 10, 2000, Prothonotary Hargrave by order set out a schedule for trial of the present case which included a provision that pre-trial motions should be heard by May 12, 2000.
[2] In February of 2001, the defendant decided that she wished to amend her pleadings after determining that the plaintiff was an end-user and therefore had not directly paid or remitted excise tax to the Minister.
[3] At a case management conference heard on June 1, 2001, Prothonotary Hargrave determined that the effect of the order of February 10, 2000 was to negate the possibility of further motions. The matter was then set for trial to commence on August 21, 2001.
[4] Plaintiff's counsel requested a trial management conference in accordance with Rule 270 of the Federal Court Rules, 1998. Such a conference was held, resulting in a direction that the trial judge would hear a motion on August 10, 2001, the issues to be argued being whether the Court could or should hear the defendant's motion to withdraw her admission and amend, and if so, whether the defendant should be given leave to amend.
[5] The motion was heard by Dawson J. on August 10, 2001 and on August 13, 2001, an order was issued dismissing the defendant's motion to amend. To summarize, the reasons for order was that the defendant's request to amend was too late, would be too prejudicial, and would not promote the interests of justice. Costs were reserved to be dealt at the conclusion of the trial.
[6] The plaintiff is seeking its costs for the defendant's motion to amend its pleadings on a solicitor-and-client basis.
[7] The defendant submits that there is no basis for an award of solicitor-and-client costs against the Crown. There is no evidence on the record of any reprehensible, scandalous or outrageous conduct in connection with the litigation on the part of the defendant. Further, the defendant's motion to amend was brought and argued in good faith in order to have an important issue determined before trial.
[8] The defendant concedes that the plaintiff is entitled to its costs on the defendant's motion to amend its pleadings on a party-and-party basis. However, the defendant submits that the plaintiff should be required to pay the costs of this reply on a solicitor-and-client basis.
[9] Rule 400 of the Federal Court Rules, 1998, reads:
| 400. (1) The Court shall have full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid.
(2) Costs may be awarded to or against the Crown. (3) In exercising its discretion under subsection (1), the Court may consider
(a) the result of the proceeding;
\...]
(k) whether any step in the proceeding was (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution;
(...)
(o) any other matter that it considers relevant.
(...)
(6) Notwithstanding any other provision of these Rules, the Court may
(a) award or refuse costs in respect of a particular issue or step in a proceeding;
(b) award assessed costs or a percentage of assessed costs up to and including a specified step in a proceeding;
(c) award all or part of costs on a solicitor-and-client basis; or
(d) award costs against a successful party.
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400. (1) La Cour a entière discrétion pour déterminer le montant des dépens, les répartir et désigner les personnes qui doivent les payer.
(2) Les dépens peuvent être adjugés à la Couronne ou contre elle.
(3) Dans l'exercice de son pouvoir discrétionnaire en application du paragraphe (1), la Cour peut tenir compte de l'un ou l'autre des facteurs suivants :
a) le résultat de l'instance;
\...]
k) la question de savoir si une mesure prise au cours de l'instance, selon le cas : (i) était inappropriée, vexatoire ou inutile, (ii) a été entreprise de manière négligente, par erreur ou avec trop de circonspection;
(...)
o) toute autre question qu'elle juge pertinente.
(...)
(6) Malgré toute autre disposition des présentes règles, la Cour peut :
a) adjuger ou refuser d'adjuger les dépens à l'égard d'une question litigieuse ou d'une procédure particulières;
b) adjuger l'ensemble ou un pourcentage des dépens taxés, jusqu'à une étape précise de l'instance;
c) adjuger tout ou partie des dépens sur une base avocat-client;
d) condamner aux dépens la partie qui obtient gain de cause.
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ISSUES
[10] 1. Is there any evidence that Crown counsel engaged in any reprehensible, scandalous, or outrageous conduct during the course of the defendant's motion to amend?
2. What weight should be given to the defendant's tardiness in bringing a motion to amend?
3. Can the defendant's failure to abide by a published policy be grounds for awarding solicitor-and-client costs?
4. Was there res judicata (or issue estoppel)?
5. What weight should be given to the lack of merit of the defendant's motion to amend?
ANALYSIS
1. Is there any evidence that Crown counsel engaged in any reprehensible, scandalous, or outrageous conduct during the course of the defendant's motion to amend?
[11] No, the plaintiff failed to convince the Court that Crown's counsel engaged in any reprehensible, scandalous or outrageous conduct during the course of the defendant's motion to amend.
[12] In Apotex Inc. v. Canada (Minister of National Health and Welfare) (2000), 265 N.R. 90 (F.C.A.), Malone J.A. stated:
\para 8] As well, this Court established a similar rule in its 1986 decision in Amway Corp. v. R. where Maloney, J.A., stated: "Costs as between solicitor and client are exceptional and generally to be awarded only on the ground of misconduct connected with the litigation." Amway Corp. v. The Queen, \1986] 2 C.T.C. 339,12 C.E.R.150 (Fed. C.A.).
[13] Whilst it is correct to say that when a lawyer is initially unaware of an affidavit's falsehood, but becomes aware of it before arguing the merits of an application, as an officer of the Court, the lawyer has an obligation to inform the Court of those facts, such is not the case here.
[14] As counsel for the defendant mentioned at paragraph 51 of his written representations:
While Dawson J. may not have been persuaded by the evidence of the Crown's affiant, she made no finding that either Mr. Duffield or counsel for the Defendant has misled the Court or engaged in misconduct that could be characterized as reprehensible, scandalous or outrageous. The Plaintiff should not be entitled to solicitor-client costs simply because the Court chose not to accept the evidence of the Defendant's witness.
[15] When a judge is not persuaded by a piece of evidence, in the present case an affidavit, it does not necessarily mean that counsel for the party intended to mislead the Court. It is possible that Mr. Duffield's statement that "The "end-user" argument was inadvertently overlooked" was inaccurate. However, there is insufficient evidence that his intention was to deliberately mislead the Court.
2. What weight should be given to the defendant's tardiness in bringing a motion to amend?
[16] Rule 76 of the Federal Court Rules, 1998, reads:
| 76. With leave of the Court, an amendment may be made
(a) to correct the name of a party, if the Court is satisfied that the mistake sought to be corrected was not such as to cause a reasonable doubt as to the identity of the party, or (b) to alter the capacity in which a party is bringing a proceeding, if the party could have commenced the proceeding in its altered capacity at the date of commencement of the proceeding, unless to do so would result in prejudice to a party that would not be compensable by costs or an adjournment. |
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76. Un document peut être modifié pour l'un des motifs suivants avec l'autorisation de la Cour, sauf lorsqu'il en résulterait un préjudice à une partie qui ne pourrait être réparé au moyen de dépens ou par un ajournement :
a) corriger le nom d'une partie, si la Cour est convaincue qu'il s'agit d'une erreur qui ne jette pas un doute raisonnable sur l'identité de la partie;
b) changer la qualité en laquelle la partie introduit l'instance, dans le cas où elle aurait pu introduire l'instance en cette nouvelle qualité à la date du début de celle-ci. |
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[17] Dawson J., stated that allowing the amendments at the time the motion was brought would result in prejudice to the plaintiff that would not be compensable in costs. (Dawson J., Reasons for Order dated August 22, 2001, para. 37)
[18] In Canderel Ltd. v. Canada, \1994] 1 F.C. 3, Décary J.A. found that an unwarranted delay in bringing an unsuccessful motion to amend one's pleadings constitutes an abuse of process. Further, in Canderel Ltd. v. Canada 94 DTC 1426, Brûlé T.C.C.J. awarded costs on a solicitor-and-client basis to the appellant to compensate her for the tardiness of the respondent's motion.
[19] Therefore, such an untimely motion does constitute grounds for awarding solicitor-and-client costs.
3. Can the defendant's failure to abide by a published policy be grounds for awarding solicitor-and-client costs?
[20] The plaintiff suggests that the defendant attempted to amend pleadings in a fashion that is contrary to a published policy which was intended by the Minister to be relied upon by the public, and which was relied upon by the plaintiff, in order to take a tactical advantage in the litigation.
[21] Even if in some cases, it could be seen as ridiculous that a department's administrative decisions be contrary to its own policies, the Minister, in my view, is not bound by its administrative policies.
[22] Therefore, such argument is, in itself, insufficient to justify the award of solicitor-and-client costs.
4. Was there res judicata (or issue estoppel)?
[23] I see no finding by Dawson J. that the issue was res judicata; this argument must be rejected.
5. What weight should be given to the lack of merit of the defendant's motion to amend?
[24] As stated by McLachlin J., in Young v. Young, \1993] 3 S.C.R. 3 at 134, the absence of merit to the motion alone does not constitute grounds for awarding solicitor-and-client costs.
CONCLUSION
[25] In light of the fact that the motion for amendment was made at a time when prejudice to the plaintiff would not be compensable in costs (Dawson J., Reasons for Order dated August 22, 2001, para. 37); and because the motion was shown to have little merit (Dawson J., Reasons for Order dated August 22, 2001, paras. 18-44 ), I would award the costs on the defendant's motion to amend its pleadings on a solicitor-and-client basis to the plaintiff.
Pierre Blais
Judge
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET: T-1709-90, T-1710-90, T-1711-90, T-1712-90
STYLE OF CAUSE:
SEASPAN INTERNATIONAL LTD.
Plaintiff
and
HER MAJESTY THE QUEEN
Defendant
PLACE OF HEARING: Vancouver, B.C.
DATE OF HEARING: 7, 8, 9 May 2002
REASONS FOR ORDER AND
ORDER PURSUANT TO COSTS BY: BLAIS J.
DATED: September 30, 2002
APPEARANCES BY: Timothy Clarke
For the Plaintiff
Jan Brongers
For the Defendant
SOLICITORS OF RECORD: Timothy Clarke
Bull, Housser & Tupper
Vancouver, B.C.
For the Plaintiff
Jan Brongers
Department of Justice
For the Defendant