Keltic Transportation Inc. v. Montgomery, 2014 NSSC 414

Supreme Court of Nova Scotia Citation: Keltic Transportation Inc. v. Montgomery, 2014 NSSC 414 Date: 20141201 Docket: Hfx No. 429987 Registry: Halifax Between: Keltic Transportation Inc. and Keltic Freight Services Inc. Plaintiffs v. David Montgomery and Fulcrum Transportation Management Limited Defendants Library Heading Judge: The Honourable Justice Suzanne M. Hood Heard: By written submissions Final Written Submissions: October 24, 2014 Subject: Costs

Summary: Costs on unsuccessful interlocutory infusion motion Issues: Tariff or lump sum costs? Result: Tariff costs awarded THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET. SUPREME COURT OF Nova Scotia Citation: Keltic Transportation Inc. v. Montgomery , 2014 NSSC 414 Date: 20141201 Docket: Hfx No. 429987 Registry: Halifax Between: Keltic Transportation Inc. and Keltic Freight Services Inc. Plaintiffs v.

David Montgomery and Fulcrum Transportation Management Limited Defendants Decision on Costs Judge: The Honourable Justice Suzanne M. Hood Heard: By written submissions Final Written Submissions: October 24, 2014 Counsel: Richard M. Dunlop, for the Plaintiffs Jeff Aucoin, for the Defendants By the Court: Introduction [ 1 ] On October 15, 2014, I heard a motion for an interlocutory injunction.

I rendered an oral decision on October 17, 2014 (released separately) refusing to grant the injunction. [ 2 ] I asked the parties for written submissions on costs since the successful defendants/respondents (the “defendants”) sought lump sum costs on the basis that the tariffs did not provide a substantial contribution towards their costs.

The plaintiffs/applicants (the “plaintiffs”) said the matter was a routine one in the employment context, was not frivolous or vexatious and there should either be no costs award to the defendants or, alternatively, costs pursuant to Tariff C, for the Chambers motion of less than a half day. [ 3 ] I have now received their written submissions. [ 4 ] This was a half-day Chambers motion with included affidavits filed by both parties, with brief cross-examination of the individual defendant.

Each party filed a brief of approximately 22 pages along with just over 20 case authorities. [ 5 ] The issues in that matter were: 1) what test should apply: “serious issue” to be tried or “ prima facie ” case; 2) the validity of the employment restrictive covenant, i.e., whether there was consideration for it; 3) whether the individual defendant was a fiduciary; 4) whether the plaintiff could establish irreparable harm; and, 5) in whose favour the balance of convenience fell. [ 6 ] Rule 77.05(1) provides: Assessment of interlocutory costs

(1) The provisions of Tariff C apply to a motion, unless the judge hearing the motion orders otherwise. [ 7 ] Tariff C provides: For applications heard in Chambers the following guidelines shall apply:

(1) Based on this Tariff C costs shall be assessed by the judge presiding in Chambers at the time an order is made following an application heard in Chambers.

(2) Unless otherwise ordered, the costs assessed following an application shall be in the cause and either added to or subtracted from the costs calculated under Tariff A.

(3) In the exercise of discretion to award costs following an application, a Judge presiding in Chambers, notwithstanding this Tariff C, may award costs that are just and appropriate in the circumstances of the application. [ 8 ] For a hearing of more than 1 hour but less than 1/2 day, the range of costs is $750 - $1,000. [ 9 ] The court has discretion to award lump sum costs instead of tariff costs (Rule 77.08) and may make any award which “will do justice between the parties” (Rule 77.02(1)). [ 10 ] In their submissions in support of lump sum costs, the defendants refer to Richards v.

Richards , 2013 NSSC 269 which in turn cited Armour Group Ltd. v. Halifax (Regional Municipality) , 2008 NSSC 123 . In the latter, Goodfellow, J. in paragraph 20 set out a non- exhaustive list of factors indicating the need for “exceptional legal services”.

He said in paragraphs 19 and 20: [19] The new Chambers Tariff C must, of itself, be taken for some time to be a reflection of what is a reasonable contribution to legal fees and party and party to be ordered otherwise the integrity of the Chambers Tariff will be rendered virtually meaningless. [20] In my view to go beyond the Tariff C in Chambers matters requires special circumstances … [ 11 ] The factors, to which Goodfellow, J. referred, were summarized by Muise, J. in Richards at paragraph 6 as follows: The motions judge ought not depart from Tariff C costs unless there are special circumstances requiring a sufficient level of exceptional legal services.

Examples of such special circumstances include the following: 1) complexity; 2) public interest; 3) pre-chambers process; 4) unsettled questions of law; 5) conduct or misconduct of a party and or solicitor; 6) failing to use an alternative and less costly process to determine the dispute; 7) the need for additional counsel; 8) the presence of multiple counsel, unless the additional counsel have limited participation; and, 9) the presence of expert witnesses.

The “level of exceptional services required” as a result of one or more of these, or other applicable circumstances, provides the grounds for whether the motions judge should exercise his or her discretion to depart from Tariff C, and to what degree. [ Armour Group Ltd. v. Halifax (Regional Municipality) , 2008 NSSC 123 , at paragraphs 20 , 21, 24 and 25.] [ 12 ] In Richards , Muise, J. awarded lump sum costs after applying these factors to the matter before him. In that case, the hearing was a five-day hearing with multiple parties.

The applicant sought oppression remedies pursuant to the Companies Act and an injunction to prevent the respondents from contravening company resolutions and agreements. She also sought access to corporate and financial information. [ 13 ] At paragraph 21, Muise, J. set out the special circumstances he concluded were at play in that case. In all the circumstances, he concluded tariff costs were inappropriate and awarded lump sum costs.

The matter was not a routine injunction and was in the context of a matrimonial dispute with respect to a family business. [ 14 ] In Armour Group , Goodfellow, J. dealt with an application (now motion) of a half day in Chambers which included briefs, argument and cross-examination on affidavits. He commented on the purpose of the tariffs, saying in paragraph 23: [23] The speed of escalation of legal fees is not one that the court can or should try and keep pace with. Solicitors and clients are in the market place and set their own contractual fee and service conditions.

The court through its establishing of Tariffs is meant to provide a reasonable level of recovery of party and party costs. [ 15 ] He continued in paragraphs 24 and 25: [24] Circumstances of each chamber’s [sic] matter will dictate whether or not there should be consideration of an exercise of discretion beyond the chamber’s [sic] Tariff Scale.

For example, the complexity of the matter must be of some magnitude because one would reasonably anticipate that there is some level of complexity to a chamber’s [sic] application, either in law and, or, fact, otherwise the matter ought to have been one capable of resolution. [25] The mere existence of one or more of the factors noted does not, of itself, warrant departure from the updated Tariff or chamber’s [sic] party and party costs.

It is the level of exceptional services required that will result first in whether or not there should be exercise of discretion to depart from the chamber’s [sic] Tariff and, secondly, the degree to which any judicial discretion should depart from the chamber’s [sic] Tariff. He then awarded costs of $950 plus disbursements. [ 16 ] Moir, J. in Bevis v. CTV Inc. , 2004 NSSC 209 said the tariffs are the usual basis for costs (para. 13). He then went on to refer to the principle of a substantial contribution towards costs and discussed lump sum costs.

However, it must be remembered that Bevis was a case of false arrest and defamation heard before a jury. [ 17 ] The defendants also refer to Smith v. Michelin North America (Canada) Inc. , 2008 NSSC 66 . In that case, I awarded lump sum costs in the amount of $500,000 plus disbursements. The issue in that case was whether Michelin had to pay $268 million into the pension fund. The case was complex, each party had retained experts and had multiple counsel, including counsel from Ontario.

Extensive affidavits were filed. Each party spent approximately one million dollars on the matter. It was heard as a Complex Chambers matter over three days. Furthermore, the successful respondent said that the tariff costs would be excessive based upon the tariffs for a matter akin to a trial, based upon the amount involved of $268 million. [ 18 ] The default position is that the tariffs apply, in this case Tariff C. I am given guidance about when I should exercise my discretion to depart from Tariff C.

I must be satisfied that “exceptional legal services” were required. [ 19 ] I consider the examples of special circumstances set out in Armour Group and Richards . 1. Complexity . Although there were several questions to be resolved, the issues were not particularly complex in the context of an interlocutory injunction in an employment matter. I was able to render an oral decision within 48 hours. The matter was argued in less than a half day, although one day had been scheduled for it. That is some indication of its lack of complexity.

As Goodfellow, J. said in Armour Group in paragraph 2: The application was a half day Chambers Hearing involving briefs, argument and cross-examination on affidavits. Armour Group seeks party and party costs of $27000 plus disbursements indicating it’s total legal fees for the application were of approximately $35000. 2. Public interest . There were no public interest issues raised in this matter. 3. Pre-Chambers process . There was none. 4. Questions of law that are unsettled .

Although it was argued that “ prima facie case” is not the test for an interlocutory injunction, it has regularly been considered to be the test in the employment context. Similarly, the issue of fiduciary duties by employees is not an unsettled area of the law. It depends in each case upon the role and responsibilities of the employee and very much depends upon the facts. The issue of whether continued employment is sufficient consideration for a restrictive covenant is one where there is conflicting case law.

However, the authorities cited were not extensive and I concluded one line of authorities was more persuasive. 5. Conduct or misconduct of a party and/or solicitor . There is no indication of any conduct by either party or counsel that would merit special consideration in the costs context. 6. Settlement/alternatives . There is no evidence of any facts which would cause me to give consideration to this factor. 7. Associate counsel . Not applicable. 8. Multi counsel . Not applicable. 9. Experts . There were none. [ 20 ] The defendants list several factors which they say take this motion out of the ordinary: 1.

The Consideration arguments around whether or not “continued employment” was sufficient. Two distinct lines of authority were developed and responded to. 2. Mr. Montgomery’s somewhat unique situation of having been hired for his book of business, which the subject motion then attempted to prevent him from servicing. 3. The dichotomy between non-solicitation agreements and non-competition agreements as argued by the Plaintiffs and responded to. 4. The damages situation where the agreement and the clients in question would relate to an identifiable list of clients. 5.

The two merits arguments presented by the Plaintiffs who sought an injunction based on the Agreements and also on the basis of fiduciary duty. This essentially doubled the scope of the injunction. [ 21 ] I have already dealt with #1 and #5 above. #2 is a factual circumstance which does not relate to the test for an interlocutory injunction. #3 is a legal issue which was not unduly complex or time-consuming.

The issue of damages (irreparable harm) (#4) is always an issue in these matters. [ 22 ] I look at all of these considerations in determining whether there are “special circumstances” requiring “exceptional legal services”. In most interlocutory injunction motions, there are individual differences from cases which have gone before and which must be dealt with in deciding if the injunction should be granted. In my view, there was nothing in this matter which would merit departing from the usual rule of awarding tariff costs. [ 23 ] The plaintiffs, however, say there should be no costs award.

They refer to the court’s discretion to make no costs award ( Rule 77.03(1)), that is, that each party bear its own costs. They refer to Survival Systems Training Ltd. v. Survival Systems Limited , 2012 NSSC 202 , where Edwards, J. made no costs award. He said at paragraph 75: I am therefore dismissing the motion for an interlocutory injunction. In the circumstances, I decline to make any award for costs. I am satisfied that SSTL acted entirely appropriately in going forward with this motion.

[ 24 ] Their alternate argument is for a costs award based upon Tariff C, as in Front Line Safety Ltd. v. MacKenzie , 2003 NSSC 15 , where LeBlanc, J. awarded costs of $1,000 payable in the cause in any event of the cause. [ 25 ] I make no comment upon the appropriateness of the plaintiffs’ actions in bringing this motion. Parties who are unsuccessful and are ordered to pay costs often have had good reason to bring a motion or commence a lawsuit. In my view that is not relevant to a costs decision.

In cases where an unsuccessful party has engaged in misconduct of some sort or brought a frivolous or vexatious motion or action, the costs consequences may be greater as a result. That is not the case here. [ 26 ] I conclude an award of costs should be made in favour of the successful defendants on this motion based on Tariff C. The defendants say costs should be paid forthwith. In Richards , Muise, J. quoted, at paragraph 18, from Cana International Distributing Inc. v.

Standard Innovation Corporation , 2011 ONSC 752 , at paragraph 7 as follows: In my opinion, absent extraordinary circumstances, costs on an unsuccessful interlocutory injunction should be payable forthwith. An application for an injunction is a discrete legal remedy involving substantial costs. There is no reason that costs should not follow the event where the application is unsuccessful. There is never an assurance that there will be a trial, particularly in circumstances where an injunction is not in place.

I agree with the submission of the Defendant that the general approach in the recent caselaw is that when a plaintiff seeking an injunction is unsuccessful, costs should be ordered paid forthwith, in any event of the cause. [ 27 ] I agree with this approach. There are no extraordinary circumstances here. I see no reason not to award costs forthwith on a motion for an interlocutory injunction, the legal underpinning of which is separate from the issues at trial. [ 28 ] The range of costs pursuant to Tariff C is $750 - $1,000.

I award costs of $1,000 plus disbursements to be paid forthwith and in any event of the cause. Hood, J.