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Civil Litigation - Costs - Access to Justice. Apotex Inc. v. Eli Lilly Canada Inc.
In Apotex Inc. v. Eli Lilly Canada Inc. (Ont CA, 2022) the Court of Appeal, in upholding a $700k costs award on a motion, makes useful comments on costs and access to justice:(a) General Principles
[59] The relevant principles to be applied in a court’s exercise of its discretion to award costs under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 are well established. They include the myriad factors enumerated in rule 57.01(1) of the Rules of Civil Procedure, such as: the result achieved, the amounts claimed and recovered, the complexity and importance of the issues in the proceeding, as well as “any other matter relevant to the question of costs”. This is not a mechanical exercise or a rubber stamp.
[60] A proper costs assessment requires a court to undertake a critical examination of the relevant factors as applied to the costs claimed and then “step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable”: Restoule v. Canada (Attorney General), 2021 ONCA 779, 466 D.L.R. (4th) 2, at para. 356, citing Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 24. However, as this court recently reiterated in Restoule, at para. 357, referencing Murano v. Bank of Montreal (1998), 1998 CanLII 5633 (ON CA), 163 D.L.R. (4th) 21 (Ont. C.A.), at para. 100, “this overall sense of what is reasonable ‘cannot be a properly informed one before the parts are critically examined’”.
[61] The overarching objective is to fix an amount of costs that is objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case, rather than to fix an amount based on the actual costs incurred by the successful litigant: Boucher, at para. 26.
[62] While the reasonable expectation of the parties concerning the amount of a costs award is a relevant factor that informs the determination of what is fair and reasonable, it is not the only, determinative factor and cannot be allowed to overwhelm the analysis of what is objectively reasonable in the circumstances of the case. To hold otherwise would result in the means of the parties artificially inflating costs with the concomitant chilling effect on access to justice for less wealthy parties. As this court cautioned in Boucher, at para. 37:The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice. The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice. There are obviously cases where the prospect of an award of costs against the losing party will operate as a reality check for the litigant and assist in discouraging frivolous or unnecessary litigation. However, in my view, the chilling effect of a costs award of the magnitude of the award in this case generally exceeds any fair and reasonable expectation of the parties. [63] Although each costs assessment is a fact-driven exercise related to a particular case, consistency with comparable awards in like cases is desirable and the reasonableness of costs that represent an outlier must be objectively and carefully scrutinized, taking into account the chilling effect on litigation that this kind of award could have: Boucher, at para. 37; Berry v. Scotia Capital Inc., 2010 ONSC 5489, 21 O.A.C. 229 (Div. Ct.), at para. 36.
[64] That said, the amount of the costs award by itself does not mean that the award is unreasonable or reflect an error in principle. As the Divisional Court noted in Andersen v. St. Jude Medical, Inc. (2006), 2006 CanLII 85158 (ON SCDC), 264 D.L.R. (4th) 557 (Ont. Div. Ct.), at para. 22 “[a]ppellate intervention based solely on quantum is problematic because there is no meaningful way to determine when a number is too high”. Again, the question is, as Boucher instructs, whether the costs are reasonable, fair, and proportionate for the losing party to pay in the particular circumstances of the case or whether the magnitude of the costs “generally exceeds any fair and reasonable expectation of the parties”.
[65] Costs that are reasonable, fair, and proportionate for a party to pay in the circumstances of the case should reflect what is reasonably predictable and warranted for the type of activity undertaken in the circumstances of the case, rather than the amount of time that a party’s lawyer is willing or permitted to expend. The party required to pay the successful party’s costs “must not be faced with an award that does not reasonably reflect the amount of time and effort that was warranted by the proceedings”: Gratton-Masuy Environmental Technologies Inc. v. Building Materials Evaluation Commission (2003), 2003 CanLII 8279 (ON SCDC), 170 O.A.C. 388 (Div. Ct.), at para. 17. As this court instructed in Moon v. Sher (2004), 2004 CanLII 39005 (ON CA), 246 D.L.R. (4th) 440 (Ont. C.A.), at para. 33:If a lawyer wants to spend four weeks in preparing for a motion when one week would be reasonable, this may be an issue between the client and his or her lawyer. However, the client, in whose favour a costs award is made, should not expect the court in fixing costs to require the losing party to pay for over-preparation, nor should the losing party reasonably expect to have to do so. [Emphasis added.] [66] The party seeking costs bears the burden of proving them to be reasonable, fair, and proportionate. The absence of dockets is not an automatic bar to proving or receiving an award of costs: Leonard v. Zychowicz, 2022 ONCA 212, at para. 33. However, absent dockets, a description of the activities for which fees and disbursements are claimed must be sufficient to permit for the kind of close scrutiny that the court is required to undertake. The material provided for the assessment must allow the court to come to a conclusion as to the amount of time reasonably required by the party seeking costs to deal with all aspects of the proceedings for which costs are claimed, including whether there was over-lawyering or unnecessary duplication of legal work: Restoule, at para. 355. Bald statements do not assist the court with this task but give rise to the kind of mechanical calculation of hours times rates that this court cautioned against in Boucher, at para. 26, and in McNaughton Automotive Limited v. Co-operators General Insurance Co., 2009 ONCA 598, 255 O.A.C. 362, at para. 17.
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[74] Referencing British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71 (CanLII), [2003] 3 S.C.R. 371, at paras. 25-26, the motion judge was well aware that costs can be employed “as a tool in the furtherance of the efficient and orderly administration of justice” to modify litigants’ behaviour. Indeed, rather than granting the parties licence to incur costs indiscriminately and excessively in their ongoing patent disputes, the motion judge viewed the unusually high costs award as a deterrent, concluding that the costs award “may have some of the effect on these parties that they are intended to have on other, less well-resourced, litigants. This includes a significant measure of indemnification, deterring claims which have a limited chance of success, and ensuring that litigation in our publicly-funded courts is ‘conducted in an efficient and just manner,’ which may further access to justice.”
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