Judgments

Decision Information

Decision Content

T-4853-77
W.H. Brady Co. (Plaintiff)
v.
Letraset Canada Limited (Defendant)
INDEXED AS: W.H. BRADY CO. Y. LETRASET CANADA LTA (T.D.)
Trial Division, Preston P.—Toronto, June 6, 7 and August 1, 1989.
Practice — Costs — Taxation — Judgment in patent infringement action awarding costs to defendant — Costs of litigation in fact paid by Letraset U.K. — Plaintiff raising preliminary objection to taxation, arguing defendant did not incur any costs — Plaintiff alleging solicitors for defendant instructed by Letraset U.K. and at no time received retainer from Letraset Canada — Latter having reimbursed Letraset U.K. to put itself in position to collect costs — Objection dismissed — Certificate to issue for $64,051.94 with interest — In absence of proof to contrary, where solicitor acting for company with its knowledge, company liable to solicitor for costs.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Federal Court Rules, C.R.C., c. 663, R. 344(7), Tariff A, s. 3(2).
CASES JUDICIALLY CONSIDERED
DISTINGUISHED:
Simpson v. Local Board of Health of Belleville (1917-18), 41 O.L.R. 320 (H.C.).
AUTHORS CITED
Orkin Markin M. The Law of Costs 2nd ed. Aurora, Ontario: Canada Law Book Inc., 1987.
COUNSEL:
A. David Morrow for plaintiff. Neil R. Belmore for defendant.
SOLICITORS:
Smart & Biggar, Ottawa, for plaintiff.
Gowling & Henderson, Toronto, for defen dant.
The following are the reasons for taxation ren dered in English by
PRESTON P.: This taxation of the defendant's costs on a party and party basis came on before me in Toronto on June 6 and 7, 1989. Counsel for the plaintiff raised a preliminary objection to the taxa tion proceeding. The main thrust of the argument being that, in the judgment rendered Letraset Canada Limited was entitled to its costs, whereas in fact it did not incur any costs as Letraset U.K. paid all costs of the litigation. After hearing argu ment on the preliminary point I directed that the taxation should proceed and that if an appeal from my ruling was decided upon then reasons for my decision would be given.
The taxation then proceeded on the defendant's bill of costs.
When the bill was originally submitted, attached to an affidavit of R. Scott Jolliffe, cross- examination was held. Following the cross-exami nation Mr. Jolliffe filed another affidavit contain ing a revised bill of costs, which covered fees and disbursements totalling $122,624.81. This bill formed the basis of the taxation. During the delib erations on the taxation, which lasted one and a half days, many items were either agreed to by counsel for the plaintiff or withdrawn by counsel for the defendant. The remaining items I either allowed, disallowed or reduced from the amount shown on the bill.
I reserved my decision and a conference call was scheduled for June 20, 1989. At that time I indicated to counsel that a certificate of taxation in the amount of $64,051.94 plus interest at 5% per annum from the date of the judgment in this action [(1985), 7 C.P.R. (3d) 82; 7 C.I.P.R. 1 (F.C.T.D.)], the 20th day of November 1985, until the date of payment of the taxed costs would issue if no appeal was taken.
I was informed by the plaintiffs counsel that he had been instructed to appeal my ruling on the preliminary objection, however he would not be
appealing the final amount taxed. Counsel for the defendant also indicated that he would not be appealing from the amount fixed, and that it was his opinion that my reasons could be restricted to the legal arguments submitted on the preliminary objection.
Mr. Morrow, counsel for the plaintiff stated that, he now understands, during the course of the litigation no fees or disbursements were paid by the defendant, Letraset Canada Limited, but that instead all accounts were forwarded to and paid by Letraset U.K. This in his submission is a bar to Letraset Canada Limited now recovering any costs. He further stated that, following Simpson v. Local Board of Health of Belleville (1917-18), 41 O.L.R. 320 (H.C.), costs can only be recovered if the party was liable to pay them to his solicitor. A party cannot, by a voluntary payment, create a liability that did not otherwise exist.
In the Simpson case Middleton J. at page 321 stated as follows:
' There is a fundamental principle, which has been recognised in many cases in our Courts, that costs are an indemnity and an indemnity only, and cannot be made a source of profit to the party, nor can a party by any voluntary payment he may make increase the burden cast upon his adversary who has been ordered to pay his costs.
As put by Draper, C.J., in Jarvis v. Great Western R.W. Co. (1859), 8 U.C.C.P. 280, 285: "If the client be not liable to pay costs to his attorney he cannot have judgment to recover those costs against the opposite party."
In that case the action was dismissed with costs, the defence was in substance the defence of the corporation, the actual defendants being public officers representing the ratepayers of the city.
Plaintiff's counsel also stated that Gowling & Henderson, solicitors for the defendant, were instructed by Mr. Gallafent and Letraset U.K. and at no time did they receive.a retainer from Letra- set Canada Limited. Evidence also shows that Letraset Canada Limited reimbursed Letraset U.K. to put the Canadian Company in a position to collect costs, and this he submits is contrary to
the fundamental principle stated by Middleton J. in Simpson v. Local Board of Health, supra.
Mr. Belmore counsel for the defendant submit ted that the affidavit of Mr. McClenahan filed, was also intended to be used to comply with Tariff A [Federal Court Rules, C.R.C., c. 663] subsec tion 3(2) as a statement of payment. He also stated that Letraset Canada Limited was liable to pay lawyers' fees and other disbursements even if it did not pay them. The plaintiff examined the president of Letraset Canada Limited for discov ery prior to the trial so it cannot be said that the Canadian Company took no part in thelitigation.
Mr. Belmore also referred to Orkin on costs [The Law of Costs] where in section 209.14 of his second edition he states:
The burden of proving that a party is not answerable to his own solicitor for costs lies on the party who raises the contention. In the absence of evidence establishing the existence of an express agreement that the party would not be liable for his solicitor's costs, he is liable unless it be established by affirmative evi dence that he did not in fact retain the solicitors either person ally or by an agent, or in any other way.
In my view when it is established that solicitors are acting for a company with its knowledge, it becomes liable to the solicitor for costs. In this case the plaintiff named Letraset Canada Limited as the only defendant in the action. It has been shown that the accounts of the defendant's lawyers and of the witnesses called by the defendant have all been paid. The trial judgment awarded costs to the defendant.
I note with interest that on the plaintiff's motion under Rule 344(7), dealing with costs, returnable before the Trial Judge on December 6, 1985 no mention was made of the issue raised in this preliminary objection.
In my opinion this case, involving private com panies, can be distinguished from the case of - Simpson v. Local Board of Health of Belleville referred to by counsel for the plaintiff.
In that case a Local Board of Health was named as defendant, the defence was undertaken by the city council and conducted by the regular solicitor for the Corporation. In the case before me Letra- set U.K. may be the parent company of Letraset Canada Limited although that was not mentioned. The judgment at trial gave the defendant its costs.
I am also required to tax the costs of the defen dant pursuant to the order of the Trial Judge dated December 11, 1985. This I have done.
My decision, following argument on the prelimi- ary issue, to refuse the preliminary objection and proceed with the taxation, made on June 6, 1989, is now supported by these reasons.
The defendant's costs are therefore taxed, as previously mentioned, at $64,051.94 with interest at 5% per annum. A certificate will be issued for that amount.
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