How Enhanced are Enhanced Costs?

Mediatube Corp v Bell Canada 2017 FC 495 Locke J
            2,339,447 / Internet Protocol Television / Fibe TV, FibreOp

In his substantive decision in Mediatube v Bell 2017 FC 6, Locke J held that costs awarded to Bell should be elevated by 50% for the infringement case (all issues except punitive damages) and awarded on a solicitor-and-client basis for the punitive damages case, essentially on the basis that the plaintiffs could not have had a reasonable belief that they had a good arguable case [234]: see here. This decision clarified the application of this holding. While the decision turns largely on the facts, there are a couple of general points of interest.

First, Locke J held that in the Federal Court, the term “solicitor-and-client costs” generally means a full indemnify basis, not only a substantial indemnity basis: [33].

Second, he noted that in allocating costs between the infringement case and punitive damages case, there was a trade-off between precision and ease of calculation, and he chose to adopt a relatively simple but less precise approach: [13].

Third, a 50% elevation of costs on the infringement case plus solicitor and client costs on the punitive damages case, sounds like a serious costs sanction. If I have done the calculations correctly, Bell’s actual total costs, including legal fees and disbursements, were just over $7.9 million ($7,901,718 - it’s not clear to me whether this figure includes tax) [5]. The grand total actually awarded on the enhanced basis, including tax, was $2,114,582 [97], or $1,931,876 before tax. This means that the costs award, even on this significantly elevated basis, in respect of a case in which the plaintiffs could not have had a reasonable belief that they had a good arguable case, was only about 25% of Bell’s actual costs. Bell is out of pocket by $5 million for having defended a suit which never should have been brought.

It is more than two years ago that the Rules Committee released an ambitious discussion paper on costs. Perhaps I’ve missed it, but I can’t recall having seen any follow-up.