T-3324-75
Warwick Shipping Limited (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Walsh J.—Montreal, June 6;
Ottawa, June 13, 1980.
Practice — Costs — Motion by legal representatives of
deceased defendant in this and two other actions to fix lump
sum in lieu of taxed costs — Solicitors for deceased spent
numerous hours in preparation of cases, which involved large
monetary claims — Proceedings against the deceased were
discontinued after his death, but his solicitors were aware of
the intention to desist against him prior to his death, and they
continued to act for him after his death up to the date of
actual discontinuances — Motion dismissed on the ground
that after the death of Mr. Fearon no steps were taken
pursuant to Rules 1724 and 1725 for the proceedings to be
carried on by the personal representatives of the deceased —
Federal Court Rules 2(2), 5, 344(1),(7)(b), 406(1),(3), 1724,
1725(1).
Motion by legal representatives of a deceased defendant,
Joseph Fearon, to fix a lump sum in lieu of taxed costs in this
and two other actions for damages. Mr. Fearon died before all
proceedings against him were discontinued, but his solicitors
were aware of the intention to desist against him for some time
prior to the actual discontinuances. The solicitors attended
numerous meetings and examinations for discovery in the
Maritimes, Ontario and Quebec, and spent many hours
researching Fearon's liability and the limitations thereof under
federal and provincial legislation. They continued to act for
Fearon after his death and up to the date of actual discontinu
ances. It is alleged that the tariff fees are inadequate. The issue
is whether or not Fearon's solicitors are entitled to have a lump
sum fixed in lieu of taxed costs.
Held, the motion is dismissed. There is a serious procedural
objection to the present motion which prevents it from being
granted. After the death of Mr. Fearon no steps were taken
pursuant to Rules 1724 and 1725 for the proceedings to be
carried on by the personal representatives of the deceased.
Federal Court Rules make no provision for distraction of costs
in favour of the attorneys of the party to whom they are
awarded unlike article 479 of the Quebec Code of Civil Proce
dure. Applicants contend that Rule 2(2) or Rule 5 (the gap
rule) might be applied so as to adopt the Quebec practice, but
this argument must be rejected. Federal Court Rules provide
for costs and there is no omission which needs to be covered
resulting from the failure to provide for distraction of costs in
favour of the attorneys of a party. Mr. Fearon's attorneys who
present these motions are therefore not the parties entitled to
collect the costs. They argue that they are really representing
the Atlantic Pilotage Authority, stating that they were instruct
ed by it to defend Mr. Fearon, and under the terms of the
agreement with the Authority are entitled to party and party
costs as taxed by a court of law. This agreement cannot affect
the Queen.
Smerchanski v. Minister of National Revenue [1979] 1
F.C. 801, referred to. Manitoba Fisheries Ltd. v. The
Queen [1980] 1 F.C. 36, referred to. Aladdin Industries
Inc. v. Canadian Thermos Products Ltd. [1973] F.C. 942,
referred to. Hillsdale Golf & Country Club Inc. v. The
Queen [1979] 1 F.C. 809, referred to. Crabbe v. Minister
of Transport [1973] F.C. 1091, referred to. McCain Foods
Ltd. v. C. M. McLean Ltd. [1980] 2 F.C. 580, referred to.
National Capital Commission v. Bourque [No. 2] [1971]
F.C. 133, applied. Osborn Refrigeration Sales and Service
Inc. v. The "Atlantean I" [1979] 2 F.C. 661, applied.
MOTION.
COUNSEL:
No one appearing for plaintiff.
Michel Bourgeois for Joseph Fearon.
James Mabbutt for defendant.
SOLICITORS:
Ogilvy Renault, Montreal, for plaintiff.
Major & Associates, Montreal, for Joseph
Fearon.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
WALSH J.: A motion was presented by the legal
representatives of the late Joseph Fearon for fixing
a lump sum in lieu of taxed costs in this action and
two others namely T-3325-75 Golden Eagle
Canada Ltd. and New Brunswick Electric Power
Commission v. Her Majesty the Queen and The
Foundation Company of Canada Ltd. Third Party
and J. P. Porter Company Ltd., Henry J. Kaiser
Company (Canada) Ltd. and Standard Construc
tion Company Ltd. Fourth Parties and T-553-76
Her Majesty the Queen v. The Ship "Golden
Robin" and Warwick Shipping Limited and
James T. Reid and Golden Eagle Canada Lim
ited. Without going into too much detail it is
necessary to briefly resume the facts. The late
Joseph Fearon was piloting the ship M/V Golden
Robin at a time when an accident involving many
factual and legal complications occurred in Port
Dalhousie, New Brunswick. As a result Warwick
Shipping Limited in one action and Golden Eagle
Canada Ltd. and New Brunswick Electric Power
Commission in another sued the defendant claim
ing that the accident resulted from the ship strik
ing an underwater obstruction. Defendant called in
third parties including Joseph Fearon, and defend
ant contended that if she were held liable to
plaintiffs she would be entitled to recover contribu
tion from Fearon pursuant to relevant New Bruns-
wick statutes. Fourth parties were brought in in
due course. A third action arose out of the same
incident with Her Majesty suing for oil pollution
caused. Fearon was named as a defendant in it and
brought into the other two actions as a third party.
It is alleged by applicants that over 50 petitions or
other procedures were presented by various par
ties. Fearon was examined on discovery by defend
ant in action T-3325-75 for a period of two days
involving 220 pages of discovery at which six
parties represented by nine attorneys participated.
The evidence he gave was allegedly of a technical
nature dealing with approaches to the harbour,
necessary courses, navigation aids available, the
extent of the dredging done by the fourth parties,
tides, currents, and other matters. Counsel con
tends that in order to represent Fearon adequately
a number of meetings with him and experts were
required in order to acquire the necessary
familiarity with the area of Port Dalhousie. Legal
questions had to be studied with respect to the
application of the Contributory Negligence Act,
S.N.B. 1973, c. C-19 and the Tortfeasors Act,
S.N.B. 1973, c. T-8 of New Brunswick, and the
limitation of responsibility under the Pilotage Act,
S.C. 1970-71-72, c. 52, and the application of Part
XX of the Canada Shipping Act, R.S.C. 1970, c.
S-9 all of which allegedly involved 100 hours of
research. The Captain of the Golden Robin was
also examined on discovery for three days with 387
pages of stenography. The attorneys of Fearon,
located in Montreal, had to go to discoveries or
meetings in Dalhousie, New Brunswick, Halifax,
Nova Scotia, Ottawa and Toronto as well as Mon-
treal. It is contended that by the application of
Rules 344 and 345 of the Federal Court Rules and
by analogy to Rule 14 of the Quebec Bar Tariff,
and considering that said Joseph Fearon was
named as a third party in action T-3324-75 in
which the claim was for $2,284,104.08 and that he
was defendant in an action brought by Her Majes
ty for $195,000 in action T-553-76 the tariff fees
are totally inadequate. Unfortunately Joseph
Fearon died on October 12, 1977, and on January
4 or 5, 1978, defendant produced désistements in
all proceedings against him and on July 18, 1978,
the styles of cause were as a consequence amend
ed. It was argued that the désistements (or discon
tinuances as they are referred to in the Rules of
this Court) are not as a result of the death of the
late Mr. Fearon but that it had been made known
to his attorneys before that it was intended to
desist against him, Her Majesty apparently having
been satisfied that the contention in his pleadings
that his liability would be limited under the Pilot-
age Act might be maintained, and certain settle
ments having taken place including pollution
claims.
While conceding that much of the work done on
the late Mr. Fearon's behalf was common to all
three actions, his attorneys have attempted to
break down their claim among the three, taking
into consideration the amounts involved. In the
action bearing No. T-3324-75 which involved by
far the largest claim the amount sought is $16,897
and it is pointed out that fees according to the
tariff would only be $1,575. In action T-3325-75
the claim is for $4,852.45, as against the fees of
only $1,500 allowed according to the tariff and in
action T-553-76 the amount sought is $5,691 as
against $1,425 fees which the tariff would provide.
It is conceded that if the limitations of the Pilot-
age Act apply the late Mr. Fearon's liability would
only have been $500, but legal questions arose as
to whether the case was necessary or voluntary
pilotage and in any event until the issue was raised
in the pleadings he was, at least in theory, in
jeopardy for the full amounts claimed. It is
conceded also that his attorneys were aware that
Her Majesty intended to desist from the claims
against him for some time before the actual dis -
continuances took place, but that they nevertheless
continued to act after his death and up to the date
of the actual discontinuances. Defendant does not
dispute that the two members of the firm of attor
neys acting for him may have spent the time set in
their affidavits in connection with this work in
research, attendance at examinations, and so forth.
Defendant does point out however that, as admit
ted experts in pilotage claims, it is somewhat
surprising that it would have been necessary to
devote so much time to the research of the various
legal issues involved and in particular to his claim
for limitation of liability. In the leading case of
Smerchanski v. M.N.R.' Chief Justice Jackett
dismissed an application for special directions con
cerning costs contemplated by Tariff B made pur
suant to Rule 344(7) on the grounds that it was
belated and there was no justification for extend
ing the time before making such an application
which should have been made within 10 days of
the pronouncement of the judgment pursuant to
Rule 337(5). In what was really obiter to the main
reasons for judgment the learned Chief Justice,
who was sitting alone in connection with this
application stated at page 805:
Finally, I should say on this point that the material submit
ted in support of this application does not, in my opinion,
provide a reasonably arguable case for an exercise of judicial
discretion increasing the fees for services of solicitors and
counsel in connection with this appeal. Such a direction must
be based on relevant considerations and must not be made on
an arbitrary basis. All that has been established here is that the
respondent incurred a very large solicitor and client bill in
connection with the appeal, which would have been relevant if
costs had been awarded on a solicitor and client basis but is not
ordinarily relevant to the determination of costs on a party and
party basis. Nothing has been put forward to suggest that there
was anything in the conduct of the appeal to warrant any
increase in the party and party tariff.
After pointing out that there is no principle as to
the basis for ordinary party and party costs which
are certainly not intended to constitute full com
pensation to the successful party for his solicitor
and client costs he stated at page 806:
I have difficulty in accepting volume of work in preparation
considered alone, or in conjunction with such factors as the
difficulty or importance of the case, as constituting a basis for
exercising the judicial discretion to increase Tariff B costs
items.
and again [at page 806]:
1 [1979] 1 F.C. 801.
If Federal Court party and party costs are not designed to
provide full reimbursement, as it seems to me, what is intended
is that they be made up of the completely arbitrary amounts
fixed by or in accordance with the rules subject to variations
(where authorized) based on factors arising out of the conduct
of the particular proceeding.
In the subsequent judgment in Manitoba Fish
eries Limited v. The Queen 2 Smith D.J. reviewed
the previous jurisprudence at some length, includ
ing the case of Aladdin Industries Incorporated v.
Canadian Thermos Products Limited [ 1973] F.C.
942 (from which the Smerchanski case was a
departure) the Smerchanski case itself, and the
case of Hillsdale Golf & Country Club Inc. v. The
Queen 3 in which I had occasion to set out in detail
my understanding of the effects of the Smerchan-
ski case and the Federal Court of Appeal case of
Crabbe v. Minister of Transports. He concludes
that as the case was in the nature of a test case a
reasonable and fair fee should be allowed.
In the case of McCain Foods Limited v. C. M.
McLean Limited [1980] 2 F. C. 580, a judgment
of December 13, 1979, (which I understand is
under appeal *) I again had occasion to consider
the Smerchanski case and noted [at page 583] in
particular the remarks of the learned Chief Justice
that "Nothing has been put forward to suggest
that there was anything in the conduct of the
appeal to warrant any increase in the party and
party tariff" and again his words "subject to varia
tions (where authorized) based on factors arising
out of the conduct of the particular proceeding" as
justifying a finding that increased amounts can be
awarded when the proof submitted to the Court in
connection with the taxation justifies them even
though in principle the party and party costs are
not expected to provide full compensation for time
and effort spent. This was a judgment on a belated
discontinuance proceeding after defendant had
been put to very substantial expense in resisting
the claim for a trade mark infringement. In ren
dering judgment I made a distinction between
Rule 344(1) which reads as follows:
Rule 344. (1) The costs of and incidental to all proceedings in
the Court shall be in the discretion of the Court and shall
follow the event unless otherwise ordered. Without limiting the
2 [1980] 1 F.C. 36.
3 [1979] 1 F.C. 809.
a [1973] F.C. 1091.
* [[1981] 1 F.C. 534.]
foregoing, the Court may direct the payment of a fixed or lump
sum in lieu of taxed costs.
and Rule 344(7)(b) which reads:
Rule 344...
(7) Any party may
(b) after the Court has reached a conclusion as to the
judgment to be pronounced, at the time of the return of the
motion for judgment,
whether or not the judgment includes any order concerning
costs, move the Court to make any special direction concerning
costs contemplated by this Rule, including any direction con
templated by Tariff B, and to decide any question as to the
application of any of the provisions in Rule 346.
because there was some doubt as to whether the
latter Rule would be applicable whereas it
appeared to me that Rule 344(1) is quite a general
Rule which precludes taxation.
In the present case defendant disputes the neces
sity of many of the actual disbursements made on
behalf of the late Mr. Fearon by his attorneys in
representing him and in any event, as I pointed out
in the McCain case (supra) it would appear inap
propriate in using Rule 344(1) and fixing a global
sum in lieu of taxed costs to ask a taxing officer to
examine and tax disbursements and then add to
that a lump sum for fees. I am satisfied that,
leaving aside the question of the disbursements in
each case, only one set of fees should be allowed in
the three proceedings as the work done on behalf
of Mr. Fearon was substantially identical in all
three. Her Majesty's counsel also points out that it
is doubtful whether travelling expenses of Fearon's
counsel to examinations in Fredericton and else
where are properly allowable, as, if Fearon had
been represented by local counsel at the place
where he lived, it would not have been necessary
for them to incur these expenses to represent him.
He also contends that much of their work may
well have been unnecessary in order to protect him
in the various proceedings. Certainly they acted
most diligently on his behalf. It is very difficult to
be precise, but on a lump sum basis I believe that
an amount of $10,000 to cover both fees and
disbursements applicable to all three actions would
be fair and just and I would order payment of this
amount if it could be concluded that this applica
tion is permissible.
This raises some very interesting legal questions
which I will now deal with. In dealing with discon
tinuances Rule 406(1) reads as follows:
Rule 406. (1) The plaintiff may, at any time before service of
the defendant's defence, or after service thereof before taking
any other proceeding in the action (other than an interlocutory
application), by filing and serving an appropriate notice in
writing, wholly discontinue his action or withdraw any particu
lar claim made by him, and thereupon he shall pay the defend
ant's costs of the action, or, if the action be not wholly
discontinued, the defendant's costs occasioned by the matter so
withdrawn. Such costs, if they cannot be agreed on, may be
taxed.
and Rule 406(3) reads:
Rule 406... .
(3) Except as in this Rule otherwise provided, a plaintiff may
not discontinue an action without leave of the Court; but the
Court may, before or after any hearing, upon such terms as to
costs, as to bringing any subsequent action, or otherwise, as
may seem just, order the action to be discontinued, or any part
of the alleged cause of complaint to be struck out.
When Her Majesty filed notices of discontinu
ances in all three cases on January 4, or 5, 1978,
apparently this was done by virtue of Rule 406(1).
Mr. Fearon was already deceased and no permis
sion was sought for the discontinuances. Defences
had already been filed however and subsequently
Fearon had been examined for discovery. Her
Majesty's counsel contends that such an examina
tion is not a "proceeding in this action". If this
contention is valid then Fearon's counsel could not
claim increased costs, which would simply be
taxed, if not agreed on, but on the other hand if
paragraph (3) of Rule 406 is applied and leave of
the Court is necessary for such discontinuances
then the Court may fix special terms as to costs. I
believe that it would give an unreasonably restric
tive interpretation to paragraph (1) to permit the
discontinuances simply to be made without con
sulting Fearon's representatives or giving them an
opportunity to speak on the subject of costs which
they could do when an order is required from the
Court permitting the discontinuances. The action
was very far advanced at the time and in fact
except for the actual trial Fearon's attorneys had
already done most of whatever was required on his
behalf, and admittedly incurred time charges and
disbursements greatly in excess of what would be
allowed on a simple taxation of costs without any
special directions. In this connection it must be
stated that Fearon's legal representatives have no
objection to the discontinuance of the proceedings,
but if they are deemed to have been discontinued
as of January 5, 1978, then certainly it would now
be too late to seek any special order as to costs. It
is true that in all three cases there were court
orders changing the style of cause so as to leave
Fearon's name out as a result of the discontinu
ances. In T-3324-75 Mahoney J. authorized the
amendment of the style of cause on December 15,
1978, in T-3325-75 Gibson J. authorized it on July
18, 1978, and in T-553-76 Gibson J. made a
similar order on July 17, 1978. These orders were
all rendered on applications made by the late Mr.
Fearon's attorneys pursuant to Rule 324, and
while they certainly imply an acceptance of the
discontinuances they were not orders for leave to
discontinue pursuant to Rule 406(3). There is even
now no formal application before the Court for
leave to discontinue, but such leave would
undoubtedly be given since all parties are agreed
that the discontinuances were desirable and have
in fact been acted on by the changes in the style of
cause. It is not unreasonable however to conclude
that the present applications should not be con
sidered as having been made too late, as the Court
has not previously been asked to consider the
effect of the discontinuances on the costs to be
awarded to the late Mr. Fearon, nor have counsel
had the opportunity of raising the issue.
There is a serious procedural objection to the
present motions however, which prevents them
from being granted. After the death of the late
Mr. Fearon no steps were taken pursuant to Rules
1724 and 1725 for the proceedings to be carried on
by the personal representatives of the deceased.
The Federal Court Rules make no provision for
distraction of costs in favour of the attorneys of
the party to whom they are awarded unlike article
479 of the Quebec Code of Civil Procedure. This
was pointed out by Associate Chief Justice Noël in
the case of National Capital Commission v.
Bourque [No. 2] 5 and reiterated in the case of
5 [1971] F.C. 133.
Osborn Refrigeration Sales and Service Inc. v.
The "Atlantean I" 6 . Applicants contend that Rule
2(2) or Rule 5 (the gap rule) of the Rules of this
Court might be applied so as to adopt the Quebec
practice, but this argument must be rejected. Fed
eral Court Rules provide for costs and there is no
omission which needs to be covered resulting from
the failure to provide for distraction of costs in
favour of the attorneys of a party. The late Mr.
Fearon's attorneys therefore who present these
motions are not the parties entitled to collect the
costs. They argue that they are really representing
the Atlantic Pilotage Authority and submit,
annexed to the affidavit of Mr. Major, a telex
from that Authority stating they were instructed
by it on January 23, 1976, to defend Joseph
Fearon, an employee of the Authority, and under
the terms of the agreement between the Authority
and Mr. Major are entitled to party and party
costs as taxed and judicially established by a court
of law. This agreement between attorneys for Mr.
Fearon and the Atlantic Pilotage Authority cannot
however affect Her Majesty the Queen, against
whom it is sought to have the costs taxed in a lump
sum, nor have the effect of creating a rule for the
Federal Court permitting costs to be awarded in
favour of the said attorneys. The affidavit of
Michael R. McGrath, Treasurer of the Atlantic
Pilotage Authority sets out that all expenses
incurred on behalf of Joseph Fearon in relation to
the legal actions surrounding the grounding of the
vessel Golden Robin were paid by the Authority
including the expenses of the attorneys and pilot
Fearon's expenses and sets out the details of them.
While there is no doubt that it is the Atlantic
Pilotage Authority which will ultimately be reim
bursed for these sums by whatever costs are
awarded as the result of the discontinuances of the
proceedings against Mr. Fearon, this certainly
does not justify Mr. Fearon's attorneys from seek
ing to have the costs paid to them. While the most
appropriate procedure would appear to be to have
the present motions made by the personal repre
sentatives of the deceased, it is possible that the
Court might consider permitting the Atlantic
Pilotage Authority to be added as a party for this
purpose by application of Rule 1725(1) which
reads as follows:
6 [1979] 2 F.C. 661 at page 691.
Rule 1725. (1) Where at any stage of a proceeding the interest
or liability of any party is assigned or transmitted to, or
devolves upon, some other person, the Court may, if it thinks it
necessary in order to ensure that all matters in dispute in the
proceeding may be effectually and completely determined and
adjudicated upon, order that other person to be made a party to
the proceeding and, where appropriate, may also order that the
proceedings be carried on as if he had been substituted for the
first mentioned party.
I make no finding- with respect to this however as
the issue is not before me. The motions made by
the late Mr. Fearon's attorneys must therefore be
dismissed under reserve of - their right to present
them again in the name of the party or parties
properly entitled to costs on the discontinuances
after such parties are brought into the action in
place of the late Joseph Fearon. The costs of these
motions must necessarily be awarded against
Messrs. Major and Associates who presented
them, but only one set of costs will be allowed on
the three motions.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.