2023 ONSC 4881, 2023 ONSC 4881

CITATION : Loops, L.L.C. et al. v. Maxill Inc., 2023 ONSC 4881 COURT FILE NO.: 2447-16 DATE: 2023/08/28 SUPERIOR COURT OF JUSTICE - ONTARIO RE: LOOPS, L.L.C. and LOOPS FLEXBRUSH, L.L.C., Plaintiffs AND: MAXILL INC., Defendant BEFORE: Justice I.F. Leach COUNSEL: Karen F. MacDonald and Kassandra Shortt, for the Plaintiffs Philip J.

Kennedy, for the Defendant Maxill Inc. and the proposed additional defendant John Shaw HEARD: In writing ENDORSEMENT REGARDING COSTS [1] [ 1 ] On May 24, 2023, I released a substantive endorsement relating to the motion brought by the plaintiffs in this intellectual property litigation to add an additional defendant, (John Shaw), to this action. [ 2 ] That motion was opposed by the existing defendant Maxill Inc., and by the proposed defendant Mr Shaw.

They took the position that the plaintiffs’ request for leave to make the desired further amendments should be denied pursuant to s.21(1) of the Limitations Act, 2002 , S.O. 2002, c.24 ; i.e., on the basis that a limitation period in respect of the contemplated claim against Mr Shaw had expired, such that the claim should not be pursued by adding Mr Shaw as a party to the proceeding. [ 3 ] For the reasons set out in my earlier endorsement: a.

I made an Order granting the plaintiffs leave to amend their Amended Statement of Claim so as to add John Shaw as another defendant to this action, and provided specific further directions in that regard; and b.

In doing so, I also confirmed the ability of the defendants Maxill Inc. and Mr Shaw to respond to that further amended pleading pursuant to Rule 26.05 of the Rules of Civil Procedure , and granted both leave, (to the extent any such leave may have been required), to plead and rely upon a limitation period defence. [ 4 ] Because my substantive decision was reserved, the parties had not been provided with an opportunity to make any cost submissions having regard to the outcome of the motion.

In my endorsement, I therefore set a timetable for the delivery of written cost submissions if the parties were unable to negotiate a resolution to the cost issues associated with the motion. [ 5 ] The parties apparently were unable to reach an agreement on costs, as I thereafter received: a. initial written cost submissions, (including a Costs Outline for the moving plaintiffs), delivered on behalf of the plaintiffs on or about June 7, 2023; b. responding written cost submissions, (including a Costs Outline for Maxill Inc. and Mr Shaw), delivered on behalf of the defendant Maxill Inc. and proposed additional defendant Mr Shaw on or about June 21, 2023; and c. reply written costs submissions delivered on behalf of the plaintiffs on or about June 28, 2023.

Overview of party positions [ 6 ] For reasons discussed in more detail below: a. The plaintiffs seek their costs of the motion on a substantial indemnity basis, fixed in the all-inclusive amount of $69,071.78. b. Maxill Inc. and Mr Shaw submit that costs of the motion should be left in the cause, to be addressed by the judge finally resolving the defendants’ contemplated limitation period defence on its substantive merits; i.e., via a motion for

summary judgment or at trial. Analysis GENERAL PRINCIPLES [ 7 ] Pursuant to

section 131 of the Courts of Justice Act , R.S.O. 1990, c.C.43 , as amended, and subject to the provisions of

an Act or rules of court, “the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid”. [ 8 ] This is supplemented by the provisions of Rule 57.01 of the Rules of Civil Procedure , subsection (1) of which lists a broad range of factors the court may consider when exercising its discretion to award costs pursuant to

section 131 of the Courts of Justice Act ,

supra. [9] Our courts repeatedly have emphasized that cost awards must not be a simple mechanical or mathematical calculation; e.g.,focused merely on details of time spent multiplied by hourly rates, or a tabulation of disbursements actually incurred. [10] Rather, all cost claims are subject to the “overriding principle of reasonableness”, as applied to the factual matrix of the case,pursuant to the ultimate “cross check” required by such authorities as Boucher, Moon and Coldmatic Refrigeration of Canada Ltd. v.Leveltek Processing LLC (2005), (ON CA), 75 O.R. (3d) 638 (C.A.), and Anderson v.

St Jude Medical Inc. (2006), (ON SCDC), 264 D.L.R. (4th) 557 (Ont.Div.Ct.). [11] The overall goal is to award costs in an amount that is “fair and reasonable for the unsuccessful party to pay in a particularproceeding”, rather than a sum tailored to an exact measure of the actual costs of a successful litigant. See Boucher v. PublicAccountants Council for the Province of Ontario, (ON CA), [2004] O.J. No. 2634 (C.A.), at paragraph 26, and ZestaEngineering Ltd. v.

Cloutier, (ON CA), [2002] O.J. no. 4495 (C.A.), at paragraph 4. [12] In arriving at a global determination of a cost award that is “fair and reasonable” in this particular case, having regard to allthe circumstances, my considerations therefore include but are not limited to those outlined below. ENTITLEMENT [13] The general rule is that a successful party is entitled to costs, subject to the discretion of the trial judge under s.131 of theCourts of Justice Act, supra, having regard to the factors in Rule 57.01 of the Rules of Civil Procedure and related jurisprudence. SeeElbakhiet v.

Palmer, 2012 ONSC 2529 , [2012] O.J. No. 2890 (S.C.J.), at paragraph 30.1, in turn citing Norton v. Kerrigan,[2004] O.T.C. 559 (S.C.J.), at paragraphs 15-16, Joncas v. Spruce Falls Power & Paper Co., [2001] O.J. No. 1939 (C.A.), and Foulis v.Robinson (1978), (ON CA), 21 O.R. (2d) 769 (C.A.), at p.776. [14] In some cases, that discretion in relation to costs may be exercised on the basis that success was divided between the parties. [15] However, while “divided success” does not necessarily mean “equal success”, “some success” may not be enough to have animpact on the appropriate cost determination.

Many cases involve multiple issues, and not all issues are equally important, equally time-consuming or equally expensive to determine. See Scipione v. Del Sordo, 2015 ONSC 5982 , [2015] O.J. No. 5130 (S.C.J.), atparagraph 68. [16] Moreover, I also am mindful that, as emphasized by our Court of Appeal in Oakville Storage & Forwarders Ltd. v. CanadianNational Railway Co. (1991), 5 O.R. (3d), leave to appeal to the Supreme Court of Canada refused (1992), 6 O.R. (3d) xiii (note), andSkye v.

Matthews (1996), (ON CA), 47 C.P.C. (3d) 222 (C.A.), while distributive cost awards are still a possibility,they are rarely if ever appropriate. [17] In relation to the plaintiffs’ motion, the plaintiffs submit they should be regarded as having been entirely successful, and thatcosts should follow the event.

They also submit that such costs should be awarded now; i.e., instead of leaving a determination in thatregard to whatever judge happens to make a final determination in relation to the merits of the defendants’ contemplated limitationperiod arguments, as suggested by counsel for Maxill Inc. and Mr Shaw. [18] I agree with the plaintiffs, for reasons that include the following: a.

As emphasized by the plaintiffs, the relevant benchmark for measuring success in the present context is whether the plaintiffs weregranted leave to further amend their pleading as requested at this stage of the litigation, (i.e., the relief sought on the motion arguedbefore me), and not whether the limitation period issues were finally decided in favour of the plaintiffs. In that regard: i.

Subject to some minor adjustments to the plaintiffs’ draft pleading, (which I independentlydirected to ensure compliance with various formatting details required by the Rules of Civil Procedure), the plaintiffs were granted leaveto amend their pleading in the manner proposed, adding Mr Shaw as a defendant to the action; i.e., the precise relief sought by theplaintiffs’ motion. ii. At no point did the plaintiffs seek a final determination of the relevant limitation period issuesin their favour or otherwise. Nor were they required to do so.

To the contrary, (and as noted in my earlier endorsement), to overcome theobjection raised by Maxill Inc. and Mr Shaw based on s.21(1) of the Limitations Act, 2002, supra, and secure the relief being requested,it was sufficient for the plaintiffs to demonstrate that the prevailing circumstances did not permit any finding that the relevant actual“discovery date” was clear for the purposes of s.5(1)(

a) of the Limitations Act, 2002, supra, in turn effectively preventing any furtherfinding, (pursuant to the analysis mandated by the Court of Appeal in relation to such motions), that the claim contemplated by theplaintiffs pursuant to their Rule 5.04(2) motion was clearly statute-barred by an applicable limitation period, such that leave to make thedesired amendments should be denied. The law was and is clear that, in such a case, a motion for leave to add a proposed defendantshould be granted, with the added defendant then being permitted to plead the expiry of a limitation period in his or her defence. iii.

As noted in the cost submissions of counsel for Maxill Inc. and Mr Shaw, I did indeed notethat it “would be inappropriate, if not unfair”, to make any final determination regarding proper

interpretation of the underlying CSA; apreliminary determination that was necessary, in my view, to then make any final determination of the relevant limitation period issues.(The required

interpretation was not possible, having regard to the explicit request made and emphasized by both sides that I not engagein any such final

interpretation of the agreement for the time being.) However, my comments in that regard were merely an explanationof the reasons why, in my view, the prevailing circumstances did not permit any finding that the relevant actual “discovery date” wasclear for the purposes of s.5(1)(

a) of the Limitations Act, 2002, supra. iv. As also noted in the cost submissions of counsel for Maxill Inc. and Mr Shaw, I went on toindicate that, if their counsel’s view as to the proper

interpretation and characterization of the underlying CSA was accepted, I would

have agreed that any claim by the plaintiffs against Mr Shaw for directly or indirectly attacking or assisting an attack upon the validity ofthe plaintiffs rights of intellectual property, through his relevant giving of viva voce evidence in that regard, would have been statute-barred. However, as noted and emphasized in the plaintiffs’ reply cost submissions, reliance on those comments, as any form of“success” on the motion by Maxill Inc. and Mr Shaw, conveniently ignores my further comments following immediately thereafter, atparagraphs 45-48 of my earlier endorsement; i.e., comments indicating that, even if I accepted defence counsel’s suggested

interpretationand characterization of the underlying CSA, I nevertheless would have disagreed, for the reasons outlined in detail in my earlierendorsement, that all of the plaintiffs’ contemplated claims against Mr Shaw would have been statute-barred. In such circumstances, therelief sought by the plaintiffs on their motion would have been granted in any event; i.e., insofar as the plaintiffs proposed to advanceclaims against Mr Shaw that were not demonstrably statute-barred. b.

While I indicated in paragraph 67 of my earlier endorsement that Maxill Inc. and Mr Shaw were “granted leave, (to the extent anysuch leave may be required), to plead and rely upon a limitation period defence”, I did so only for the sake of clarity, and not because Iaffirmatively believed that any such leave was required. To the contrary, as I indicated earlier in the same paragraph, Maxill Inc. and MrShaw had the ability as of right to respond to the plaintiffs’ further amended pleading pursuant to Rule 26.05 of the Rules of CivilProcedure.

In doing so, they inherently had the ability to plead any defence which had not been formally rejected or dismissed by thecourt. Again, I made no such formal determination, in the course of my earlier endorsement, in relation to the relevant limitation periodissues. Indeed, as noted and emphasized in the cost submissions of counsel for Maxill Inc. and Mr Shaw, I included the followingcomment in my earlier endorsement: “To be absolutely clear, I am in no way deciding or suggesting that the limitation period issuesherein are or should be finally resolved in the plaintiffs’ favour”.

For present purposes, the fundamental point is that my commentsregarding the ability of Maxill Inc. and/or Mr Shaw to plead and rely upon a limitation period defence, and/or my failure to resolve therelevant limitation period issues in favour of the plaintiffs, in no way constitute any degree of “success” by Maxill Inc. and/or Mr Shawin relation to the plaintiffs’ motion. The former were neither requested by the defendants nor strictly necessary, and the latter was notrelief requested by the plaintiffs. c.

At first blush, the prospect of deferring any award of costs in relation to the plaintiffs’ motion, to the judge making the finaldetermination as to whether the defendants’ contemplated limitation period defence, arguably has a superficial attraction. In particular, ifthe court ultimately finds on a complete and appropriately tested record that all of the plaintiffs’ claims against Mr Shaw are statute-barred, (e.g., after having engaged in the binding

interpretation and characterization of the obligations created by the underlying CSAwhich no party to this proceeding wanted me to carry out at this stage of the proceedings), one might argue with the benefit of hindsightthat it would have been better for all concerned if the plaintiffs had not brought their motion for leave to amend their pleading so as toadvance such claims, thereby putting all concerned to time and expense that could have been avoided. However: i.

Taken to its logical extreme, such logic would suggest that the costs of all interlocutory stepsin a proceeding should be delayed until the ultimate merits of a claim are decided; i.e., as all such interlocutory steps, with the benefit ofhindsight, arguably could have been avoided if the party with the unmeritorious claim or defence had simply abandoned their position atthe outset. Our system of costs self-evidently does not work that way. ii.

Modern cost rules are instead designed to foster three fundamental purposes: partialindemnification of successful litigants for the cost of litigation in respect of which they were successful; encouraging settlements (i.e.,party agreement) so as to avoid the need for litigation; and discouraging and sanctioning inappropriate behaviour by litigants. See Fongv. Chan (1999), (ON CA), 46 O.R. (3d) 330 (C.A.), at paragraph 22, and Serra v. Serra, 2009 ONCA 395 ,[2009] O.J. No. 1905 (C.A.), at paragraph 8.

In my view, adopting the approach suggested by counsel for Maxill Inc. and Mr Shaw, andgenerally deferring a decision in relation to the costs of a motion such as this to a judge ultimately deciding a limitation period issue bysummary judgment or trial, would have a number of unfortunate and undesirable implications running counter to each of those identifiedgoals of our modern cost rules. In particular: 1.

Parties in the position of the plaintiffs in this case, who have succeeded in relation to the particular litigious steps taken in relationto this motion, would be denied immediate partial indemnification for their associated costs, and risk the prospect of being denied suchpartial indemnification altogether. 2.

There would be little or no pressing incentive for any proposed defendant, facing such a motion, to agree on the granting of suchrelief; i.e., to arrive at a “settlement” whereby a plaintiff would be granted leave to make desired amendments adding the proposeddefendant as a party to the action, with the proposed defendant thereafter being permitted to plead and rely on a contemplated limitationsdefence.

To the contrary, it seems likely that such a proposed defendant would be encouraged in all such cases to oppose the granting ofsuch relief; i.e., as such opposition might succeed in preventing the proposed claim, or at worst allow the proposed defendant to renewhis or her limitation period arguments at a much later date with no adverse consequences in the meantime. 3.

Unscrupulous proposed defendants with no serious limitation period or other defence would be presented with a means of delayingthe inevitable without immediate consequences; i.e., by opposing proposed amendments on the basis of supposed limitation periodconcerns known to have no merit, thereby forcing a plaintiff to go through the process of bringing a formal motion in that regard, anddelaying the overall progress of the litigation towards final judgment at no cost to the defendant in the interim.

Such inappropriatebehaviour by litigants would be encouraged, and face no immediate or effective sanction or corrective. d. While I have reviewed the authorities cited and relied upon by counsel for Maxill Inc. and Mr Shaw, in support of his argumentsthat costs of the plaintiffs’ motion should be denied or deferred to the judge ultimately deciding the limitation period issue, I frankly didnot find them to be helpful or persuasive in terms of offering any meaningful support for the cost dispositions proposed by thedefendants.

Without limiting the generality of the foregoing, there are reasons to distinguish the particular exercises of cost discretion inthose cases; e.g., a moving party’s failure to request costs, and/or reasons why the moving party was not entirely successful. In anyevent, while I do not dispute that courts have the ability, in the exercise of their discretion, to approach costs in the manner suggested bycounsel for Maxill Inc. and Mr Shaw in an appropriate case, I see no adequate justification for doing so in the particular circumstancesbefore me. SCALE

[19] As noted above, the moving plaintiffs seek their costs of the motion on a substantial indemnity basis. [20] In that regard, neither plaintiff counsel nor defence counsel made any reference in their written cost submissions to theexistence of any settlement offers, exchanged prior to argument of the motion, that might have triggered additional cost consequencespursuant to Rule 49.10 of the Rules of Civil Procedure. [21] If there is any justification for awarding costs of the motion to the plaintiffs on an elevated scale, it therefore would have tofocus on some kind of conduct by Maxill Inc. and/or Mr Shaw that merits condemnation. [22] In particular, although the court has a broad discretion in relation to costs, confirmed by s.131 of the Courts of Justice Act,supra, as expanded by Rule 57.01 of the Rules of Civil Procedure, our appellate courts repeatedly have emphasized that awards of costson a partial indemnity basis generally strike the proper balance as to the burden of costs that should be borne by the “winner”, and thatelevated cost awards should be reserved for “rare and most exceptional” cases where there has been demonstrable misconduct by alitigant.

See, for example, Foulis v. Robinson (1987), (ON CA), 21 O.R. (2d) 769 (C.A.), and Isaacs v. MHGInternational Ltd., (1984), (ON CA), 45 O.R. (2d) 693 (C.A.) [23] The sort of conduct or misconduct meriting elevated cost awards has been described in various ways. [24] In Young v. Young, (SCC), [1993] 4 S.C.R. 3, at p.134, McLachlin J. (as she then was) indicated that elevatedcost awards are warranted “only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”. [25] In Mortimer v. Cameron (1994), (ON CA), 17 O.R. (3d) 1 (C.A.), and McBride Metal Fabricating Corp.v.

H&W Sales Co. (2002), (ON CA), 59 O.R. (3d) 97, whose principles were echoed and emphasized again by theCourt of Appeal in Davies v. Clarington, 2009 ONCA 722 , [2009] O.J.

No. 4236 (C.A.), conduct warranting elevated costawards was described as “reprehensible”, “egregious”, or “acts that clearly indicated an abuse of process”, justifying enhanced costs as aform of chastisement. [26] In this case, leaving aside the merits of the plaintiffs’ underlying claims, (which have yet to be adjudicated), I saw nothing inthe history of the matter, or in the motion proceedings that transpired before me, to suggest any conduct on the part of Maxill Inc. and/orMr Shaw in the sense required to warrant an award of costs on a substantial indemnity basis. [27] Nor did the plaintiffs, in their written cost submissions, identify any specific behavior of Maxill Inc. and Mr Shaw that wassaid to justify an award of costs on an elevated scale apart from references to the vigorous opposition mounted by Maxill Inc. and MrShaw in disputing and contesting the plaintiffs’ proposed further pleading amendments. [28] In that regard, it was emphasized repeatedly in the plaintiffs’ cost submissions that the plaintiffs’ motion should not have beenunnecessary. [29] In particular, it was said that Maxill Inc. and Mr Shaw “could and should have consented” to the relevant proposed furtheramendment of the plaintiffs’ pleading, (prior to then pleading any intended limitation period defence as a prelude to having that issuethen determined by a motion for

summary judgment or trial), but instead unreasonably failed to do so, thereby “inappropriately andunnecessarily” lengthening this proceeding by forcing the plaintiffs to bring their motion. [30] However, the authorities make it clear that something more egregious than tenacious but unsuccessful opposition to plaintiffclaims is required to constitute misbehavior warranting imposition of an elevated cost award. In particular, our Court of Appealrepeatedly has emphasized that, “under our system, defendants are entitled to put the plaintiff to the proof, and there is no obligation tosettle”. See Foulis v.

Robinson, supra, at p.776, and Davies v. Clarington, supra, at paragraph 44. [31] To the extent the plaintiffs are entitled to costs of the motion proceedings before me, those costs accordingly should beawarded only on a partial indemnity basis. AMOUNT CLAIMED AND RECOVERED – RULE 57.01(1)(a) [32] Rule 57.01(1)(

a) permits the court to consider “the amount claimed and the amount recovered in the proceeding”. [33] On its face, this factor has no direct application to the costs determination being made in the present context, as the reliefsought and granted in relation to the relevant motion by the plaintiffs, (i.e., leave to further amend the plaintiffs’ pleading to add anotherdefendant), was not defined or quantified by monetary amounts. [34] To the extent Rule 57.01(1)(

a) was an intended reference to the broader underlying consideration of relief requested comparedto relief obtained, and therefore the degree to which the party or parties claiming costs were successful, that consideration already hasbeen addressed in my earlier comments. PRINCIPLE OF INDEMNITY – RULE 57.01(1)(0.a) [35] Rule 57.01(0.

a) permits the court to consider, in exercising its cost discretion, “the principle of indemnity, including, whereapplicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by thatlawyer”. [36] In their respective cost submissions, neither side questioned the indicated lawyer experience and corresponding hourly ratesindicated in the other side’s Costs Outline, suggesting that the indicated hourly rates of those devoting time to the matter were mutuallyacceptable. [37] I nevertheless independently had concerns that the hourly rates charged by counsel for the plaintiffs were unreasonably high,

at least in relation to junior counsel just one, two or four years after their call to the bar; concerns reinforced by the fact that both sides are represented by large law firms in Toronto, but the hourly rates of junior counsel at the law firm representing the plaintiffs are approximately 33% to 88% higher than their similarly experienced counterparts at the law firm representing the defendants. [ 38 ] Of course, counsel are free to charge their own clients whatever those clients are willing to pay for the services of a particular lawyer.

However, that does not necessarily entail reasonableness in terms of the hourly rates claimable in relation to an adverse cost award. In this particular case, I think a degree of discounting is warranted in relation to the fees claimed in relation to work devoted to the matter by more junior counsel at the plaintiffs’ law firm. [ 39 ] As for the amount of time devoted to the matter by the plaintiffs’ law firm: a. I agree with the submission of plaintiffs’ counsel that the factual and legal considerations raised by the plaintiffs’ motion were relatively complex. Without limiting the generality of the foregoing: i.

As reflected in my earlier endorsement, the factual context giving rise to the plaintiffs’ motion for leave to further amend their pleading to add Mr Shaw as a defendant involved an extended multi-year history of action and interaction by multiple parties, (extending beyond the conduct of the immediate parties to this litigation to include related corporate activity), party agreement, further communications, and court proceedings extending across multiple jurisdictions. That factual context realistically needed to be presented and addressed in a detailed way, having regard to the issues raised by the motion. ii.

As also reflected in my earlier endorsement, the plaintiffs’ motion and defendants’ response/opposition to granting of the relief being sought by the plaintiffs raised numerous issues, (e.g., the nature of the claims the plaintiffs wished to advance against Mr Shaw, application of the rules regarding pleading amendments, application of the Limitations Act, 2002 , supra , considerations relating to the law of contempt, conflict of laws issues, and possible relevance of the doctrine of collateral attack), all of which had to be addressed against the backdrop of the law relating to intellectual property rights in the international context; an area of law generally regarded as more complex and specialized than many other areas of law. iii.

The material and proceedings before me made it clear that presentation of necessary context, and addressing the limitation period arguments advanced on behalf of Maxill Inc. and Mr Shaw, required the review of substantial underlying documentation and the transcripts of formal examinations. iv.

As emphasized by counsel for the plaintiffs, the material prepared and requiring review in relation to the motion was voluminous; e.g., with the plaintiffs filing a six-volume motion record 1283 pages in length along with a 474 page compendium, and the defendants filing a responding motion record 381 pages in length along with a 350 page compendium. b. I also am mindful of the general admonition, voiced by Justice Nordheimer (as he then was) in Basedo v. University Health Network , [2002] O.J. No. 597 (S.C.J.) , but embraced by our Court of Appeal in Boucher v.

Public Accountants Council (Ontario), supra , at paragraph 27, that “it is not the role of the court to second-guess the time spent by counsel unless it is manifestly unreasonable in the sense that the total time spent is clearly excessive or the matter has been overly lawyered”. c. In this particular case, I nevertheless independently shared at least some of the concerns raised in defence counsel’s submissions about demonstrable excess and possible duplication in relation to work done in relation to the motion by plaintiff counsel. In that regard: i.

I note especially my independent perception and finding that, while presentation of a detailed context and background was necessary and appropriate, much of the material included in the plaintiffs’ voluminous motion record actually was extraneous and unnecessary for determination of the issues raised by the plaintiffs’ motion and the defendants’ response. ii. I generally take no issue with multiple lawyers working on a particular matter.

To the contrary, a “team” approach is appropriate and to be commended in circumstances where the general goal of such an approach is delegation of legal work to a level where that work can be done at the lowest possible hourly rate. Such an approach is beneficial to all parties, including opposing litigants who may be obliged to pay adverse cost awards. Having said that: 1. In my view, such a team approach invariably entails some degree of duplicated effort, if only because members of such a team inevitably must spend time explaining or learning aspects of the matter already known by others.

In my view, some allowance for such duplication of effort is appropriate in such circumstances. 2. In this particular case, I also was struck by the fact that work was delegated to multiple junior lawyers of comparable experience and comparable if not identical hourly rates.

In my view, the involvement of that greater number of lawyers of comparable experience cannot be explained simply by delegation of work to those capable of doing it at the lowest hourly rate, and gives rise to enhanced concern about the invariable duplication of effort, (noted in the preceding sub-paragraph), inherent in having multiple lawyers work on a matter. REASONABLE EXPECTATIONS OF UNSUCCESSFUL PARTY – RULE 57.01(1)(0.b) [ 40 ] As noted above, the written cost submissions delivered by counsel for Maxill Inc. and Mr Shaw was accompanied by a Costs Outline.

It indicates the time and expense devoted to the plaintiffs’ motion by their counsel, who confirmed – as an officer of the court – that the document was prepared when the motion was argued and not subsequently adjusted. [ 41 ] According to that Costs Outline, counsel for Maxill Inc. and Mr Shaw incurred and therefore presumably would have requested substantial indemnity costs of $50,446.16, or partial indemnity costs of $33,848.72 in the alternative, had they been the successful parties on the motion. [ 42 ] Those sums obviously are significantly less than the substantial indemnity costs of $69,071.78, and partial indemnity costs of $46,072.81, set forth in the Costs Outline submitted by the plaintiffs.

[ 43 ] In other words, if the Costs Outline of Maxill Inc. and Mr Shaw provides an indication of their cost expectations in relation to the plaintiffs’ motion, it suggests that they anticipated a cost award that would have been roughly 73 percent of that contemplated by the plaintiffs on a substantial indemnity basis, and roughly 73 percent of that contemplated by the plaintiffs on a partial indemnity basis. [ 44 ] However, I do not think Maxill Inc. and Mr Shaw reasonably could have expected the plaintiffs to incur the same level of costs in relation to the motion.

In particular: a. it is neither required nor expected that counsel for each side will devote precisely the same amount of time to any particular matter; and b. in my experience, moving parties frequently spend more time than responding parties on a matter, (in the absence of those responding parties advancing their own competing request for relief), as moving parties necessarily devote time to providing the court with required context and relevant materials that responding parties need not duplicate. [ 45 ] While such considerations address some of the difference between the apparent cost expectations of the parties, the concerns raised elsewhere in this endorsement, (e.g., regarding hourly rates and apparent excess and duplication), remain and suggest other possible reasons for that difference – although I note that defence counsel also used a “team” approach in relation to work done in preparation for the motion.

APPORTIONMENT OF LIABILITY – RULE 57.01(1)(b) [ 46 ] Rule 57.01(1)(

b) permits the court to consider, in exercising its cost discretion, “the apportionment of liability”. [ 47 ] Strictly speaking, “liability” per se was not in issue in the motion proceedings before me. [ 48 ] I nevertheless am mindful of the reality that, in exercising their discretion in relation to cost determinations, courts nevertheless sometimes have had regard to the broader question of whether success in relation to particular issues was divided; i.e., either through a broad

interpretation of Rule 57.01(1)(

b) that does not restrict focus to “liability” per se , or resort to the court’s broad discretion under s.131 of the Courts of Justice Act , supra . [ 49 ] For reasons already outlined above, in my view costs of the plaintiffs’ motion should be awarded on the basis that the plaintiffs were entirely successful, without any meaningful division of success or degree of success attributed to Maxill Inc. and/or Mr Shaw. COMPLEXITY OF PROCEEDING AND IMPORTANCE OF ISSUES – RULES 57.01(1)(

c) AND 57.01(1)(d) [ 50 ] Rules 57.01(1)(

c) and 57.01(1)(

d) permit the court to consider, in exercising its cost discretion, “the complexity of the proceeding” and “the importance of the issues”. [ 51 ] For present purposes, I accept that certain aspects of this litigation involved inherently complex matters for reasons already outlined above. [ 52 ] Similarly, I accept that the issues in this case were of fundamental importance to all of the parties involved, even if those issues did and do not raise matters of broader significance; i.e., beyond the interests of those directly involved in this litigation. In that regard: a.

As emphasized in the cost submissions of plaintiff counsel, it was necessary and appropriate to ensure that all those responsible for the alleged wrongs committed in relation to the plaintiffs’ rights of intellectual property, and alleged ensuing damages, are before the court in this proceeding. The general damages claimed by the plaintiffs in that regard have not been numerically quantified in the plaintiffs’ amended or further amended pleading; i.e., insofar as the plaintiffs’ pleading simply advances a claim for unspecified “general damages”.

Precise quantification of such alleged damages no doubt may require further analysis and consideration following the completion of documentary and oral discovery examinations. However, the tenacity with which the plaintiffs have sought to protect their rights of intellectual property and restrain alleged misconduct by the defendants, in the course of multi-jurisdictional litigation, suggests a perception that the damages flowing from the defendants’ alleged misconduct may be very substantial. b.

As emphasized in the cost submissions of defence counsel, the relief sought by the plaintiffs’ motion was of equal importance to Maxill Inc. and Mr Shaw, not only because of the resulting personal exposure of Mr Shaw to possible liability for such very substantial damages, and the additional costs that will be incurred by Maxill Inc. and Mr Shaw in defence of the action, but also because of the strategic and wider legal implications that may flow from Mr Shaw being made a defendant to this proceeding in his personal capacity. CONDUCT AND/OR STEPS THAT LENGTHENED PROCEEDING – RULES 57.01(1)(

e) AND 57.01(1)(f) [ 53 ] Rule 57.01(1)(

e) permits the court to consider, in exercising its cost discretion, “the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding”. [ 54 ] Rule 57.01(1)(

f) permits the court to consider whether any step in the proceeding was “improper, vexatious or unnecessary”, or “taken through negligence, mistake or excessive caution”. [ 55 ] The Cost Outline tendered on behalf of the plaintiffs suggests those concerns are “n/a” or not applicable to the present determination of an appropriate award of costs.

However, as noted above, there are indications and complaints elsewhere in the plaintiffs’ written cost submissions: a. that the refusal of Maxill Inc. and Mr Shaw to consent to the plaintiffs’ proposed further pleading amendments was unreasonable, and inappropriately “lengthened these proceedings by forcing Loops to bring a motion to add John Shaw as a defendant to the

proceeding”; and b. that the said refusal was both inappropriate and unnecessary. [ 56 ] For reasons similar to those already expressed in relation to my determination regarding the appropriate scale of costs to be awarded, I nevertheless do not believe mere unsuccessful opposition by a defendant to the granting of requested relief constitutes: a. the type of litigation-lengthening conduct in the sense contemplated by Rule 57.01(1)(

e) of the Rules of Civil Procedure ; or b. improper or unnecessary conduct in the sense contemplated by Rule 57.01(1)(

f) of the Rules of Civil Procedure . [ 57 ] As noted above, our appellate courts repeatedly have confirmed that, under our legal system, defendants are entitled to put a plaintiff to the proof of relief being requested, and there is no obligation to compromise in that regard. [ 58 ] Moreover, treating failed opposition to the granting of relief as litigation-lengthening conduct in the sense contemplated by Rule 57.01(1)(e), or improper or unnecessary conduct in the sense contemplated by Rule 57.01(1)(f), effectively would engage those additional cost considerations in all cases where there are successful and unsuccessful parties. [ 59 ] In my view, Rules 57.01(1)(

e) and 57.01(1)(

f) contemplate something more than unsuccessful opposition, and nothing more in that regard was clearly identified by the plaintiffs in terms of the conduct of Maxill Inc. and/or Mr Shaw. REFUSAL TO MAKE APPROPRIATE ADMISSIONS – RULE 57.01(1)(g) [ 60 ] The only consideration cited by the plaintiffs, in relation to Rule 57.01(1)(g), was Mr Shaw’s refusal “to admit facts that were pertinent to discovering his personal breach in various examinations for discovery”. [ 61 ] In my view, however, that suggestion is problematic for two reasons: a.

My jurisdiction inherently is limited to making cost awards relating to Mr Shaw’s conduct in this litigation. To the extent Mr Shaw may or may not have failed to acknowledge certain matters in discovery examinations conducted in relation to other proceedings, in other jurisdictions, I think the cost consequences of that, if any, are matters to be addressed by the court or courts with jurisdiction over those proceedings. b.

To the extent the plaintiffs are relying upon Mr Shaw’s failure to answer certain questions put to him during oral discovery examination conducted in relation to this proceeding, I think the cost consequences of that were matters to be addressed in the context of the plaintiffs’ motion to address undertakings and refusals that was heard and decided herein by Justice Tranquilli. In my view, such concerns and their possible implications in relation to cost awards cannot appropriately be raised now, in this context.

ANY OTHER MATTER RELEVANT TO COSTS – RULE 57.01(1)(i) [ 62 ] In my view, no additional considerations were identified by the parties under this heading. [ 63 ] Without limiting the generality of the foregoing, (and as noted above), neither party mentioned the existence of any relevant settlement offers exchanged prior to argument of the motion.

Conclusion [ 64 ] It has been said many times, and in many ways, that discretionary cost determinations are far from an exact science. [ 65 ] Again, the overall goal is to award costs in an amount that is fair and reasonable in a particular proceeding – having examined various factors such as those outlined in Rule 57.01. [ 66 ] Having regard to all the circumstances of this particular case, including the various considerations noted above, I think justice will be served if my discretion is exercised so as to award the moving plaintiffs their costs of the motion fixed in the all-inclusive amount of $38,000.00, payable forthwith by Maxill Inc. and Mr Shaw. [ 67 ] An order shall go accordingly.

Addendum [ 68 ] As noted above, this matter is subject to a protective order made herein by Justice Raikes on April 18, 2017, whereby certain information provided and addressed in this proceeding is deemed by that order to be “Confidential Information”, in respect of which access and dissemination is subject to specified restrictions. [ 69 ] Sensitive to the provisions of that order, I imposed initial restrictions on the public filing and circulation of my earlier substantive endorsement, similar to the initial restrictions I have imposed on the public filing and circulation of this endorsement. [ 70 ] As I nevertheless also was and am mindful of the provisions of

section 135 of the Courts of Justice Act , R.S.O. 1990, c.C.43 , and the emphasis placed by the Legislature and this court on the importance of ensuring that court proceedings generally should be open to the public to the extent possible, (i.e., barring some other demonstrable overriding concern in that regard), my earlier endorsement also included a specific direction obliging the parties herein to obtain a further virtual hearing to address the matter of my substantive endorsement being made the subject of authorized wider circulation following the making of agreed redactions. [ 71 ] In particular, paragraph 69 of my earlier substantive endorsement read as follows:

In accordance with the procedure suggested by counsel during the hearing on January 23, 2023, the parties hereby also are granted leave to obtain, and shall obtain , a similar virtual appointment to address the matter of this endorsement being made the subject of authorized wider circulation following the making of agreed redactions.

As indicated at the outset, this endorsement otherwise will remain sealed, in the manner noted above, pending any further order of the court in that regard. [Emphasis added.] [ 72 ] To my knowledge, the parties have failed to take any steps to obtain such a similar virtual appointment, through consultation with the London trial co-ordinator or otherwise, since the release of my substantive endorsement on May 14, 2023.

Nor have I been provided with any suggested redacted version of my earlier endorsement for wider circulation. [ 73 ] In the circumstances, I therefore proactively have prepared redacted versions of my earlier substantive endorsement and this endorsement regarding costs.

In a concerted effort to prevent the parties and their products herein from being identified via wider availability and circulation of the endorsements to the general public, (e.g., via uploading of the redacted endorsements to the relevant Sharepoint and Caselines folders for this matter, and provision of the redacted endorsements to reporting services), those redacted versions of the endorsements: a. assign pseudonyms to the parties, products and “Get-Ups” mentioned therein; b. identify other individuals only by their initials; and c. indicate further redactions, in relation to such matters as party addresses, trademark application numbers and patent numbers. [ 74 ] I also have directed the London judicial secretaries to provide counsel herein with copies of those redacted versions of the two endorsements, at the same time as the unredacted version of this endorsement is released to the parties. [ 75 ] Unless I receive a written indication from the London trial co-ordinator on or before September 11, 2023, that the parties have taken steps to obtain a further virtual appointment before me to address redaction of the two endorsements: a. it will be assumed that the parties have no objection to the two endorsements in question being uploaded to the relevant Sharepoint and Caselines folders, and provided to the reporting agencies, in the redacted form I have suggested; and b.

I accordingly will provide the London court office with directions to proceed with uploading of the redacted versions of those two endorsements to those Sharepoint and Caselines folders, and provision of the redacted versions of those two endorsements to the reporting agencies. “Justice I.F. Leach” Justice I.F. Leach Date: August 28, 2023