_RGB_KO_tagline.svg){kind=logo}
The court’s decision in Drainvac International 2006 Inc. v. Vacuum Specialists (1985) Ltd., 2024 FC 280 establishes guidelines for parties in legal proceedings regarding the evidence needed to be awarded costs and indicates that the threshold for a compensatory award against a lawyer is substantial. Moreover, the case highlights the critical role of active engagement in case management processes and the possible repercussions for both parties of failing to actively participate in legal proceedings and comply with deadlines.
Background:
This motion for costs emerged from a complex legal dispute initiated on May 27, 2021. Drainvac International 2006 Inc ("Drainvac") initiated a lawsuit against Vacuum Specialists (1985) Ltd. ("Vacuum"), alleging trademark misuse and copyright infringement concerning Drainvac's product images. Despite efforts to manage the case, including setting a timetable and requiring updates, both parties consistently failed to meet court-ordered deadlines.
Notably, after failing to provide a required status update by April 29, 2022, and ignoring subsequent directives for updates and to explain delays, the plaintiff's lack of response led to the dismissal of the action on July 17, 2023, due to perceived abandonment. The defendant then sought costs and the plaintiff attempted to overturn the dismissal order, a motion which was dismissed on December 11, 2023, as the court deemed itself without authority to revisit the decision. In its decision, the court highlighted the plaintiff's ongoing pattern of delay and concluded that the litigation had effectively been concluded by the plaintiff's side before the dismissal, reinforcing the dismissal's validity and leaving the plaintiff to consider an appeal under Rule 51 as the proper recourse.
Request for Costs against Counsel:
The court recognized the stringent criteria necessary for issuing a compensatory order against a lawyer as established in Quebec (Attorney General) v. Lacombe, 2010 SCC 388. It necessitates the court to identify a pattern of actions by the lawyer that are both irrelevant and conducted in bad faith, contributing to the abuse and delay of proceedings. This high threshold ensures that lawyers are not deterred by the fear of facing adverse orders, which could conflict with their fundamental duty to advocate zealously for their clients. The court stated that the plaintiff counsel’s failure to communicate and respond to inquiries failed to meet the reprehensible, scandalous, or outrageous bar required under rule 404 for compensatory award against the lawyer.
Bill of Costs Required for Lump Sum Costs Award:
For the court to grant a lumpsum award, the requesting party is required to provide a bill of costs and evidence proving the fees were genuinely incurred, accompanied by a sufficient description of the services rendered: Nova Chemicals Corporation v. Dow Chemical Company, 2017 FCA 25 at para 18. Unfortunately, the defendant did not adequately detail the costs incurred to qualify for a lump sum costs award.
Entitlement for “Costs Thrown Away”:
The term "costs thrown away" refers to expenses a party incurs in trial preparation that become redundant and necessitate redoing due to trial adjournment, as defined by the Ontario Superior Court in Caldwell v Caldwell, 2015. The criteria for granting elevated costs are stringent and there is no defined test for justifying such awards. The Federal Court of Appeal occasionally awarded such awards in disputes involving sophisticated commercial entities or in cases completely lacking merit, as demonstrated in Sport Maska Inc v Bauer Hockey Ltd, 2019. Despite these precedents, the judge in this case was not convinced that the circumstances in the present matter merited the award of "costs thrown away" or solicitor and client costs.
Courts Decision:
In the end, the court partially approved the motion for costs. It highlighted that the case management process offered the defendant a chance to request a case management conference, an opportunity they neglected. Instead, the defendant favored pushing the court towards dismissing the case without making efforts to address issues before the deadlines passed. The court's decision to independently dismiss the case inadvertently advantaged the defendant, sparing them from taking further actions or bearing additional costs to uphold the dismissal against the motion to reverse it.
Considering all the circumstances, the court determined that the defendant deserves to be awarded costs, opting for the upper range specified in court's tariff, namely Column IV of Tariff B.