Date: 20041028
Docket: A-349-04
Citation: 2004 FCA 367
BETWEEN:
MICHAEL J. CULHANE
Appellant
- and -
ATP AERO TRAINING PRODUCTS INC.,
REILLY JAMES BURKE
Respondents
Charles E. Stinson
Assessment Officer
[1] The Appellant's action in Federal Court file T-1491-00, for declaratory and injunctive relief and for damages all relative to the Competition Act and the provision of free on-line Canadian aviation examination guides on the internet, was dismissed with costs. There has not yet been a hearing of his appeal, but the Federal Court of Appeal has dismissed the Respondents' motion for security for costs, with costs of the motion to the Appellant in any event of the appeal. The Appellant, after the Respondents (as Defendants) had set their bill of costs down for assessment in the Federal Court, presented his bill of costs, relating to the above-noted motion, for assessment at the same time. The Respondents objected that its assessment would be premature.
The Respondents' Position
[2] The Respondents argued further to Nature's Path Foods Inc. v. Country Fresh Enterprises Inc., [1999] F.C.J. No. 827 (A.O.) that the absence in the order of a "forthwith" provision for payment of the interlocutory costs makes their assessment premature. Motions for security for costs are generally brought early in proceedings. Here, the motion asserted two grounds, ie. that the Appellant had not yet paid or made arrangements to pay the costs awarded in the Federal Court judgment despite being asked to do so, and that the Appellant's uncertain financial situation might make satisfaction of costs difficult on the assumption that his frivolous and unmeritorious appeal was denied.
[3] The Respondents asserted that they carefully timed the motion for security for costs from the perspective, for example, of the Appellant possibly raising impecunious circumstances under Rule 417. As well, they suggested that the motion be adjourned until after the assessment of costs in the Federal Court. The Respondents argued that paragraph 3 of the order, providing that dismissal was "without prejudice to the right of the respondents to make a new motion for security for costs of the appeal if the appellant does not pay or provide security for the costs at trial within a reasonable time after those costs are finally determined", could not result in the Appellant's interlocutory award of costs being vacated or varied, but could create set-off opportunities in this Court for the Respondents. The Appellant should not be permitted to graft set-off of his interlocutory costs in the Federal Court of Appeal to a separate assessment of costs previously scheduled in the Federal Court.
The Appellant's Position
[4] The Appellant asserted that the Respondents were not objecting to sufficiency of notice of the assessment of costs. The Appellant noted that Mark M. Orkin, The Law of Costs, 2d ed. (Toronto: Canada Law Book Inc. 2003) at page 4-2, para. 402, characterizes an award of costs in any event of the cause as "the extreme expression of disapproval by the court" regardless of which party is ultimately successful in the main action and at para. 402.1 acknowledges the traditional practice in many jurisdictions that "the costs of interlocutory proceedings are not payable until the conclusion" of the proceedings. The Appellant argued that the fact situation here is distinguishable from that in Nature's Path Foods Inc., supra. That is, the grounds, ie. non-payment of unassessed Federal Court costs, in the Respondent's motion for security for costs were such that the ultimate judgment in this appeal cannot affect any assessment of these interlocutory costs. As well, having met the notice provisions of Rule 406(1), he is entitled to proceed. This would enable him to take advantage of his right to set-off under Rule 408(2) and, given that all parties in the Federal Court of Appeal and the Federal Court matters were present before me, it would be more efficient to apply Rule 3 in a positive, as opposed to a negative, fashion to permit their hearing together, including set-off as appropriate between the two courts. Just as the Respondents are not awaiting the final outcome of the appeal to pursue their Federal Court costs, the Appellant should not have to wait before pursuing his interlocutory costs awarded in any event of said outcome.
[5] The Appellant argued that immediate assessment of his interlocutory costs would not prejudice the right granted by paragraph 3 of the order for the Respondents to move again for security for costs. Rule 401(2) provides for "forthwith" payment of costs in certain circumstances. By contrast, there is no rule restricting an assessment of costs in the absence of a "forthwith" provision. The Appellant argued that the "pay as you go" approach considered in Orleski et al. v. North American Property Group et al., (1995), 166 A.R. 285 (A.C.Q.B.) should be applied here with particular regard to the analysis at page 287, paras. [16] to [18] inclusive, ie. if the outcome of the lawsuit cannot affect an interlocutory issue, said latter issue is discrete and may attract costs in any event of the cause. Paragraph 3 of the order here creates the same circumstances for the Appellant, ie. final judgment in the appeal or any subsequent interlocutory judgments cannot affect dismissal of the first motion for security and in turn any assessment of its associated costs awarded in any event of the cause.
Assessment
[6] Each side had alerted me prior to the hearing of this assessment that the authority of the Appellant to proceed with his assessment of costs at this time would likely be placed in issue. To ensure the most expeditious hearing process, I advised them in advance that I normally address such issues as a preliminary objection and drew their attention to Nature's Path Foods Inc., supra and to Almecon Industries Ltd. v. Anchortek Ltd., (2002) F.C.J. No. 1813 (A.O.) affirmed at (2003) F.C.J. No. 182 (F.C.).
[7] After hearing oral argument, I delivered the following findings. First, the absence of a "forthwith" provision in the dismissal order indicates that Rule 401(2) is not applicable here. Second, while Orleski, supra, is compelling, particularly given that I am aware that busy jurisdictions such as Ontario have adopted a form of the "pay as you go" approach, ie. by requiring that the presiding judge settle the dollar amount of costs at the conclusion of each interlocutory appearance, its characterization in para. [24] of the matter of "forthwith" payment of costs as the "next question" after disposition of the question of the outcome of litigation not affecting the outcome of a discrete interlocutory issue and the latter's associated costs indicates to me that the disposition of the latter question was independent of the former. Therefore, I confined my consideration of Orleski, supra, to whether its analysis of a discrete interlocutory issue relative to the outcome of the litigation should be applied so as to vary or vacate the "forthwith" practice considered in Nature's Path Foods Inc. and Almecon Industries Ltd., supra. I concluded that it should not interfere with the norms of practice further to Rules 406(1), 408(2) and Rule 3. That is, as the Respondents urged, it is not just the Appellant who could seek set-off. The opportunity for set-off of subsequent interlocutory awards of costs or even costs after judgment, if in favour of the Respondents, would be lost to the Respondents if the "forthwith" practice established in the jurisprudence was ignored or abandoned. I do not think that my considerations on the threshold for set-off in Wilson v. Canada [2000] F.C.J. No. 506 (A.O.); varied by [2000] F.C.J. No. 1783 (F.C.T.D.), but not on a point relevant for the circumstances here, help the Appellant. Therefore, I concluded that a Certificate of Assessment should issue allowing the Respondents' preliminary objection, ie. that assessment of the Appellant's interlocutory costs is premature.
(Sgd.) "Charles E. Stinson"
Assessment Officer
Vancouver, BC
October 28, 2004
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-349-04
STYLE OF CAUSE: MICHAEL J. CULHANE v. ATP AERO TRAINING
PRODUCTS INC. et al.
PLACE OF HEARING: Vancouver, BC
DATE OF HEARING: September 16, 2004
REASONS FOR ASSESSMENT OF COSTS: CHARLES E. STINSON
DATED: October 28, 2004
APPEARANCES:
Michael J. Culhane representing himself
Gene H. Fraser for Respondents
SOLICITORS OF RECORD:
Burke Tomchenko & Fraser for Respondents
Port Moody, BC