1395804 Ontario Ltd. v.

AG; CFN T-1391-14 - Plaintiffs Costs Submissions - Nov 21, 2016

A. Overview
1. Pursuant to this Courts order of November 10, 2016, the Plaintiffs action for copyright
infringement was dismissed and costs ordered payable in favor of the Defendant. The
Defendant has served its costs submissions, which include affidavit evidence in support of its
position of approximately 200 pages. The Plaintiff objects to the Defendant filing materials in
addition to the 10-page limit stipulated by the Court. In the alternative, if the Court allows
additional materials to be filed and received from the Defendant, the Plaintiff requests an
opportunity to review and respond to any affidavit or other document filed by the Defendant,
which exceeds the 10-page limit for submissions stipulated in this Courts order of November
10th.
2. The Defendants claim for 70% of its real costs, which appear to be in the range of
$165,289, is grossly exaggerated. Its request to exceed costs calculated on the basis of the
normally applied Column III costs from the table to Tariff B to the Federal Courts Rules should
be denied as there is no reasoned or compelling basis for increased costs. An appropriate and
measured application of costs in this case should be $5,000, i.e. below the low end of Column III
of the table given the novel law defense raised by the Defendant in what the Defendant
fashioned as a test case. The largest driver of costs in the present action has been the
unnecessary, disproportionate and unbridled defense framed by the Defendant to preempt
other actions by the Plaintiff by building a case advancing a novel principle of law in order to
establish that the Plaintiff has misused copyright and should be denied relief under the
Copyright Act for the present and other actions that it has filed.
3. The unique evolution of the present action as a test case was driven by the
Defendants theory of the present action and other actions filed by the Plaintiff that sought to
characterize the Plaintiff as copyright troll. In raising its novel copyright trolling defense, the
Defendant significantly expanded the scope of discovery and compelled the disclosure of
correspondence, exchanges and information from other independent actions filed by the
Plaintiff against both the Attorney General of Canada (AGC) and non-AGC parties. The discovery
of this material was irrelevant to this Courts ruling. The Defendant also expanded the length
of the trial and called evidence that did not relate to the matter at issue between the parties
and, by its own admission, developed a theory of its case to aid in its defense of other cases. Its
defense was not material to the Courts ruling, which based itself on an interpretation and
application of fair dealing principles from the Supreme Court related to the matters that
occurred as between the parties and not the facts relating to other actions.

4. The Defendant also makes reference to an offer to settle that it made early on in the
proceeding, which it maintained throughout the litigation; however, this offer to settle should
not be applied to double the costs in favor of the Defendant pursuant to Rule 420. The
Defendant resisted the Plaintiffs attempt to advance parallel proceedings against AGC and nonAGC Defendants based on facts materially different to those of the present action and, on its
own initiative, crafted a test case approach without consent of the Plaintiff in order to dryrun a novel defense, which it intended to apply in an effort to preempt other actions filed by
the Plaintiff. The test case rationale was carefully devised by the Crown with a view of
obtaining a trial judgment that would address future cases filed by the Plaintiff. For the test of
novel principles of law the Crown should be prevented from relying on the strict terms of an
offer to settle and should not be rewarded for unsuccessfully mounting an expansive novel
defense in law. Here, the Crown is exhibiting the most aggressive form of cost recovery that is
typical of pharmaceutical corporations engaged in a long and hard fought patent litigation.
5. Although the Plaintiff resisted the characterization of the present action as being a test
case, this Court ordered that all other actions filed by the Plaintiff be stayed until 45 days after
this Courts ruling in T-1391-14, which happened to be the case that was the most procedurally
advanced of all the actions filed by the Plaintiff. The Crown identified a test case approach to
address what it believed was a vital legal issue (i.e. whether the Plaintiff has abused copyright
law) and is now claiming that the Plaintiff should have simply resolved the test case based on its
offer to settle.
6. Given the significance of the present case for the Crown as a tool to advance a novel
point of law, which was not successful - an award of costs should be limited to $5,000. In the
alternative, the specific circumstances of the present case and the context of the Defendants
offer to settle should not justify a departure from Column III costs. Under either argument, it is
submitted that the Defendant should not be permitted to double its costs for an action that it
unsuccessfully sought to use as a precedent setting case in connection with non-related actions.
B. Calculation of Column III Costs
7. Unless this Court orders otherwise, Rule 407 provides that Column III costs are
applicable for the award of party-and-party costs. Where this Court has allowed a departure
from Column III costs, it relates to complex patent cases where costs are assessed at the upper
end of Column IV.1 However, such cases, involving weeks of trial, dozens of experts, and
millions of dollars in damages, 2 bear no resemblance to the present case which involved no
expert evidence, could have been completed in two days and was unnecessarily protracted by a
novel law argument of the Defendant. The level of complexity of the current case was low.
See for example: Apotex Inc. v. Sanofi-Aventis, 2012 FC 318 at para 5; Johnson & Johnson Inc. v. Boston Scientific
Ltd., 2008 FC 817
2
See: Apotex Inc. v. Sanofi-Aventis, 2012 FC 318.
1

This said, even in complex patent cases, Column III costs may be applied.3 In the present case,
which is radically different from hard fought patent litigations, there was also no agreement
between the parties that costs should be assessed above Column III. 4
8. The Plaintiff provides the following reference point for calculation of damages according
to Column III of the table to Tariff B:
Item Assessable Service

1
2

A. Originating documents and

Other Pleadings
Originating process
Preparation and filing of all
defences, replies, counterclaims
or respondents records and
materials.

Amendment of pleading

B. Motions
Uncontested motions

Preparation and filing of a

contested motion, including
materials and responses thereto.
Appearance on motion per hour
C. Discovery and Examinations

Column III

N/A
4-7
The Defendant amended its pleading of its own
volition to reflect its novel defense and should not
be compensated for the amendment.
N/A

N/A

N/A

Discovery of documents, including

listing, affidavit and inspection.

2-5

Preparation for an examination,

including examinations for
discovery, on affidavits, and in aid
of execution.

2-5

3
4

Plaintiffs Position

The costs of motions to stay and compel answers

have already been paid in favor of the Defendant.
The Defendant is not entitled to double
compensation or to use the outcome of procedural
motions as a costs consideration/
Already compensated see #5 above
The Defendant caused the scope of discovery to be
amplified to include thousands of pages from other
unrelated actions resulting in many hours of wasted
time for both parties.
The scope of preparation for discoveries was
likewise considerably expanded by the Defendants
over-cautious approach, predicated on a defense
encompassing other unrelated actions.

Hoffman La roche Ltd. v Apotex Inc., 2013 FC 1265 at para 8.

Eurocopter v. Bell Helicopter Textron Canada Ltd., 2012 FC 842 at para 22.

Item Assessable Service

9

Attending on examinations, per

hour.

Column III
0-3

Plaintiffs Position
The Defendant claims that 5.5 hours were necessary
to examine the Plaintiff. This amount should be
reduced based on its disproportionate approach.

D. Pre-Trial and Pre-Hearing

Procedures
10

11
12

13

Preparation for conference,

including memorandum.
Attendance at conference, per
hour.
Notice to admit facts or admission
of facts; notice for production at
hearing or trial or reply thereto.
Counsel fee:

3-6

1-3
1-3

(a) preparation for trial or

hearing, whether or not the trial
or hearing proceeds, including
correspondence, preparation of
witnesses, issuance of subpoenas
and other services not otherwise
particularized in this Tariff; and

2-5

(b) preparation for trial or

hearing, per day in Court after the
first day.

2-3

Memoranda were prepared based on issues that

had been significantly canvased and prepared in the
context of previous motions thereby requiring less
new work.
Pre-trial conference in this matter was brief
approximately 1 hour.
The Defendant prepared an extensive notice to
admit facts based on issues that went far beyond
the facts between the parties.
The Defendant engineered a defense that went far
beyond the facts related to the present action,
which entailed contact with non-parties to the
litigation, Canada Evidence Act considerations for
CBC witness and the review of thousands of pages
of documents, which was unnecessary. Two
witnesses were then withdrawn showing an over
abundance of caution by the Defendant.
There were five days of trial scheduled. Had the
defendant mounted a more proportionate defense
based on the facts of the case, with the agreed
statement of facts, the trial could have been
completed in 2.5 days. The Plaintiff could not resist
the time allocation given the number of witnesses
slated for the defense. It is submitted that a time
allocation of 2.5 should be applied instead of 4 days.

E. Trial or Hearing
Counsel fee:
14

(a) to first counsel, per hour in

Court; and

2-3

The present case could be managed by one counsel

and was managed by one counsel for the Plaintiff
assisted by an articling student. A less papercumbersome trial could have easily been managed
by one senior counsel. The actual time for trial was
approximately 6 hours x 5 hours per day = 30 hours;

Item Assessable Service

15

Column III

Plaintiffs Position
however, it is submitted that the 15 hours should
have been sufficient to dispose of the trial.
It is submitted that 15 hours should be used for time
for trial.

(b) to second counsel, where

Court directs, 50% of the amount
calculated under paragraph (a).

Second counsel was not required.

Preparation and filing of written

argument, where requested or
permitted by the Court.

The Court did not require written argument;

however, the Defendant prepared a summary
binder of all exhibits relating to its trolling defense:
a time consuming initiative, which undoubtedly
increased its costs allocation.

Calculation of Costs
Unit Cost (as of April 2016)
Low end Column III Costs
(with 50% reduction on court
hours)
Low end Column III Costs
(with full court hours)

N/A

$140
55 units

Total fees: 55 units x $146.58/ unit = $7,700

90 units

Total fees: 90 units x $146.58/ unit = $12,600

C. Rule 400(3) Factors

9. In assessing costs and exercising its discretion in terms of the appropriate application of
the tariff and in determining the appropriate range of costs, the Court may consider several
factors as enumerated under Rule 400. The most relevant factors in respect of the present case
are:
(a) the result of the proceeding;
(b) the amounts claimed and the amounts recovered;
(c) the importance and complexity of the issues;
(e) any written offer to settle;
(g) the amount of work;
(h) whether the public interest in having the proceeding litigated justifies a particular award
of costs;
(j) the failure by a party to admit anything that should have been admitted or to serve a
request to admit;
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(k) whether any step in the proceeding was (i) improper, vexatious or unnecessary, or (ii)
taken through negligence, mistake or excessive caution;
The Result of the Proceeding - Factors a and b
10. The Plaintiffs claim against the Defendant was dismissed and this Court has ordered
costs in favor of the Defendant, which is the normal rule. However, in the present
circumstances, costs should not reward the expansive and largely unnecessary approach to the
litigation taken by the Defendant. The nature of the case as being a claim for a breach of
copyright infringement seeking less than $20,000 in damages does not merit a costs award of
more than five times the amount being sought. Such a request is completely disproportionate
to the nature and complexity of the case and simply eviscerates access to justice.
The Importance and Complexity of the Issue Factor c
11. The present case was not complex. The breadth of the trial and related issues was
expanded by the Defendant in a manner that purports to resemble a long and complex patent
litigation. In fact that is how the Defendant improperly seeks to justify a lump sum award based
on 70% of its costs. It is submitted that the present case could have been litigated in a much
more efficient and direct manner. It was not a legally or factually complex case.
Written Offer to Settle Factor e
12. As discussed above, the Defendants written offer to settle should not be applied to
double costs against the Plaintiff in the context of the litigation of a test case scenario imposed
by the Crown. This Court has strongly cautioned against the mechanical application of Rule
420 such that an offer to settle must be considered in context and on a case by case basis. 5 The
Crowns offer of settlement in respect of the present action was made with the implicit
understanding that resolution of the present action was either not possible or practical because
the outcome of the present case was being advanced by the Crown as a benchmark for future
litigation. By setting such a standard for the present litigation, it is disingenuous for the
Defendant to now argue that its offer to settle rendered the need for the present trial moot.
13. The Crown having linked various actions filed by the Plaintiff not by the similarity of
facts in each case but rather, by an overarching theory of a commonly applicable defense
undermined the normal economic and pragmatic significance of its offer to settle. In context,
the Defendants offer to settle was not a genuine offer as it ran counter to the unavoidable test
case formulation of the Crown on whether the Plaintiff was a copyright troll. The Defendant for
its part, sought to load on evidence, arguments and novel law to the present action, for which it
wanted to obtain a judicial precedent. The Defendants defense and theory was not entertained
by the Court and in this sense, the logic of using the present case as a test case was defeated.

Apotex Inc. v. Sanofi-Aventis, 2012 FC 318 at para 34.

Amount of Work Factor g

14. The Defendant has litigated the present action in a manner consistent with a defense of
13 actions worth a cumulative of $601,892.11, which it explicitly acknowledges in its own
submissions. The fact is that the present action was for recovery of less than $20,000 in
damages. The Defendants strategy was complete overkill and disproportionate to the present
action. Effectively, the Defendant is seeking a punitive measure of damages against the Plaintiff
a principle that is inimical to both the principle of proportional recovery and access to justice
in the measure of costs for litigants of modest means. 6
15. The Defendant also seeks compensation for two counsel. The tariffs do not provide for
the recovery of costs on the basis of two counsel, except in the context of trial time, where it is
warranted. There is no reason why the present case could not have been defended by one
counsel. Counsel for the Defendant changed on three occasions (between Alexander Gay,
Orlagh OKelly and Alexandre Kaufman) and at one point the Defendant was represented
exclusively by counsel, Ms. OKelly. There is no reason why the entire case could not have been
defended by a single legal counsel. The burden of work was clearly increased by the Defendant
in constructing a novel defense, researching and developing the area of copyright misuse in
Canadian law and applying same to a record of evidence spanning thirteen separate actions.
Additional counsel may have been instrumental in managing the sheer volume of documents in
this case; however, this task was superfluous and should neither be counted or rewarded by
either single or double costs.
Importance of the Public Interest Factor h
16. Where matters of concern to public interest are the subject of litigation, it is appropriate
for parties to bear their own costs. 7 It is also well established that in cases where novel
principles of law are litigated no costs are awarded or the parties should each bear their own
costs. 8 Both parties in the present case raised the specter of importance of this matter as being
one linked to a broader public interest in terms of either stopping copyright trolls or
protecting online copyright. The Court, however, has decided this case more narrowly on the
specific facts relating to the interaction between the parties. In this regard, the Court did not
need to articulate novel law principles; however, its treatment of fair dealing in respect of the
sharing of online copyright protected material has provided some contextual guidance in an
area where there was an acknowledged dearth of jurisprudence.
17. Given that the Court has already ordered costs payable in favor of the Defendant, the
Defendant is not expected to bear its own costs. However, the nature of the case and novel law
Trial Lawyers Association of British Columbia v. BC (Attorney General), 2014 SCC 59, [2014] 3 S.C.R. 31; B.C.G.E.U.
v. BC (Attorney General), [1988] 2 S.C.R. 214 at 230; Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at para 26.
7
Calwell Fishing Ltd v Canada, 2016 FC 1140
8
CCH Canadian Ltd v Law Society of Upper Canada (2000), 184 DLR (4th) 186; Calwell Fishing Ltd. v. Canada, 2016
FC 1140; - see also for judicial review application: Caruana v. Canada (AG) 2006 FC 1355.
6

defense advanced by the Crown in the context of strong public interest considerations
identified by both parties should militate in favor of reducing costs to lower or nominal costs
awarded to the Defendant. The Plaintiff suggests that this amount should be $5,000.
Excessive Caution of the Defendant (Factor k)
18. The Defendants admitted strategy of litigating the present case as if it were a trial
encompassing the allegations and claims of 13 different actions exponentially broadened the
proceeding. The Defendant sought to call multiple witnesses, some of which it withdrew at the
final moment. The Defendant built a defense that was designed to establish a modus operandi
that could be capable of generating an estoppel against 13 different actions. It was essentially
arguing considerably more than the case that was being presented by the Plaintiff.
19. The result of the Defendants efforts to expand the record were:
An expansion of discoveries including the examination of third party contributors of
their financial dealings with the Plaintiff, which were irrelevant to this action;
Requirement for the production and copying of thousands of pages of records;
Unnecessary review of material relating to 12 actions apart from the present case;
Identifying multiple witnesses beyond the facts of the dispute;
Increasing the length of the trial calling 7 witnesses, 2 of which were withdrawn;
Filing of unnecessary exhibits during the trial;
Preparation of legal argument relating to novel law on copyright misuse;
Creation of a detailed timeline and a theory of the case relating to the application of
the doctrine of copyright misuse;
20. It is submitted that in the absence of the Defendants copyright misuse defense, the
scope of discoveries, time for trial preparation, witness preparation and duration of trial all
would have been significantly reduced. A shortened anticipated duration for trial, may have
allowed for an earlier trial date and an overall more streamlined trial process. The Plaintiff was
not in a position to resist the duration of the trial given that the Defendant was permitted to
call its defense on the copyright misuse issue by the Court. Justice Gascon noted that the
attempts made by the Plaintiff to resist the stay motion and appeal the stay order were not
improper and did not unnecessarily lengthen the proceeding. 9 However, had the Defendant
restricted its defense to current rather than novel law issues, the duration of the proceeding
could have been significantly reduced.
Improper Denials Factor j
21. As a general principle, a partys position taken at trial even if not upheld in law should
not be cause for exacting increased costs, unless the position itself is abusive. 10 The Defendant
9

Order of Gascon, J. dated August 16, 2016 at para 13.

Apotex Inc. v. Sanofi Aventis, 2012 FC 318 at para 15.

10

challenges the Plaintiffs responses in the course of the proceeding as being improper and
thereby meriting increased costs. These challenges are without merit. The Defendant suggests
that the Plaintiff should have conceded that the articles were received by the Defendant
without solicitation; however, the Plaintiff did not have an opportunity to discover Sandra
Marsden to assess whether she had had conversations with the Defendant. It is not incumbent
on a party to make admissions based on evidence from third parties that cannot be
discovered.11
22. The Defendant also states that the Plaintiffs failure to admit the limited scope of
distribution was improper. 12 However, the Plaintiff took the reasonable position, at trial, that
the Defendant bears an evidentiary burden to establish its treatment of the material in its
possession as part of the fair dealing analysis. The evidence at trial demonstrated that the
Defendant took no steps to limit the distribution of the Plaintiffs material or to ascertain where
it had been sent to within the department by all recipients and that the Department has no
systemic policy to deal with screening and limiting distribution of copyright protected material.
The Defendant did not indicate or provide evidence to establish that the Plaintiffs material was
not reviewed by the Ministers Office despite reliable correspondence suggesting otherwise.
Ultimately, according to the Courts ruling, the breadth of dissemination within the Department
was not a material consideration given findings regarding the Plaintiffs terms and conditions;
however, it was not abusive for the Plaintiff not to admit that its material was shared only with
six Departmental staff persons.
23. The Defendant also took exception to the fact that the Plaintiff did not make admission
as to stories being distributed out of concern that they were inaccurate and needed
correction. 13 However, the Plaintiff was not obliged to admit that its stories required
correction. Fundamental to the Plaintiffs position was the view that it was improper for the
Defendant to be engaged in a process of reviewing its material to provide its own spin. The
Plaintiff was entitled to take the position that the Defendant was interested in creating its own
spin and in so doing was engaged in a process of media-monitoring without a license. This
position was not accepted by the Court, but it is not something that the Plaintiff was obliged to
admit prior to trial and the Plaintiff should not be penalized for this position, which was not
abusive. Additionally, no evidence was ever provided on why Scott Winter forwarded its article
to Ms. LaHay. The Plaintiff was not obliged to presume Mr. Winters motivation for forwarding
the article.
24. The Defendant also asserts that the Plaintiff mischaracterized evidence from discovery
regarding whether payment from PCO constituted a settlement. Although this evidence was
See: Answer 85 in the Plaintiffs Responses to Defendants Requests to Admit dated June 10, 2016 (Request to
Admit). This document can be produced at the request of the Court.
12
See: Answer 87 for Requests to Admit. This document can be produced at the request of the Court.
13
See: Answer 88 for Requests to Admit. This document can be produced at the request of the Court.
11

not germane to the Courts ruling, the Defendant continues to ignore the Plaintiffs evidence in
discovery, namely that receipt of funds from PCO was characterized as a settlement by
Blacklocks in its own records not pursuant to a copyright dispute, but because the PCO failed
to honor the timeline for a payment it had already agreed to make for use of the Plaintiffs
material.14 What is important here is that the Plaintiff (and not PCO) characterized the amount
received from the PCO as a settlement of a delinquent account, not as a settlement by PCO of
a copyright dispute initiated by litigation. The explanation was clarified by the Plaintiff during
discoveries and reiterated at trial. This was not improper or abusive.
D. Conclusion
25. Based on the above considerations, the Plaintiff submits that the Defendant is entitled
to nominal costs of $5,000. This submission is based primarily on the Defendants maneuvering
out of excessive caution to establish a novel principle in Canadian jurisprudence, which
transformed the fact specific dispute between the parties into the trial of the century, grossly
expanding discoveries, trial dates and the use of resources for the pursuit of a novel legal
principle that was not necessary. Given the Crowns clear attempt to frame the present case as
test case, its offer to settle was disingenuous and should not be counted to double the
Crowns costs.
26. The Plaintiff reserves its right to file further submissions in relation to any defense
document filed beyond the 10-page limit that is accepted by the Court. This case was decided
on fact specific grounds that clearly obviate the excessive caution of the Crown. The Crown
must not be rewarded for its excessive expenditures and the costs in this matter should not be
levied in a manner to pulverize the Plaintiff for having filed other actions against the Crown.
Although the Crown may not like the Plaintiff nor agree with its approach, the approach of the
Plaintiff in bringing the current action was not unreasonable or improper within the forced
constraints of purported test case litigation.
ALL OF WHICH IS SUBMITTED THIS 21st day of November 2016

___________________
Yavar Hameed,
Solicitor for the Plaintiff 1395804 Ontario Ltd. c.o.b. Blacklocks

Cross examination of Tom Korski (December 8, 2015) Volume III at pages 171- 172. The relevant pages can be
produced for inspection on request of the Court.
14

10