Competition Tribunal Tribunal de la Concurrence Reference: Nadeau Poultry Farm Limited v. Groupe Westco Inc. et al., 2010 Comp. Trib. 1 File No.: CT-2008-004 Registry Document No.: 0603
IN THE MATTER of the Competition Act, R.S.C. 1985, c. C-34, as amended; AND IN THE MATTER of an Application by Nadeau Ferme Avicole Limitée/Nadeau Poultry Farm Limited for an Order pursuant to section 75 of the Competition Act;
AND IN THE MATTER of an Application by Nadeau Ferme Avicole Limitée/Nadeau Poultry Farm Limited for an Interim Order pursuant to section 104 of the Competition Act.
B E T W E E N: Nadeau Ferme Avicole Limitée/ Nadeau Poultry Farm Limited (applicant)
and Groupe Westco Inc. and Groupe Dynaco, Coopérative Agroalimentaire, and Volailles Acadia S.E.C. and Volailles Acadia Inc./ Acadia Poultry Inc. (respondents)
Decided on the basis of the written record Before: Blanchard J. (presiding), H. Lanctôt and P. A. Gervais Date of Reasons for Order and Order: January 21, 2010 Reasons and Order signed by: Mr. Justice E. Blanchard, Mr. H. Lanctôt and Mr. P. A. Gervais
REASONS FOR ORDER AND ORDER DEALING WITH QUESTIONS ABOUT COSTS ISSUES
I. INTRODUCTION [1] On June 8, 2009, the Competition Tribunal dismissed Nadeau Poultry Farm Limited’s (the “Applicant” or “Nadeau”) application for an order pursuant to subsection 75(1) of the Competition Act, R.S.C. 1985, c. C-34 (the “Act”). In paragraph 483 of the decision, the Tribunal reserved the issue of costs and directed the parties to communicate with the registry on or before Monday, July 20, 2009, “in order to advise as to whether they require further time in order to attempt to agree on costs”. The parties have not reached a settlement and have therefore made submissions asking for the Tribunal’s ruling on the following questions:
a) Should costs be awarded, if so, should they be reduced? b) Should each of the Respondents be entitled to costs? c) What point of Tariff B should be used as the basis for a costs award? d) What number of counsel should be covered by a costs award? e) What should be the impact of the Respondents’ settlement offers? f) Are claims under certain tariff items allowable? g) Are the disbursements reasonable and necessary?
II. CONCLUSIONS [2] The Tribunal finds a lump sum should be awarded to each of the Respondents based on Tariff B of the Federal Courts Rules, S.O.R/98-106 (the “Rules”). Groupe Westco Inc. (“Westco”) is entitled to an award based on two counsel throughout the preparatory phase of the hearing and 2½ counsel during the actual hearing. Groupe Dynaco, Coopérative Agroalimentaire (“Dynaco”) and Volailles Acadia S.E.C. and Volailles Acadia Inc./Acadia Poultry Inc. (collectively, “Acadia”) shall each be entitled to one counsel during both the preparatory phase of the hearing and the actual hearing. The Tribunal has recognized the volume of work accomplished by Westco for the benefit of all Respondents. Westco’s costs shall be based on the mid-range of Column III while costs for Acadia and Dynaco shall be based on the low end of Column III. Given their offers to settle, each Respondent is entitled to a lump sum award that is based upon 150% of the applicable ranges in Column III of the Tariff from November 3, 2008, the date the offers to settle were served. The Respondents shall each prepare a draft bill of costs in accordance with these reasons.
III. DISCUSSION A. Summary of the Respondents’ position [3] The Respondents submit that they are each entitled to an award of costs and have claimed the following amounts:
a) Westco: fees of $346,190 and disbursements of $502,478.96; b) Dynaco: fees of $126,230 and disbursements of $18,460.26; and c) Acadia: fees of $134,030 plus applicable taxes and disbursements of $16,776.47.
[4] The fees sought by each of the Respondents are based on the top end of Column IV of Tariff B. The Respondents assert that they are entitled to increased costs because (1) they were successful in the application (2) the issues were important and complex (3) the amount of work was exceptional and (4) the Applicant made false or unfounded allegations against them. The Respondents also rely on their respective written offers to settle to assert that costs should be doubled after November 3, 2008, the day they served their respective offers to settle.
B. Summary of the Applicant’s position [5] The Applicant’s position on costs may be summarized as follows: (a) No costs should be payable by any party because of divided success. (b) If costs are otherwise ordered payable to the Respondents, they should be reduced by 30% by reasons of divided success and /or the conduct of the Respondents which had the effect of substantially lengthening and complicating the proceedings.
(c) Based on the corporate and operational links between the Respondents, their similar interest in the matter and the fact that Acadia and Dynaco essentially adopted Westco’s position throughout the proceedings, the Tribunal should award one set of costs (one set of fees for three counsel, one set of disbursements) to be shared among the Respondents as they see fit.
(d) If costs are awarded, the applicable Tariff Column should be the mid-point of Column III.
(e) The Respondents did not comply with both the technical and substantive requirements of Rule 420 with regards to their respective offers to settle. Thus there is no basis upon which to award increased costs based on the offers.
(f) The Respondents have made inflated or improper claims under a number of the individual heads or items listed under Tariff B.
(g) The overall total claimed by the Respondents for disbursements is by any measure excessive.
[6] We now turn to the consideration of each of these submissions. C. Analysis [7] Section 8.1 of the Competition Tribunal Act, R.S.C. 1985, c. 19 (2 nd Supp.) gives jurisdiction to the Tribunal to award costs of proceedings before it in accordance with the provisions governing costs in the Rules. Accordingly, pursuant to Rule 400(1) of the Rules the Tribunal has “full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid.” A non-exhaustive list of factors that the Tribunal
may consider when exercising its discretion is set out in Rule 400(3). Rule 400 is attached as a schedule to these reasons.
[8] An award of party-party costs is not an exercise in exact science. It is only an estimate of the amount the Court considers appropriate as a contribution towards the successful party's solicitor-client costs (Consorzio Del Prosciutto Di Parma v. Maple Leaf Meats, 2002 FCA 417, [2003] 2 F.C. 451) It is a fundamental principle that an award of costs represents a compromise between compensating a successful party and not unduly burdening an unsuccessful party (Apotex Inc. v. Wellcome Foundation Ltd. (1998), 159 F.T.R. 233 (F.C.T.D), aff’d (2001), 199 F.T.R. 320 (F.C.A.).)
[9] According to Rule 400(4) of the Rules, costs awarded may be fixed on a lump sum basis by the Court or left to be assessed. The Tribunal, in B-Filer Inc. et al. v. The Bank of Nova Scotia, 2007 Comp. Trib. 26, stated the following with regards to lump sums:
In our view, the Tribunal should favour lump sum awards over formal taxation of bills of costs because such practice is in accordance with the direction to the Tribunal found in subsection 9(2) of the Competition Tribunal Act that all proceedings before it "shall be dealt with as informally and expeditiously as the circumstances and considerations of fairness permit".
Having said that, when setting costs on a lump sum basis, the Tribunal is not to take a "shot in the dark". Rather, costs must be determined on a principled basis. See: CCH Canadian Ltd. v. Law Society of Upper Canada, (2004), 37 C.P.R. (4 th ) 323 (F.C.). We accept that when "fixing lump sum fees [it is appropriate] to be guided by Tariff B which operates on the principle of allowing a block of time within the range of hours set out in the various columns". See: Donaghy v. Scotia Capital Inc., 2007 FC 598 at paragraph 7.
[10] Therefore in our view, costs, if allowed, should be awarded on a lump sum basis. (1) Should costs be awarded, if so, should they be reduced? [11] Nadeau submits that no costs should be awarded or that, in the alternative, costs should be reduced by 30% based on divided success and/or the conduct of the Respondents. We will deal with each of these submissions in turn.
[12] To substantiate its position that success in the matter was divided, Nadeau asserts that it was successful on (1) its application for leave pursuant to section 103.1 of the Act (2) on its application for interim relief pursuant to section 104 of the Act and (3) in establishing certain elements under section 75 of the Act.
[13] We respectfully disagree with Nadeau’s submission that success was divided. The application for leave and the application for interim relief were preliminary matters which, in our view, are not determinative in our assessment of costs. The matter at issue is the section 75 application. Further, in order to be successful, Nadeau had the burden of establishing all
elements under section 75 of the Act (our emphasis). As a general rule, costs should follow the event (Johnson & Johnson Inc. v. Boston Scientific Ltd., 2008 FC 817). Absent an abuse of process, a successful party should not be penalized simply because not all the points advanced by that party have found favour with the Court (Canada v. IPSCO Recycling Inc., 2004 FC 1083, 259 F.T.R. 204).
[14] The Applicant further asserts that the Respondents’ failure to admit paragraphs 75(1)(a) and (c) of the Act, along with divided success, warrant a reduction in costs. In our view, little time was spent addressing Nadeau’s willingness and ability to meet the usual trade terms under paragraph 75(1)(c). As for paragraph 75(1)(a), this is not a case where the Respondents conceded a contentious issue late in the proceedings. Throughout the proceedings, the Respondents maintained and vigorously argued their position that the Applicant was not substantially affected in its business due to its inability to obtain adequate supplies of the product, in the market, on the usual trade terms. This issue was ultimately addressed at length by the Tribunal. In our view, no time was wasted by the Respondents in litigating this important issue.
[15] The Respondents were successful in their defence of the application. For this reason, costs will be awarded to the Respondents without reductions by reason of the above stated grounds. (2) Should each of the Respondents be entitled to costs?
[16] Nadeau submits that the Respondents should have been represented by one firm of solicitors as they had corporate links, the same interests and Acadia and Dynaco essentially adopted Westco’s position throughout the proceedings. Accordingly, Nadeau asserts that if costs are awarded, there should be only one set of costs (one set of fees for three counsel, one set of disbursements), to be shared among the Respondents as they see fit.
[17] According to Rule 400(3)(l) of the Rules, a factor that the Court may consider in the exercise of its discretion is “whether more than one set of costs should be allowed, where two or more parties were represented by different solicitors or were represented by the same solicitor but separated their defence unnecessarily.” In Capital Vision v. Canada (Minister of National Revenue – M.N.R.), 2003 FC 1253, Justice Heneghan awarded costs to multiple applicants where their interests in the matter were related but not identical. The following excerpts from Orkin’s, The Law of Costs, at section 209.4 (looseleaf (Aurora: Canada Law Book Inc., 2000)) are also useful:
Where defendants have separate interests, each is justified in severing the defence if he or she chooses to do so, and each if successful is entitled to a separate bill of costs, unless the trial judge, in his or her discretion, sees fit to provide that there shall be but one set of costs.
[…] While it is true that no defendant is under an obligation on being sued to hunt up some other party’s solicitor instead of his or her own, a defendant will not be entitled to a separate bill of costs, if successful, when he or she is identical in
interest with a co-defendant, or is a member of a group or class with a common interest as, for example, persons entitled to one share of an estate under administration proceedings, or a group of beneficiaries in an application for construction of a will; or parties having essentially the same interests in trust lands being sold by trustees.
[18] Further, in Merck & Co. v. Apotex Inc., 2006 FCA 324, Justice Malone stated for the Federal Court of Appeal at paragraph 23 that “[t]his Court has already decided, that despite raising overlapping issues, applicants in the same proceedings should not be required to share a single costs award.”
[19] Throughout the proceedings, the Respondents addressed overlapping issues collaboratively for the sake of efficiency. However, each of the Respondents made contributions to the application by preparing pleadings, witness statements, written arguments and by conducting oral examinations and making oral arguments. In our view, the Respondents’ interests were not identical and the allegations by Nadeau with regards to the mala fide alliance between them reasonably required each Respondent to have its own counsel both during the preparatory phase of the proceedings and the actual hearing. Accordingly, the Respondents are each entitled to costs.
(3) What point of Tariff B should be used as the basis for a costs award? [20] As previously mentioned, the Tribunal has full discretion over costs and may use the factors listed under Rule 400(3) to exercise that discretion. The Tribunal, in B-Filer, stated that while costs are discretionary, in the absence of any order otherwise, Rule 407 directs that party-and-party costs are to be assessed in accordance with Column III of the table to Tariff B. In Rona Inc. v. Commissioner of Competition, 2005 Comp. Trib. 26, the Tribunal stated that there must be sound reasons to derogate from this provision.
[21] Given the complexity of the matter, the existence of the offers to settle and the circumstances of the application before the Tribunal, the Respondents request that costs be assessed in accordance with the top of Column IV of Tariff B. Nadeau submits that the applicable Tariff Column should be the mid-point of Column III.
[22] In our view, the complexity and the volume of work involved in the proceedings do not justify an increase in costs to the top of Column IV, Tariff B. The matter was neither more complex, nor excessive in terms of the work involved, than other matters that come before the Tribunal. In its reasons granting Nadeau’s application for interim relief, the Tribunal indicated that the arguments raised by the Respondents relating to the section 75 application raised complex questions of fact and law. However, the Tribunal did not state that the questions of fact and law were complex per se, rather it stated that such questions were ill suited for the determination in an application for interim relief and that such questions would best be addressed on a fulsome record with the benefit of viva voce evidence.
[23] The Tribunal also disagrees that the Applicant’s conduct or conspiracy allegations lengthened the hearing or caused the Respondents to do more work. We are of the view that the
hearing was conducted in an efficient manner. While it is true that significant pre-hearing issues needed to be addressed, the Tribunal is of the opinion that no one party in particular was specifically responsible for such issues as to warrant an increase in costs. We also disagree with the Respondents that the conspiracy allegation made by the Applicant justifies an increase in costs. We are therefore of the view that there are no sound reasons to depart from the general principle that costs should be assessed in accordance with Column III of Tariff B. We will deal below with the Respondents’ offers to settle.
[24] While we are of the view that Column III, Tariff B should govern costs for all Respondents, the Tribunal acknowledges that counsel for Westco played the leading role throughout both the preparatory phase of the proceedings and the hearing. For example, Westco conducted essentially all cross-examinations of the Applicant’s witnesses during the hearing, it produced the sole expert for the Respondents and its final argument addressed most overlapping issues. Further, while each party submitted pleadings, Westco’s work, or parts thereof, was at times simply reproduced by Acadia and Dynaco. We are therefore of the view that costs payable to Dynaco and Acadia should be assessed at a lower scale than costs payable to Westco. Accordingly, Westco’s costs will be assessed in accordance with rates at the mid range in Column III, Tariff B, while costs for Acadia and Dynaco will be assessed at the lowest range in Column III, Tariff B. Our decision in no way reflects the quality of the work performed by counsel for Dynaco and Acadia.
(4) What number of counsel should be covered by a costs award? [25] Westco submits that the nature of the proceedings, and the volume and complexity of the legal, regulatory, economic and factual evidence justify an award of full costs for two counsel during the preparatory phase of the proceedings and three counsel during the hearing preparation and the hearing.
[26] Westco had a team of five counsel throughout the hearing and Nadeau had a team of four counsel. We are satisfied that the nature of the preparatory work performed in this case reasonably necessitated two counsel. We are therefore of the view that Westco’s lump sum should be guided by the mid-range of Column III for two counsel during the preparatory phase of the proceedings including hearing preparation and fees based on 2½ counsel for the actual hearing. Dynaco and Acadia’s lump sums should be guided by the low range of Column III for one counsel each throughout both the preparatory phase of the proceedings and the hearing.
(5) What should be the impact of the Respondents’ settlement offers? [27] We now turn to the relevance of the offers to settle. On November 3, 2008, two weeks before the hearing was scheduled to commence, the Respondents served offers on the Applicant. Rule 420 of the Rules sets out the costs consequences where a party obtains a judgment less favorable than a written offer to settle. It reads as follows:
420(2) Unless otherwise ordered by the Court and subject to subsection (3), where a defendant makes a
420(2) Sauf ordonnance contraire de la Cour et sous réserve du paragraphe (3), si le défendeur fait au demandeur
written offer to settle, (a) if the plaintiff obtains a judgment less favourable than the terms of the offer to settle, the plaintiff is entitled to party-and-party costs to the date of service of the offer and the defendant shall be entitled to costs calculated at double that rate, but not double disbursements, from that date to the date of judgment; or (b) if the plaintiff fails to obtain judgment, the defendant is entitled to party-and-party costs to the date of the service of the offer and to costs calculated at double that rate, but not double disbursements, from that date to the date of judgment.
Conditions (3) Subsections (1) and (2) do not apply unless the offer to settle (a) is made at least 14 days before the commencement of the hearing or trial; and (b) is not withdrawn and does not expire before the commencement of the hearing or trial. [28] The Respondents’ offers to settle were identical and provided that they would accept the Applicant as a customer for seven quota periods following acceptance of the offer (a quota period lasts 8 weeks). For the first two consecutive quota periods they would provide the Applicant with all of the chicken produced under their respective quotas. During the following 5 consecutive quota periods they would gradually reduce supply to the Applicant. The offers provided the following clause with regards to price:
The price for the chicken supplied during the First Supply Period and the Tapering Supply Period will be either a) the New Brunswick Board price in effect at the time the supply is made or b) the highest base price offered to any
une offre écrite de règlement, les dépens sont alloués de la façon suivante : a) si le demandeur obtient un jugement moins avantageux que les conditions de l’offre, il a droit aux dépens partie-partie jusqu’à la date de signification de l’offre et le défendeur a droit, par la suite et jusqu’à la date du jugement au double de ces dépens mais non au double des débours; b) si le demandeur n’a pas gain de cause lors du jugement, le défendeur a droit aux dépens partie-partie jusqu’à la date de signification de l’offre et, par la suite et jusqu’à la date du jugement, au double de ces dépens mais non au double des débours.
Conditions (3)Les paragraphes (1) et (2) ne s’appliquent qu’à l’offre de règlement qui répond aux conditions suivantes : a) elle est faite au moins 14 jours avant le début de l’audience ou de l’instruction; b) elle n’est pas révoquée et n’expire pas avant le début de l’audience ou de l’instruction.
New Brunswick quota holder (including any premium or incentives offered by Nadeau), whichever is higher.
[29] Acceptance of the offer would have resulted in the application being discontinued on a without costs basis.
[30] Nadeau asserts that the Respondents did not comply with both the substantive and technical requirements of Rule 420. Specifically, Nadeau alleges that the prescribed minimum notice requirement was not provided and that the offers (1) were not clear (2) did not provide a sufficient element of compromise (3) were not presented in a timely fashion and (4) would not have brought the dispute between the parties to an end.
[31] In our view, the offers were clear and they presented a reasonable element of compromise. The offers, in our view, would have also brought the dispute between the parties to an end.
[32] We will now deal with the timeliness of the offers. Nadeau submits that the Respondents did not adhere to the minimum notice requirement under Rule 420(3)(a) which requires that, an offer must be “made at least 14 days before the commencement of the hearing or trial.” Nadeau further submits that the offers were not made in a timely fashion, as by the time the offers were served, all of the substantive pre-hearing steps required under the Tribunal’s scheduling order had been completed.
[33] Nadeau makes two arguments pertaining to the minimum notice requirement. First, that all three offers were late by one day. This argument is answered by section 26 of the Interpretation Act, R.S.C. 1985, c. I-21, which provides that if the last day for service falls on a holiday (defined to include Sunday), then the prescription period is deemed to expire on the next following day that is not a holiday. Here, November 2, 2008 was a Sunday. It follows that last day for service in the circumstances, would have been November 3, 2008.
[34] Second, Nadeau argues that the Respondents Dynaco and Acadia did not meet the minimum notice requirement because they served their offers after 5:00 p.m. on November 3, 2008.
[35] Rule 144(2) of the Rules provides that when service is effected after 5:00 p.m. it is deemed to be effective at 9:00 a.m. on the next business day, in this case, November 4, 2008. Based on the above, in order to comply with the minimum notice requirement under Rule 420(3)(a), the Respondents must have served their respective offers to settle by 5:00 p.m. on November 3, 2008. Dynaco and Acadia served their offers several minutes after 5:00 p.m. on November 3, 2008 and Westco’s offer was served just before 5:00 p.m. on that same day. Acadia and Dynaco were therefore technically not in compliance with Rule 420(3)(a) and as a result are not entitled to double costs under the Rule. Westco is in compliance with the minimum notice requirement. However, a default of only several minutes does not preclude us from exercising our discretion to award an upward adjustment by reason of the offers.
[36] Technical compliance with Rule 420 does not necessarily lead to double costs for Westco. The Tribunal has the discretion to decide differently, depending on the circumstances. In B-Filer, even though the party making the offer had complied with the minimum notice requirement under the Rules, the Tribunal’s consideration of the timeliness of the offer was found to militate against the application of Rule 420. The offer in that case was served approximately one month before the commencement of the hearing. In the present matter, the offers were served two weeks prior to the hearing. The Applicant’s lay witness statements and expert reports had been provided by October 1, 2008. The Respondents’ witness statements and reports were served by October 20, 2008 and the Applicant’s reply statements and reports were served by October 28, 2008. Therefore, by the time the offers were served on the Applicant, its case in chief had essentially been prepared.
[37] In our view, the timing of the offers made by all the Respondents militates against the full application of the double costs rule. The offers were made at the last possible moment in an apparent attempt to come into compliance with the minimum notice requirement under Rule 420(3)(a) and at that time, most of the substantive pre-hearing steps in the proceedings had been completed. In these circumstances and in the exercise of our discretion, we are of the view that the Respondents are entitled to an upward adjustment as a result of the offers to settle, but not double costs. Accordingly, the Respondents will receive lump sum awards that are based upon 150% of the applicable ranges in Column III of the Tariff from November 3, 2008 by reason of their offers to settle.
(6) Are claims under certain tariff items allowable? [38] Nadeau asserts that the Respondents have made inflated or improper claims under a number of the individual items listed under Tariff B. We will only deal with the items that are disputed. i. Item 2 [39] The Respondents Acadia and Westco have multiple entries under tariff item 2 “[p]reparation and filing of all defences, replies, counterclaims or respondents’ records and materials.” In our view, the Respondents are not entitled to claim more than one entry each under this item (Abbott Laboratories Ltd. v. Canada (Minister of Health), 2009 FC 399 at para. 10.)
ii. Item 5 [40] The Respondents have each made entries under tariff item 5 “[p]reparation and filing of a contested motion, including materials and responses thereto” relating to the motions arising out of the examinations for discovery. The orders dealing with the motions referred to by the Respondents were silent on costs. Accordingly, they must be treated as awarding no costs to any of the parties (Research in Motion v. Visto Corp., 2008 FC 618, 67 C.P.R. (4 th ) 219 at para. 19.) The Respondents are therefore not entitled to claim any fees with respect to their entries under item 5.
iii. Item 7 [41] Multiple entries by the Respondents were made under item 7 “[d]iscovery of documents, including listing, affidavit and inspection”. Based on the circumstances of the case, we are of the view that the claimed multiple entries should be allowed (Aird v. Country Park Village Properties (Mainland) Ltd., 2005 FC 1170, 169 A.C.W.S. (3d) 34 at para. 22.) However, the Respondents will only be entitled to half of the applicable units for the preparation and inspection of supplementary affidavits of documents.
iv. Item 8 [42] Item 8 “[p]reparation for an examination, including examinations for discovery, on affidavits, and in aid of execution” can be claimed more than once. Westco is therefore entitled to claim fees for preparation for the examinations for discovery of Mr. Feenstra and Mr. Soucy under tariff item 8. Westco’s claims for preparation of the examinations of representatives of the other Respondents, Mr. Faucher and Ms. Cloutier, will not be allowed as there was no cross-claim and no questions were asked by counsel for Westco. Westco could have obtained information from the other Respondents. The same principle will be applied for Acadia. It is only entitled to claim fees for the preparation of its own witness.
v. Item 9 [43] Nadeau submits that the Respondents’ entries under tariff item 9 “[a]ttending on examinations, per hour” should be reduced. The Tribunal is of the view that Westco is entitled to claim for its attendance at the examinations for discovery of representatives of Acadia and Dynaco notwithstanding the fact that it asked no questions. The same principle shall apply to Dynaco’s and Acadia’s entries under tariff item 9. Therefore, the Respondents’ claims under item 9 will be allowed.
vi. Item 12 [44] Item 12 of Tariff B provides for a maximum of three units under Column III for services in connection with “[n]otice to admit facts or admission of facts; notice for production at hearing or trial or reply thereto”. Nadeau argues that Westco improperly claimed six separate entries under this item for the preparation of witness statements. We agree and Westco will only be allowed fees for its first entry under tariff item 12.
vii. Item 23 [45] Westco has made 31 entries under tariff item 23 “[a]ttendance on a reference, an accounting or other like procedure not otherwise provided for in this Tariff, per hour” relating mostly to the inspection of witness statements and expert affidavits. In our view, Westco should not be entitled to claim fees for the inspection of witness statements and expert affidavits. This task falls under tariff item 13. The Respondents have already claimed the maximum under tariff item 13. No additional fees for the inspection of witness statements will be allowed.
viii. Item 24 [46] Fees are recoverable for “[t]ravel by counsel to attend a trial, hearing, motion, examination or analogous procedure, at the discretion of the Court” under tariff item 24. In our view, the Respondents should not be entitled to claim fees under this item for travel within their city of residence. Westco and Dynaco will only be allowed fees for two return trips to Ottawa. In our view, a third return trip was unnecessary given the fact that the parties were aware that the hearing would be adjourned early in the week. Westco will also be allowed fees for attendance at the cross-examinations of Mr. Feenstra, Ms. Cloutier and Mr. Faucher.
ix. Item 27 [47] Pursuant to the Competition Tribunal Rules, SOR/2008-141 parties appearing before the Tribunal must serve witness statements prior to the hearing setting out the lay witnesses’ evidence in chief in full. There is no tariff item that deals with the preparation of witness statements. However, in our view, a successful party should be entitled to claim fees for the preparation of these statements which serve to reduce hearing time. We are of the view that they should be claimed under tariff item 27 “[s]uch other services as may be allowed by the assessment officer or ordered by the Court”. We will allow a separate entry for each witness statement prepared by the Respondents. With regard to other claims made under tariff item 27, the Respondents will each be allowed one entry for work relating to the offer and one entry for undertakings.
(7) Are the disbursements reasonable and necessary? [48] The Applicant disputes the amounts claimed by the Respondents for expert fees, travel accommodation and meals, photocopies, transcripts (case conferences only) and disbursements relating to the leave application. We will deal with each of these items in turn.
[49] In assessing disbursements, the Tribunal must first determine if costs were incurred, and once this has been established, whether the costs were reasonable and necessary (Abbott Laboratories Ltd. v. Canada (Minister of Health), 2009 FC 399 at para. 15).
i. Expert fees [50] Westco seeks costs for expert fees and disbursements incurred for the retention of its expert, Margaret Sanderson, in the amount of $416,127.45. Ms. Sanderson was assisted by other CRA International Limited (“CRA”) associates. For expert fees alone, Westco claims $391,271.00 which can be broken down as follows:
a. For Margaret Sanderson’s time, 258.75 hours at $600 per hour, for a total of $155,250; b. For the time of Andrius Baziliauskas (associate), 308.75 hours at $450 per hour, for a total of $138,937.50; c. For the time of Courtney Stoddard (associate), 3.75 hours at $350.00 per hour, for a total of $1,312.50;
d. For various “Associate/Analyst” time, 451.05 hours for a total of $95,711.00; and e. For “Other Support” time, .50 hours at $120 per hour for a total of $60.
[51] Westco submits that the expert fees incurred were necessary and reasonable given the vital importance of the economic and financial issues to the disposition of the case. Westco also asserts that the expert evidence of Ms. Sanderson was greatly relied on by the Tribunal and that it was generally preferred over the expert evidence of the Applicant.
[52] Nadeau asserts that a reasonable recovery for Westco’s expert fees in all the circumstances, would be for 200 hours of Ms. Sanderson’s time at $450.00 per hour, for a total of $90,000.00, plus GST. Nadeau submits that no amount is recoverable for the fees charged for anyone other than Margaret Sanderson. It further argues that the time spent on various tasks by CRA was excessive and unreasonable and that the rate charged by Ms. Sanderson was excessive.
[53] Ms. Sanderson was the only expert called to testify on behalf of the Respondents and the only expert to submit a report. However, she did rely on the work performed by associates and support staff without which she would have required more time to complete her assignment (Aerlinte Eireann Teoranta v. Canada, [1993] F.C.J. No. 1462 (QL)). Accordingly, the Tribunal will allow certain fees relating to work performed by these individuals.
[54] Let us now turn to the reasonableness of the hours claimed and rates charged. We will deal with Ms. Sanderson and the other associates of CRA separately. CRA invoices indicate that Ms. Sanderson dedicated 258.75 hours to the file performing various tasks such as reviewing affidavits, drafting her expert report, assisting counsel with preparation for examinations for discovery and with cross-examinations of witnesses at trial. In our view, Ms. Sanderson’s involvement in these tasks was necessary given the importance of the economic and financial issues to the disposition of the case. Further, her expert report discussed various distinct issues such as upstream and downstream market definitions, effects on competition, and the effect of Nadeau’s inability to obtain supply. Given the thoroughness of her work and the necessity of her involvement throughout both the preparatory phase of the proceedings and the hearing, we are of the view that the hours claimed by Ms. Sanderson were reasonable and will thus be allowed.
[55] We are also of the view that the rate charged by Ms. Sanderson was reasonable. Ms. Sanderson charged $600.00 per hour for her services for a total of $155, 250. Her expert report and viva voce evidence dealt with all the issues, were relied on by the Tribunal and, in our opinion, were indispensable to the Respondents’ case.
[56] We will now deal with the fees and hours claimed by the analysts and associates of CRA. As previously mentioned, the Tribunal is prepared to allow certain fees in respect of the work performed by various analysts/associates of CRA. However, it is difficult for the Tribunal to determine that each time entry by each individual was reasonably necessary as it did not have the opportunity to review the work performed by each of these individuals. Similarly, the Tribunal cannot determine whether or not the rates charged were reasonable as it was not advised of each of the analyst/associates’ expertise or work experience. In any event, we are of the opinion that the global amount charged by CRA is excessive. While we recognize the reasonableness of Ms. Sanderson’s hours for her work on the file, in our view, an additional 764.05 hours of assistance
from other analysts/associates, is excessive. Otherwise stated, there seems to be some duplication of work. Nevertheless, in keeping with the Tribunal’s discretion and its acknowledgment that Ms. Sanderson received some assistance from various analysts/associates, the Tribunal is prepared to allow $50,000 for the work performed by these individuals.
[57] The CRA invoices also include expenses relating to travel, library charges, computer network services and other expenses. In our view, such expenses are not recoverable as Westco has failed to establish that they were reasonable and necessary. For example, no details were provided with respect to what “computer network services” entail.
[58] For these reasons, Westco is entitled to recover $205,250.00 in disbursements relating to expert fees.
ii. Accommodations, Travel and Meals [59] Westco’s travel and accommodation disbursements should be based on the number of counsel for which costs have been awarded above. Travel expenses for counsel for Westco and Dynaco in respect of the hearing will be limited to two return trips to Ottawa. In our view, Acadia’s accommodation costs were reasonable and necessary and will thus be allowed as claimed.
[60] Expenses relating to Mr. Soucy’s attendance at trial will be limited to the time he was testifying. Other expenses incurred by Mr. Soucy for his attendance at trial and the expenses incurred by Mr. Jean-Yves Lavoie will be disallowed as such expenses are traditionally borne by the client (Janssen-Ortho Inc. v. Novopharm Ltd., 2006 FC 1333, 57 C.P.R. (4 th ) 58 at para. 25.) Reasonable accommodation disbursements relating to Ms. Sanderson’s attendance at the hearing will be allowed.
iii. Copies [61] Westco claims $52,839.75 in photocopying charges at $0.25 per page. Nadeau submits that Westco’s photocopying claim has not been substantiated, in that no information has been provided as to the actual cost of photocopying. In Janssen-Ortho, Justice Hughes indicated the following at paragraph 16:
16 Photocopying is allowed, where indicated in these Reasons, at the lesser of the actual charge or $0.25 per page. I am mindful that law firms may have set up in-house copy centres, possibly as separate entities. In this regard, the comments of this Court in Diversified Products Corp. v. Tye-Sil Corp., [1990] F.C.J. No. 1056 (QL) are appropriate in stating that the sum of $0.25 per page is not simply an amount that can be charged without more. When an in-house service is used, the assessment officer must be advised as to the actual costs. The Court said:
With respect, I cannot agree with the reasoning of the Taxing Officer. The item of photocopies is an allowable disbursement only if it is essential to the conduct of the action. Therefore, this is
intended to reimburse a party for the actual out-of-pocket cost of the photocopy. The $0.25 charge by the office of Plaintiffs’ counsel is an arbitrary charge and does not reflect the actual cost of the photocopy. A law office is not in the business of making a profit on its photocopy equipment. It must charge the actual cost and the party claiming such disbursements has the burden to satisfy the Taxing Officer as to the actual cost of the essential photocopies.
[62] The Tribunal recognizes that a significant volume of copies was required in the proceeding. However, in our view, Westco has led no evidence to establish the actual costs of the photocopy. In its submission, counsel for Westco indicates that “$0.25 is the actual out-of-pocket expense borne by Westco for the cost of the photocopies”. What is relevant is not the cost charged to the client but rather the actual cost of a photocopy. We will allow only the actual costs incurred for photocopies, payable on filing of proof of actual costs of essential photocopies.
iv. Transcripts [63] The Respondents claim for the cost of transcripts of case management conferences held on September 5 and November 6 of 2008. These conferences addressed procedural matters and Tribunal orders outlining the parties’ obligations resulting from these case conferences were issued. It is therefore our opinion that such transcripts were not necessary. Accordingly, costs for these disbursements will not be allowed.
v. Costs in respect of the leave application [64] Westco has claimed $3,368.88 in disbursements relating to the application for leave under section 103.1 of the Act. In B-Filer, the Tribunal refused to allow costs in respect of the leave application based primarily on the fact that the Tribunal’s order dealing with the leave application was silent on costs. Justice Dawson, for the Tribunal’s panel, offered the following at paragraph 41 of the decision:
We note in leaving this issue that such result is consistent with the principle cited in Orkin, The Law of Costs, at s. 105.7 (looseleaf (Aurora: Canada Law Book Inc., 2000)) that if a matter is disposed of on a motion, with no mention of costs “it is as though the judge disposing of the matter had said that he saw fit to make no order as to costs.”
[65] In the present matter, the Applicant was successful in the leave application and the order relating to the leave application was silent on costs. Accordingly, disbursements with regards to the leave application will not be allowed.
[66] In order to assist the Tribunal in awarding a lump sum, the Respondents shall each provide a revised bill of costs, based on these reasons, in accordance with the following order.
THEREFORE, THE TRIBUNAL ORDERS THAT: [67] The issue of costs remains reserved. [68] The Respondents shall each prepare a further draft bill of costs in accordance with these reasons, such bill shall be served and filed within 30 days of the date of this order.
[69] The Respondents may accompany such bills with further written submissions, not to exceed 10 pages in length.
[70] Thereafter, Nadeau may serve and file responsive submissions, not to exceed 10 pages in length, within 14 days after the service of the Respondents’ submissions.
[71] The Respondents may serve and file reply submissions, not to exceed five pages in length, within 7 days after the service of Nadeau’s responsive submissions.
DATED at Ottawa, this 21 st day of January, 2010 SIGNED on behalf of the Tribunal by the panel members (s) Edmond P. Blanchard (s) Henri Lanctôt (s) P. André Gervais
SCHEDULE [72] Rule 400 of the Federal Courts Rules: 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.
Crown (2) Costs may be awarded to or against the Crown. Factors in awarding costs (3) In exercising its discretion under subsection (1), the Court may consider (a) the result of the proceeding; (b) the amounts claimed and the amounts recovered; (c) the importance and complexity of the issues; (d) the apportionment of liability; (e) any written offer to settle; (f) any offer to contribute made under rule 421; (g) the amount of work; (h) whether the public interest in having the proceeding litigated justifies a particular award of costs; (i) any conduct of a party that tended to shorten or unnecessarily lengthen the duration of the proceeding;
400(1) La Cour a le pouvoir discrétionnaire de déterminer le montant des dépens, de les répartir et de désigner les personnes qui doivent les payer.
La Couronne (2) Les dépens peuvent être adjugés à la Couronne ou contre elle. Facteurs à prendre en compte (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; b) les sommes réclamées et les sommes recouvrées; c) l’importance et la complexité des questions en litige; d) le partage de la responsabilité; e) toute offre écrite de règlement; f) toute offre de contribution faite en vertu de la règle 421; g) la charge de travail; h) le fait que l’intérêt public dans la résolution judiciaire de l’instance justifie une adjudication particulière des dépens; i) la conduite d’une partie qui a eu pour effet d’abréger ou de prolonger inutilement la durée de l’instance;
(j) the failure by a party to admit anything that should have been admitted or to serve a request to admit; (k) whether any step in the proceeding was (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution; (l) whether more than one set of costs should be allowed, where two or more parties were represented by different solicitors or were represented by the same solicitor but separated their defence unnecessarily; (m) whether two or more parties, represented by the same solicitor, initiated separate proceedings unnecessarily; (n) whether a party who was successful in an action exaggerated a claim, including a counterclaim or third party claim, to avoid the operation of rules 292 to 299; and (o) any other matter that it considers relevant. Tariff B (4) The Court may fix all or part of any costs by reference to Tariff B and may award a lump sum in lieu of, or in addition to, any assessed costs.
j) le défaut de la part d’une partie de signifier une demande visée à la règle 255 ou de reconnaître ce qui aurait dû être admis; 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; l) la question de savoir si plus d’un mémoire de dépens devrait être accordé lorsque deux ou plusieurs parties sont représentées par différents avocats ou lorsque, étant représentées par le même avocat, elles ont scindé inutilement leur défense; m) la question de savoir si deux ou plusieurs parties représentées par le même avocat ont engagé inutilement des instances distinctes; n) la question de savoir si la partie qui a eu gain de cause dans une action a exagéré le montant de sa réclamation, notamment celle indiquée dans la demande reconventionnelle ou la mise en cause, pour éviter l’application des règles 292 à 299; o) toute autre question qu’elle juge pertinente. Tarif B (4) La Cour peut fixer tout ou partie des dépens en se reportant au tarif B et adjuger une somme globale au lieu ou en sus des dépens taxés.
Directions re assessment (5) Where the Court orders that costs be assessed in accordance with Tariff B, the Court may direct that the assessment be performed under a specific column or combination of columns of the table to that Tariff. Further discretion of Court (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 c) adjuger tout ou partie des a solicitor-and-client basis; or (d) award costs against a successful party. Award and payment of costs
(7) Costs shall be awarded to the party who is entitled to receive the costs and not to the party's solicitor, but they may be paid to the party's solicitor in trust.
Directives de la Cour (5) Dans le cas où la Cour ordonne que les dépens soient taxés conformément au tarif B, elle peut donner des directives prescrivant que la taxation soit faite selon une colonne déterminée ou une combinaison de colonnes du tableau de ce tarif. Autres pouvoirs discrétionnaires de la Cour (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; dépens sur une base avocat- client; d) condamner aux dépens la partie qui obtient gain de cause. Adjudication et paiement des dépens
(7) Les dépens sont adjugés à la partie qui y a droit et non à son avocat, mais ils peuvent être payés en fiducie à celui-ci.
COUNSEL: For the applicant Nadeau Ferme Avicole Limitée/Nadeau Poultry Farm Limited Leah Price Myriah Graves
For the respondents Groupe Westco Inc. Eric C. Lefebvre Martha Healey Denis Gascon Alexandre Bourbonnais Geoffrey Conrad
Groupe Dynaco, Coopérative Agroalimentaire Olivier Tousignant Paul Routhier Louis Masson Paul Michaud
Volailles Acadia S.E.C. and Volailles Acadia Inc./Acadia Poultry Inc. Valérie Belle-Isle