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.
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.