Date: 20200127
Docket: T-1486-19
Toronto, Ontario, January 27, 2020
PRESENT: Case Management Judge Angela Furlanetto
BETWEEN:
ALLARCO ENTERTAINMENT 2008 INC.
Plaintiff
and
STAPLES CANADA ULC, STAPLES CANADA INC., STAPLES CANADA
HOLDINGS, LLC, STAPLES CANADA HOLDINGS III, LLC, STAPLES
PROMOTIONAL PRODUCTS CANADA, LTD., BEST BUY CANADA LTD., BEST
BUY MEDICAL SUPPLIES (CANADA) INC., BEST BUY MATTRESS COUNTRY
CANADA LTD., LONDON DRUGS LIMITED, CANADA COMPUTERS INC., JOHN
DOE CUSTOMERS 1 TO 50,000
Defendants
ORDER
UPON motion brought by the Plaintiff and heard at a Special Sitting of the Federal Court
in Toronto on January 23, 2020 for:
1. An order adjourning or for a stay of the costs hearing set for January 23, 2020;
2. An order striking out the affidavits of Lori-Anne De Borba, Kim Humphrey,
Nicole Lee and Alana McMullen;
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3. An order for Directions;
4. Such further and other relief as counsel may advise and the Court Directs
including but not limited to the following:
5. A breakdown of the alleged fees according to the tariffs set out in the rules of
practice;
6. An Order that requires the 4Stores Defendants to submit cost outlines if so
advised in the format set out in Tariff B and identifying which categories in Rule
400(3) are invoked including a categorization of fees based on party and party
costs and solicitor and client costs for guidance to the Court and to include a
breakdown of time alleged to have been docketed for the following matters:
7. Time spent reviewing the hard drive evidence and preparing the work product of
the analysis of the contents of the hard drives;
8. Time spent regarding the allegations of improper conduct by the Plaintiff;
9. Time spent regarding the preparation of the motion which requested production of
the hard drives even though they had already been provided;
10. Time spent regarding preparation of the motion seeking to strike out the word
steal or stealing and other words from the statement of claim;
11. Time spent regarding preparation of the motion seeking particulars of the other
allegations in the statement of claim;
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12. Time spent regarding preparation for the motion for security for costs including
the evidence that they uncovered and that they intended to rely on;
13. In the event that the affidavits are not struck out for an order adjourning the
motion to allow the Plaintiff to examine the affiants, Lori-Anne DeBorba, Kim
Humphrey, Nicole Lee, Alana McMullen, Cathy Heath;
14. For an order providing that when the assessment of costs is referred to the
assessment officer that specific directions are given according to the guidelines in
Rule 403;
15. For an Order that the parties shall discontinue the practice of making submissions
or allegations of evidence to the Court by letter or which is not approved by
opposing counsel such that all letters will be restricted to matters of procedure;
16. For such further and other relief as counsel may advise and this Court;
17. For costs.
AND UPON hearing submissions from the parties at the motion and reviewing the
motion materials filed; and upon considering this matter;
This action was discontinued by the Plaintiff on January 6, 2020. The Defendants have
brought a motion for recovery of their costs under Rule 402 of the Federal Courts Rules. The
motion seeks solicitor and client fees and disbursements on the basis of the Plaintiff’s alleged
conduct in the proceeding; in the alternative, the motion requests costs payable as a lump sum
based on a percentage of the fees incurred, along with disbursements.
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By this motion, the Plaintiff seeks an adjournment or stay of the Defendants’ motion and
includes a laundry list of requests for relief. The primary relief the Plaintiff seeks is to have the
costs it owes from its discontinuance of the action dealt with in the Alberta Court of Queen’s
Bench as it has now started an action in that court for the same relief against the Defendants (the
“Alberta Action”). Alternatively, it seeks to have the Defendants’ costs motion adjourned so that
it may obtain further evidence and information from the Defendants in support of the
Defendants’ motion; it seeks to strike the affidavits currently in evidence in support of the
Defendants’ motion based on hearsay. If not successful in striking the evidence, the Plaintiff
seeks to adjourn the motion until it can conduct cross-examination. The Plaintiff seeks a
breakdown of the fees incurred by the Defendants as broken down by the steps set out in Tariff
B. The Plaintiff also seeks other breakdowns of the Defendants’ fees, some of which are
overlapping and repetitive with information already provided or requested and other requests are
written in context of the Plaintiff’s argument on the merits. The Plaintiff asks that costs be
assessed by an assessment officer and suggests that it should have an entitlement to costs.
Additionally, the Plaintiff seeks other broad relief, including the right to cross-examine an affiant
on an earlier affidavit filed in the proceeding; an order regarding the manner in which letters can
be filed in the proceeding; and an undertaking to be given by the Defendants for the Alberta
Action.
The evidence that the Plaintiff filed on the adjournment motion was lengthy and included
five affidavits, including two from experts, the vast majority of which was not relevant to the
requested adjournment and related to issues involving the merits of the proceeding. None of the
affidavits were previously filed in the proceeding, although one asserted it was in support of a
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motion for interlocutory injunction, which had never been brought in the proceeding and was not
pending before the Court.
For the reasons that follow, I will dismiss the Plaintiff’s primary relief and its request to
strike the affidavits filed on the Defendants’ motion, but will order that all Defendants provide a
breakdown of the alleged fees incurred according to the items set out in Tariff B, which the
Plaintiff asserts is the information relevant to its responding argument for the costs motion. The
remainder of the Plaintiff’s requests are dismissed as being redundant, unnecessary and/or
improper.
Request for adjournment for the Alberta Action
The Plaintiff seeks a long-term adjournment or stay of the Defendants’ costs motion and
proposes to have costs of the Federal Court action dealt with in the Alberta Action. It cites no
law to support this request or to found the Alberta Court’s jurisdiction to deal with any matter of
costs from this Court and bases its request on the assumption that the same materials already
filed in this proceeding with be used and filed in the Alberta Action. This assumption is not
shared by the Defendants.
The Federal Court of Appeal in Clayton v. Canada (AG), 2018 FCA 1 at para 24, Mylan
Pharmaceuticals v. AstraZeneca 2011 FCA 312 at para 5 and Epicept v. Canada (Minister of
Health) 2011 FCA 209 at para 14 discussed the legal test for a long term adjournment as
grounded in an “interests of justice” analysis. The Court has discretion to stay proceedings on the
grounds that the issue is being dealt with in another court where, in the circumstances, it is in the
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interest of justice to do so. In determining this issue, the Court will consider the prejudice to the
parties in granting the relief requested.
In this case, it is my view that it is not in the interests of justice to grant the relief
requested and that in doing so it would be highly prejudicial to the Defendants.
Rule 402 expressly provides that the Defendants are entitled to their costs payable
forthwith upon discontinuance. Pursuant to Rule 412 these costs may be assessed upon filing of
the notice of discontinuance. The Plaintiff has not displaced this presumption.
The Plaintiff has not established a sufficient nexus between the Alberta Action and the
steps taken in this proceeding to justify deferring the costs to be paid. Any duplication of costs, if
this issue in fact arises, can be dealt with if and when the issue arises in the Alberta Action, but
should not be dealt with prematurely by means of deferral of costs by this Court based on
speculation. Fairness dictates that costs should be paid now to compensate the Defendants, fully
or partially, for fees and disbursements incurred unnecessarily in this proceeding as a result of
the Plaintiff’s discontinuance, and that this should be done while the litigation is still in the
minds of the litigants and without the additional costs associated with delay.
While the Plaintiff argues there is a risk of this Court making factual findings that will
interfere with the Alberta Action, I do not agree. The assessment of costs does not require a
determination of the merits of this action, but rather consideration of the conduct of the parties in
the proceedings and the reasonableness of the costs requested and the amounts asserted to be
incurred.
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Request to strike the Defendants’ affidavit evidence
The Plaintiff seeks to strike the affidavits included in the Defendants’ motion for costs on
the basis of hearsay. The affidavits are those of law clerks from the Defendants’ respective law
firms, each of which is primarily included in the Defendants’ motion in order to attest to the
costs information provided, which includes, for each firm, both a bill of costs and copies of the
invoices sent to clients for the action. The Plaintiff argues that the solicitors who incurred the
fees should be the ones to testify as to the various fees incurred. This is an unduly onerous
request.
The issue of evidence to support the legal fees claimed in costs proceedings was
addressed by the Federal Court of Appeal in Dow Chemical Co. v. NOVA Chemicals Corp., 2017
FCA 25 (“Dow”). Dow was a complex patent infringement action; the Plaintiffs who were
successful at trial, requested costs as a lump sum payment based on a percentage of their legal
fees and requested recovery of their disbursements. The costs requested were significant and the
Defendant objected to the evidence presented to support the costs asserted. The Federal Court of
Appeal held that it was sufficient to justify legal fees by providing a Bill of Costs and evidence
demonstrating the fees actually incurred, which should include a description of the services
provided in exchange for those fees. Affidavit evidence was only required to justify
disbursements not incurred by counsel. Affidavit evidence from a solicitor was not necessary to
support the legal fees incurred (see Dow, paras 14, 15 and 18).
In this case, the Plaintiff’s objection does not relate to the disbursements asserted, but
rather to the claim for legal fees. In support of the fees asserted, each Defendant has provided a
Bill of Costs and copies of the invoices issued, which are introduced through a law clerk’s
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affidavit. I see no basis to strike the affidavits submitted or the evidence provided as they result
in even more detailed information than that referred to in Dow. However, I do note that there is
variation in the level of detail presented in the Bills of Costs for the different Defendants.
The Plaintiff asserts that it cannot tell which fees accord with which services. It asserts
that the only services that should be recoverable are the services identified in Tariff B of the
Federal Courts Rules. This is the breakdown the Plaintiff asserted in its argument that it would
need, above all else, to respond to the Defendants’ motion. As such, and for the purposes of
assisting with the efficient resolution of the costs motion, I will order all Defendants to produce
this information.
Request for other costs information and an assessment
The Plaintiff has also made other requests relating to the breakdown of the costs asserted
by the Defendants. I consider the majority of these requests to be redundant and unnecessary in
view of the information already provided and the further information I am ordering to be
produced. Other requests relate to the Plaintiff’s argument on the merits and are unnecessary and
improper as posed. The Plaintiff may raise any concerns with the details of the information
provided in argument in its response to the Defendants’ costs motion.
With respect to the Plaintiff’s request for costs to be determined by an assessment officer,
I note that Rules 2 and 405 of the Federal Courts Rules provide a Prothonotary and case
management judge with full discretion to deal with the issue of costs and to fix a costs amount.
There is no basis to refer the issue of costs to a separate assessment (Ds-Max Canada v. Nu Life
Inc. 2005 FC 25 at para 5).
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Request to adjourn for cross-examination on the affidavits filed
The Plaintiff asks for an adjournment to allow time to cross-examine the affiants on the
evidence submitted, in the event that its request to strike the affidavits is not allowed. The
Defendants argue that the Plaintiff has lost any opportunity to cross-examine the law clerks on
their affidavits and that; moreover, there is no basis to do so, and that any such cross-
examinations will not yield any information relevant to the Defendants’ motion or any
information beyond what is already available on the face of the invoices (Philip Morris Products
SA v. Marlboro Canada Ltd. 2011 FC 1113 at para 20-28 (“Philip Morris”)).
In view of my disposition on the further evidence to be provided, I consider the request
for cross-examination now to be unnecessary. As noted above, the Plaintiff admitted that the
information it needed to respond to the Defendants’ motion for costs was a breakdown of the
fees incurred based on the services set out in Tariff. With this breakdown for all Defendants and
the information already provided, there will be ample information as to the Defendants alleged
fees incurred. If the Plaintiff is of the view that the fees billed are unreasonable or improperly
claimed, it is open for the Plaintiff to challenge the reasonableness of the fees charged based on
the evidence provided in its response to the Defendants’ motion.
Any further request for cross-examination now with this further information already to be
provided, in my view, would be nothing more than a fishing expedition related to items no longer
at issue in view of the Plaintiff’s discontinuance.
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Other relief requested
With respect to the other items requested by the Plaintiff on its motion, they are
dismissed as follows:
- There is no basis to cross-examine Cathy Heath who did not deliver an affidavit on the
costs motion; she has no evidence pending on the Defendants’ costs motion and the relief
to be decided.
- The Plaintiff’s request for this Court to issue an order to bar certain activity in the Alberta
Action based on alleged submissions made by the Defendants during case management is
improper for this Court. Any request for an undertaking dealing with activity to be taken
in the Alberta Action should be dealt with there.
- I consider the law firm invoices attached to the DeBorba, Humphrey, Lee, and McMullen
affidavits to be confidential and will allow this information to be temporarily sealed for
the purposes of addressing the costs motion and returned to the Defendants on
disposition. I will not order that the redactions be made available. There is sufficient
description provided to understand the services rendered; any further information is
unnecessary in view of the additional information ordered on this motion (Philip Morris
at para 28). I note Plaintiff counsel’s agreement to treat such information on a counsels’
eyes only basis for restricted use on the Defendants’ motion for costs.
- The request made by the Plaintiff for an order relating to the manner in which letters can
be submitted to the Court is displaced and without merit.
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Costs of the motion
As revealed by this Order, the nature of the relief requested on this motion went far
beyond a motion for adjournment, involving excessive argument by the Plaintiff on the motion,
voluminous motion materials, much of which was unnecessary to the issue of adjournment, and a
number of unfounded and repetitive requests. On the basis of my disposition on the motion in
accordance with the primary relief requested, and being of the view that the remainder of the
motion could have been dealt with more efficiently by the Plaintiff by simply making a request
for a breakdown of the fees incurred in accordance with the Tariff items, I will order that the
costs of the motion be awarded to the Defendants in an amount to be fixed and payable forthwith
with the remainder of the costs to be determined. The Defendants will be entitled to make short
submissions as to the costs for the motion at the same time that they provide the further
information now ordered. The Plaintiff will accordingly be entitled to respond to these
submissions as part of its main response to the Defendants’ costs motion.
THIS COURT ORDERS that:
1. The Plaintiff’s request for a long-term adjournment or stay of the Defendants’ costs
motion to allow the costs to be dealt with in the Alberta Action is dismissed.
2. The Plaintiff’s request to strike the affidavits of Lori-Anne DeBorba, Kim Humphrey,
Nicole Lee and Alana McMullen is dismissed.
3. Within seven (7) days of the date of this Order, all Defendants shall deliver a breakdown
of the alleged fees incurred for this action according to the items set out in Tariff B of the
Federal Courts Rules.
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4. The Plaintiff shall have ten (10) days from the delivery of the information in item 3, to
serve and file its written representations on the Defendants’ motion for costs.
5. The Defendants shall have five (5) days from the delivery of the Plaintiffs’ written
representations on their motion for costs to serve and file any reply submissions.
6. The Defendants’ motion for costs shall thereafter be dealt with based on the written
record filed. Should the parties be of the view that additional oral submissions are needed,
such request shall be dealt with through case management.
7. All other relief requested in the Plaintiff’s motion is dismissed.
8. The invoices submitted as attachments to the DeBorba, Humphrey, Lee and McMullen
affidavits shall remain under temporary seal and shall be treated as confidential by the
Registry until final disposition of the Defendants’ costs motion, at which time such
invoices shall be returned to the Defendants.
9. Costs of this motion are awarded to the Defendants in an amount to be fixed and payable
forthwith with the remainder of the costs for the action.
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10. The Defendants shall be entitled to make short submissions, of no more than 4 pages, as
to the costs of this motion and its apportionments amongst the Defendants, which
submissions shall be served and filed at the same time as the information ordered to be
produced in item 3 of this Order. The Plaintiff shall include its response to these
submissions in its written representations on the Defendants’ motion for costs.
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“Angela Furlanetto”
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