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Federal Court - Costs. AGI Suretrack, LLC v. Farmers Edge Inc.
In AGI Suretrack, LLC v. Farmers Edge Inc. (Fed CA, 2025) the Federal Court of Appeal considers the R.420 ['Consequences of failure to accept plaintiff’s offer'] costs Rule:[22] For Rule 420 to be engaged, "“the offer in question must be clear and unequivocal, must contain an element of compromise, must comply with the time limits in the Rules and must bring the litigation to an end”" (Venngo, at para. 87). In this case, Rule 420 is not engaged because both of the respondent’s latter offers lacked an "“ingredient of compromise (or incentive to accept)”" (H-D U.S.A., LLC v. Berrada, 2015 FC 189, at para. 32, citing Apotex Inc v. Sanofi-Aventis, 2012 FC 318, at para. 30). The respondent’s first offer is also of no consequence since it was terminated in advance of the hearing, upon the introduction of the two new offers. . AGI Suretrack, LLC v. Farmers Edge Inc.
In AGI Suretrack, LLC v. Farmers Edge Inc. (Fed CA, 2025) the Federal Court of Appeal considers cost awards in intellectual property cases:[1] It is common for the Federal Court to award lump-sum costs well in excess of the Tariff in intellectual property proceedings. These awards are often fixed as a percentage of actual legal costs. The range of awards is wide but frequently settles in the 30 to 50% range (Venngo Inc. v. Concierge Connection Inc. (Perkopolis), 2017 FCA 96, at para. 85 [Venngo]; Nova Chemicals Corporation v. Dow Chemical Company, 2017 FCA 25, at para. 17 [Nova Chemicals]). Several considerations support this practice, including the greater than average complexity of intellectual property trials, the sophistication of the parties, and legal bills far in excess of what Tariff B allows (Allergan Inc. v. Sandoz Canada Inc., 2021 FC 186, at para. 26).
[2] This type of award (a percentage of actual costs) is distinct from the fixed amount awards that are routinely granted in the Federal Court and this Court. These fixed amount awards are a reasonably generous but rough approximation of what the Tariff would grant for a trial, judicial review, motion or appeal. The purpose of fixing costs peremptorily is to provide certainty to the parties, facilitate closure and reduce litigation costs. The reasons that follow do not address these types of costs orders and should not be understood to affect the continuation of this practice.
[3] In this motion, the respondent, who was successful at both trial and appeal, seeks an elevated award of costs. The respondent asks for costs of $441,195, plus interest, representing about 90% of its actual fees and disbursements for the appeal. The respondent argues that an elevated costs award is justified given the lack of merit in the appeal, the complexity of the issues and two settlement offers made in advance of the appeal hearing.
[4] The respondent seeks to migrate the practice of awarding costs based on a percentage of actual legal fees from trials to appeals. In the circumstance of this appeal, I am not convinced this practice should be followed. It is not a foregone conclusion that elevated lump-sum costs are justified in every intellectual property trial nor in every intellectual property appeal. Whether at trial or appeal, the burden is on the successful party, to "“demonstrate why their particular circumstances warrant an increased award”" (Nova Chemicals, at para. 13). While I am satisfied that an elevated award of costs is warranted, I would, in the circumstances, confine it to a modest premium over what the Tariff, B, Column V, would allow.
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[8] Lump sum awards "“cannot be justified solely on the basis that a successful party’s actual fees are significantly higher than the Tariff amounts”" (Nova Chemicals, at para. 13; see also Apotex Inc. v. Shire LLC, 2021 FCA 54, at para. 18 [Apotex]). If this argument were to succeed, there would be no need for a Tariff at all. Actual legal fees will invariably be higher than the Tariff.
[9] The respondent cites Nova Chemicals, Venngo, Apotex, and Steelhead LNG (ASLNG) Ltd. v. ARC Resources Ltd., 2025 FCA 5 [Steelhead LNG] in support of its position that actual legal fees should supersede tariff amounts. Notably, other than Steelhead LNG, none of these decisions arise in an appellate context.
[10] In Steelhead LNG, the successful party requested costs in an amount that was "“less than one-third of their actual legal costs”" (Steelhead LNG, at para. 4). Ultimately, this Court awarded less than half of the amount requested, falling well outside of the 25 to 50% range that the respondent suggests is "“generally considered”" in the context of complex patent litigations. In Steelhead LNG, Stratas J.A. characterized the appeal as "“less than a low-chance case, especially given the strict and demanding appellate standard of review of ‘palpable and overriding error’”" (Steelhead LNG, at para. 7).
[11] Costs awards in the context of intellectual property trials are not benchmarks for costs awards in the appellate context. Cost awards in intellectual property trials engage considerations that are generally not present in their counterpart appeals: parties need not prepare expert reports and lead evidence, the life span of an action can exceed two years, compared to nine months from notice of appeal to hearing in a routine appeal, there are fewer motions at an appellate level to name but a few. In appeals to this Court, timelines, page limits and the length of hearing are strictly controlled. But most importantly, appeals are constrained by the grounds of appeal, the standard of review and oral arguments are, or should be, laser-focused on questions of law or palpable and overriding errors of evidence. The considerations driving costs awards as a percentage of actual legal fees cannot be summarily transposed to an appellate context. . Seismotech IP Holdings Inc. v. Ecobee Technologies ULC
In Seismotech IP Holdings Inc. v. Ecobee Technologies ULC (Fed CA, 2024) the Federal Court of Appeal made a useful note re cost awards:[11] While we find that the present appeal cannot succeed on the merits, the Motion Judge’s order must nevertheless be varied. Indeed, it is trite law that as a matter of procedural fairness, costs cannot be awarded when they have not been requested, which, admittedly, is the case here (Exeter v Canada (Attorney General), 2013 FCA 134 at para. 12; Haynes v. Canada (Attorney General), 2023 FCA 244 at para. 5). As a result, the appeal will be granted but only in relation to the costs award. Otherwise, it is dismissed. Since, this time, the respondent is seeking costs, they will be awarded to it. . Haynes v. Canada (Attorney General)
In Haynes v. Canada (Attorney General) (Fed CA, 2023) the Federal Court of Appeal noted a case that maintained that a costs order must be requested:... As is well settled, there cannot be an award of costs for a particular proceeding if costs were not requested in that proceeding (Exeter v. Canada (Attorney General), 2013 FCA 134, 445 N.R. 356 at para. 16). . Haynes v. Canada (Attorney General)
In Haynes v. Canada (Attorney General) (Fed CA, 2023) the Federal Court of Appeal considered costs awarded to presenting (self-represented) parties:[14] Here, I see no reason to interfere with the Federal Court’s finding in this regard. It was open to it to expect that the appellant would have provided some evidence or information regarding the costs he had incurred so far in the application for judicial review. This approach is consistent with this Court’s jurisprudence according to which unrepresented litigants, while not barred from receiving costs, have no automatic right to the full amount contemplated by the Tariff. Rather, self-represented parties are entitled, in addition to actual outlays and disbursements, to “some form of compensation […], particularly when [they are] required to be present at a hearing and [forego] income because of that” (Air Canada c. Thibodeau¸ 2007 FCA 115, 375 N.R. 195 at para. 24, citing Sherman v. Minister of National Revenue, 2003 FCA 202, [2003] 4 F.C. 865). . Haynes v. Canada (Attorney General)
In Haynes v. Canada (Attorney General) (Fed CA, 2023) the Federal Court of Appeal considered R400 regarding costs in the federal courts:[13] Rule 400(1) establishes the basic principle that costs are in the complete discretion of the Court as to issues of entitlement, amount and allocation (Canada (Attorney General) v. Rapiscan Systems Inc, 2015 FCA 97 at para. 10). They are, in that sense, “quintessentially discretionary” (Nolan v. Kerry (Canada) Inc., 2009 SCC 39, [2009] 2 S.C.R. 678 at para. 126). Awards of costs, therefore, command deference so that an appellate court will only intervene if they are vitiated by palpable and overriding error (Hospira Healthcare Corporation v. Kennedy Institute of Rheumatology, 2016 FCA 215)). . Hull v. Canada [deference and offers]
In Hull v. Canada (Fed CA, 2023) the Federal Court of Appeal characterizes the deference accorded to cost orders on appeal, and considers the cost order effect of prior offers to settle the litigation:[3] As noted by this Court in Marzen Artistic Aluminum Ltd. v. Canada, 2016 FCA 34:[59] On the third issue regarding the granting of costs to the respondent, it is a well-established principle that orders granting costs are discretionary and command deference. Rule 147 of the Tax Court of Canada Rules (General Procedure) SOR/90-688a, specifies the factors that a judge must consider in awarding costs. An appellate Court should only intervene if the Judge considered irrelevant factors, failed to consider relevant factors, or reached an unreasonable conclusion (see Guibord v. Canada, 2011 FCA 346). [4] This discretion in granting cost awards is maintained in Rule 147(3.1). Rule 147(3.1) provides for enhanced costs when an appellant makes an offer of settlement and obtains a judgment at least as favourable as the settlement offer. The discretion to not apply this Rule is confirmed by the opening words of Rule 147(3.1) – "“[u]nless otherwise ordered by the Court…”".
[5] In this case, the Tax Court Judge decided to not apply Rule 147(3.1) as he was entitled to do. There is no merit to the appellant’s argument that, as a result of obtaining a more favourable judgment than the settlement offer, he was automatically entitled to "“enhanced costs”". This argument overlooks the opening words of Rule 147(3.1) which clearly grant the Tax Court Judge the discretion to grant an order for costs that does not reflect the enhanced costs as set out in this Rule. . Red Pheasant First Nation v. Whitford
In Red Pheasant First Nation v. Whitford (Fed CA, 2023) the Federal Court of Appeal considered the discretion allowed in trial cost awards, and on appeal of same:[11] An award of costs is “quintessentially discretionary”: Nolan v. Kerry (Canada) Inc., 2009 SCC 39 at para. 126. Hospira Healthcare Corporation v. Kennedy Institute of Rheumatology, 2016 FCA 215, confirms that the standard of review applicable on appeals of discretionary decisions of the Federal Court is that articulated by the Supreme Court in Housen v. Nikolaisen, 2002 SCC 33. Questions of law are reviewed on the standard of correctness. Findings of fact or mixed fact and law are reviewed for palpable and overriding error unless an extricable legal error can be demonstrated.
[12] Put another way, appellate Courts should interfere with costs awards only if the Court below “made an error in principle or if the costs award is plainly wrong”: Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6 at para. 247, citing Hamilton v. Open Window Bakery Ltd., 2004 SCC 9 at para. 27.
III. Costs in the Federal Courts: Federal Courts Rules
[13] Rule 400(1) of the Federal Courts Rules, S.O.R./98-106 (Rules) expressly grants the Court “full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid.” Rule 400(3) sets out a non-exhaustive list of factors the Court may consider in making cost awards. Rule 400(3)(o) expressly permits the Court to consider any other matter it considers relevant. The Court is not required to state the weight afforded to any particular factor and not all factors may be relevant in a particular case.
[14] Rule 400(4) allows the Court to fix costs according to the Tariff or to award a lump sum. Rule 400(6) allows the Court to award all or part of the costs on a solicitor-and-client basis. . Key First Nation v. Lavallee
In Key First Nation v. Lavallee (Fed CA, 2023) the Federal Court of Appeal's assessment officer issued an extensive cost ruling. I haven't seen one of these before and it may be interesting for anyone involved in such a costs proceeding.
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