T-1226-84
Bryan Osborne (Plaintiff)
v.
The Queen as represented by the Treasury Board
(Defendant)
T-1239-84
William James Millar (Plaintiff)
v.
The Queen as represented by the Treasury Board
(Defendant)
INDEXED AS: OSBORNE v. CANADA (TREASURY BOARD)
Trial Division, Walsh D.J.—Ottawa, October 10
and 20, 1986.
Practice — Costs — Motion pursuant to R. 344(7) and
Tariff B s. 3 for increase of amounts allowable under Tariff B
s. 2(1)(d) and (e) — Plaintiffs partly successful in main action
— Issues at trial complex and important and requiring exten
sive preparation — Tariff outdated and inadequate — Instant
case resembling test case, being first on issue — Proposed
amendments to Federal Court Rules overcoming restrictive
approach to increases in Smerchanski and radically changing
existing tariff — Amendments, while not yet in effect, indicat
ing what now deemed fair and reasonable — Federal Court
Rules, C.R.C., c. 663, RR. 344(7), 346A (proposed Can. Gaz.,
Part I, No. 11), Tariff A, s. 1(4)(a), Tariff B, ss. 2(1)(d),(e), 3
— Public Service Employment Act, R.S.C. 1970, c. P-32, s. 32
— Canadian Charter of Rights and Freedoms, being Part I of
the Constitution Act, 1982, Schedule B, Canada Act 1982,
1982, c. 11 (U.K.), ss. 1, 2(b),(d) — Civil Service Act, S.N.S.
1980, c. 3 — Federal Court Act, R.S.C. 1970 (2nd Supp.), c.
10, s. 46.
The plaintiffs' actions, which were heard along with a third,
sought a finding that the restrictions on political activities of
civil servants in section 32 of the Public Service Employment
Act were of no force and effect as being in violation of
paragraphs 2(b) and (d) of the Charter.
While unsuccessful in this contention, the parties herein
obtained a finding that they could attend a leadership conven
tion and were allowed costs. The case required extensive study
and preparation of material with respect to section 32 of the
Act and section 1 of the Charter. The trial was lengthy and
costly. However, counsel for the plaintiffs herein collaborated
and greatly assisted the Court by preparing a joint brief on
section 1 of the Charter and a book of agreed documents,
thereby reducing the length of the trial.
This is a motion, applicable to both cases, for an order
pursuant to Rule 344(7) and section 3 of Tariff B of the
Federal Court Rules for a direction to the taxing officer to
increase the amounts allowable under paragraphs 2(d) and (e)
of Tariff B.
Held, the motion should be allowed.
It was decided in Smerchanski that the amount of work
required and the difficulty or importance of the case did not
justify an increase in Tariff B costs items. While making
allowances for test cases, this approach was, until recently,
followed in Federal Court cases. However, there is now a
tendency to be more generous in making special directions as to
costs rather than rigidly adhering to the hopelessly outdated
and inadequate Tariff whenever the discoveries or days of
hearing are shortened by the cooperation of the parties in their
preparation and at trial. And while the main action herein was
not a test case, it clearly resembled one in that it was the first
such case on the issue. A hearing before the Public Service
Staff Relations Board dealing with the validity of section 32
was adjourned until judgment was rendered in the main action
in this case.
Finally, proposed amendments to the Federal Court Rules
would allow much more realistic amounts. They would also
greatly extend the use of judicial discretion and overcome the
Smerchanski case by permitting the importance of the issues,
the volume of work and the complexity of proceedings to be
taken into account, as well as the conduct of the parties that
tends to shorten or lengthen the duration of the proceedings.
The amendments would also specifically provide a fee for the
principal counsel and the possibility of another fee for partici
pation by junior counsel. While these rules are not yet in effect,
they can be considered as an indication of what is now deemed
to be fair and reasonable.
Relying on paragraph 1(4)(a) of Tariff A, it is directed that
the present proceedings be considered as a class III action. An
amount, to be determined by the taxing officer, will be allowed
as preparation for trial.
With respect to amounts allowed under paragraph 2(1)(e) of
Tariff B, amounts similar to those allowed in the proposed new
Tariff will be allowed. The special circumstances of this case
and the fact that it was considerably shortened by the coopera
tion of all parties justify a reasonable increase in the amounts
permissible under the existing Tariff.
CASES JUDICIALLY CONSIDERED
APPLIED:
R. v. Manitoba Fisheries Ltd., [1980] 2 F.C. 217 (C.A.),
affirming [1980] 1 F.C. 36 (T.D.); Warwick Shipping
Limited v. The Queen, [1984] 1 F.C. 998 (CA.).
NOT FOLLOWED:
Smerchanski v. Minister of National Revenue, [1979] 1
F.C. 801 (CA.).
CONSIDERED:
Spur Oil Limited v. The Queen, [1983] 1 F.C. 244
(T.D.).
REFERRED TO:
Fraser v. Nova Scotia (Attorney General), judgment
dated June 10, 1986, SH 54592, not yet reported; Mac-
Millan Bloedel (Saskatchewan) Ltd. v. Consolboard Inc.
(1981), 124 D.L.R. (3d) 342 (F.C.A.).
COUNSEL:
Dougald E. Brown for plaintiff.
Duff Friesen, Q.C., for defendant.
SOLICITORS:
Nelligan/Power, Ottawa, for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for order ren
dered in English by
WALSH D.J.: This deals with a motion brought
on applicable to both cases for an order pursuant
to Rule 344(7) [Federal Court Rules, C.R.C., c.
663] and section 3 of Tariff B for a direction to
the taxing officer to increase the amounts allow
able under paragraphs 2(1)(d) and 2(1)(e) of
Tariff B. These two actions were heard along with
a third bearing number T-1636-84 in which there
were five plaintiffs: Randy Barnhart, Linda Cam-
poni, Michael Cassidy, Ken Clavette and Heather
Stevens and in which, however, the plaintiffs were
represented by other attorneys than those repre
senting the two plaintiffs with whom the present
motion is concerned. In all three actions however
the primary objective of the plaintiffs was to
obtain a finding that section 32 of the Public
Service Employment Act [R.S.C. 1970, c. P-32]
was of no force and effect as being in violation of
paragraphs 2(b) and 2(d) of the Canadian Charter
of Rights and Freedoms [being Part I of the
Constitution Act, 1982, Schedule B, Canada Act
1982, 1982, c. 11 (U.K.)].
None of the plaintiffs succeeded in this conten
tion but to a limited extent the judgment [Osborne
v. Canada (Treasury Board), [ 1986] 3 F.C. 206
(T.D.)] interpreted section 32 of the Act as per
mitting some of the political activities which plain
tiffs wished to undertake. No costs were allowed to
either plaintiffs or defendants in action T-1636-84
involving five plaintiffs who sought to be permitted
to undertake a wide range of such activities, only a
very few of which were found to be permissible
under the interpretation given to the section, but in
the two actions with respect to which the motion
for direction is now made, costs were allowed to
plaintiffs, although they had not succeeded in
having section 32 of the Public Service Employ
ment Act found to be of no force and effect, since
they had succeeded in part in obtaining a finding
that there is no authority or basis in law to order
that they not be permitted to attend a leadership
convention as they had sought to do. This was
based on interpretation of subsection 32(2) permit
ting public servants to attend political meetings or
contribute money for the funds of a political party.
Since the main thrust of all the parties was the
attack on section 32, the study and preparation of
material for this, applicable to all three cases was
what made the trial lengthy and costly. Since any
limitation whatsoever of political activity of public
servants of necessity interferes to some extent with
their freedom of speech and freedom of association
the defendant was obliged to invoke section 1 of
the Charter to establish that some limitation was
justifiable in a free and democratic society. The
defendant accordingly called Professor Kernaghan,
an eminent political scientist who has devoted
much study and worked extensively on the subject
as an expert witness to establish that in other free
and democratic societies, and certainly in Canada,
there has always been a tradition of political neu
trality and that historically public servants who
are deemed to be appointed and promoted on the
basis of merit do not engage in unrestricted politi
cal activities. The public service statutes of a
number of democratic countries including Great
Britain, the United States, and even Japan, were
produced, as well as those of all 10 provinces of
Canada, reports of parliamentary committees and
a series of articles and treatises on the subject.
Many of the publications were produced by the
plaintiffs for the purpose of cross-examination of
Professor Kernaghan.
It is common ground that counsel representing
the two plaintiffs in the present motion as well as
other counsel representing the five plaintiffs in the
other action for which costs were not allowed and
counsel representing the defendant in all three
actions collaborated and greatly assisted the Court
thereby reducing the length of the trial in the
interest of all parties by preparing a joint brief
dealing with section 1 of the Charter and a book of
agreed documents. The two plaintiffs in the
present motion also produced a further brief deal
ing with section 1 as well as a number of the
articles by Professor Kernaghan and others to
assist in their cross-examination.
It is apparent from reading the judgment in the
case of Fraser v. Nova Scotia (Attorney General)
[judgment dated June 10, 1986, SH 54592, not yet
reported], to which reference is made in the judg
ment in this case, that somewhat similar material
was produced in connection with the Canadian
Charter of Rights and Freedoms attack on restric
tive sections of the Civil Service Act of Nova
Scotia [S.N.S. 1980, c. 3] since the judgment dealt
at considerable length on expert opinions expressed
by Professor Kernaghan and analyzed the Public
Service regulations of the various provinces of
Canada, Great Britain, including a report made
there, and the United States including the Hatch
Act. [An Act to prevent pernicious political activi
ties, 53 Stat. 1147].
Since the trend of Supreme Court jurisprudence
appears to indicate that whenever section 1 of the
Charter is to be invoked, it is necessary that some
proof be made to establish what is justifiable in a
free and democratic society, and that the trial
judge cannot merely rely on his own views when
rendering judgment no blame therefore can be
attributed to the defendant if, as in the present
case, a far-reaching inquiry is made as to what is
in fact done in other free and democratic societies
and a voluminous amount of material is produced
to establish it. The plaintiffs then are forced to
indulge in considerable research to prepare for
cross-examination of any witness, expert or other
wise, called to testify with respect to this. To the
extent that the defendant may be able to use the
same evidence repeatedly in connection with simi
lar actions in other jurisdictions and should not be
compensated for preparing and using this evidence
more than once, this is not an issue in the present
motion since it is not the defendant's costs which
are being taxed but plaintiffs'.
Plaintiffs submitted a time docket sheet indicat
ing the client as "Professional Institute of the
Public Service re: Osborne, Brian" and a second
time docket sheet for the same client re: William
James Millar. An accompanying affidavit indi
cates total time docketed in both cases as: John
Nelligan 70.6 hours, Dougald Brown 179.7 hours,
and students 54.4 hours. The claim for students'
time was deleted at the hearing as jurisprudence
has indicated that this is not allowed. The next
paragraph in the affidavit states that the time
docketed in both cases for preparation for trial
including research for the joint section 1 brief,
preparation of agreed statement of facts and
exhibit books, preparation of witnesses, legal
research and preparation of briefs excluding tele
phone conferences with clients is: John Nelligan
20.4 hours, Dougald Brown 98.7 hours. The time
docketed for attendance at trial and preparation
during the course of the trial is: John Nelligan
44.5 hours, Dougald Brown 36 hours. While these
times do not reconcile when the latter two are
added with the total in the first set of time figures,
the difference may well be because of the deletion
of the time involved in telephone conferences with
clients. The defendant does not dispute the accura
cy of the figures and, in answer to a question by
the Court, Mr. Brown, who argued the motion,
stated that Mr. Nelligan's customary time charges
are $200 and Mr. Brown's time charges are $100.
It must be noted that what may be appropriate in
solicitor and client taxation is not necessarily so in
taxation of party and party costs. The plaintiffs'
counsel also stated that the actions are under
appeal but that it was desirable to seek directions
for taxation of costs at trial at this time in any
event. He undertook however not to seek applica
tion of any special direction as to costs in the event
that the appeal on the Charter attack on section 32
of the Public Service Employment Act does not
succeed at final judgment, since he concedes that
all the additional time involved was in connection
with this issue, so that if his clients are not success
ful in it then costs taxed in accordance with the
Tariff on the relatively minor issue of the rights of
his clients to attend a leadership convention as a
delegate will be satisfactory.
In seeking a special direction as to costs the
plaintiffs have to overcome the obstacle of the
Smerchanski [Smerchanski v. Minister of Na
tional Revenue] case, [1979] 1 F.C. 801 (C.A.), in
which former Chief Justice Jackett stated
categorically at page 806:
I have difficulty in accepting volume of work in preparation
considered alone, or in conjunction with such factors as the
difficulty or importance of the case, as constituting a basis for
exercising the judicial discretion to increase Tariff B costs
items.
This judgment was followed in the Court of
Appeal in the case of MacMillan Bloedel (Sas-
katchewan) Ltd. v. Consolboard Inc. (1981), 124
D.L.R. (3d) 342, and in the case of Warwick
Shipping Limited v. The Queen, [ 1984] 1 F.C. 998
(C.A.). This latter case also considered the
Manitoba Fisheries [R. v. Manitoba Fisheries
Ltd.] case, [1980] 2 F.C. 217, in which the Court
of Appeal had held that since it was a test case this
justified an increase of the Tariff items, bearing in
mind that although the fact that it was a test case
increased the cost, this would however result in the
settlement of a number of other actions based on
the same matter. At page 1007 of the Warwick
Shipping case, Chief Justice Thurlow states:
On the other hand, while the delivery of the ship to ship-
breakers shortly after the grounding and before the issues were
raised and the loss of ship's documents were not matters
relating to the conduct of the proceedings, of the kind which
Jacket C.J. appears to have had in mind when dealing with the
Smerchanski case, they are facts which increased the costs of
defending the action brought by the appellant and for which
the appellant was responsible. As such they were, in my view,
matters which the learned Trial Judge could properly treat as a
basis for increasing the amounts prescribed by Tariff B.
At page 1008 he states:
Turning first to the allowance for discovery, as Tariff item
(1)(b) provides for a per diem amount it compensates by that
feature for a long hearing. Moreover, it is only for days of
hearing that an allowance may be made. On the other hand, a
hearing may be and often is materially shortened by undertak
ings given by counsel to provide answers which the person
giving discovery is unable to give immediately at the hearing.
That is a practice which, in my view, saves costs and should not
be discouraged. If by following it the number of days of
hearings is shortened it is due to the work which counsel on
giving the undertaking must do in order to provide the answers.
That I think makes the time spent in the hearing itself of more
value to the parties and when the case is one in which increased
costs are warranted it would I think justify an increase in the
daily amount allowable.
Accordingly the Court allowed $200 per day for
each of the ten hearing days of the discovery in
place of the $100 allowed by the Tariff.
On the same page of the judgment he states:
Having regard to the reasons for which, in my view, a
direction for increased costs is warranted, I do not think the
increase in the allowance for preparation for trial from $350 to
$3,000 authorized by the learned Trial Judge is in the circum
stances excessive and I would affirm it.
However the judgment does state that the allow
ance for services of solicitors and counsel under
Tariff B is intended to cover by a single amount on
a per diem basis an allowance for any number of
solicitors or counsel engaged by a party since the
importance and complexities of the case do not
justify the presence of a junior as well as a senior
counsel throughout the trial nor an increase in the
prescribed per diem rate.
This latter statement has the effect of overruling
what was said by Deputy Justice Smith at trial in
the earlier Manitoba Fisheries [Manitoba Fisher
ies Ltd. v. R., [1980] 1 F.C. 36] case that the
importance of the case before him justified the
collaboration by more than one counsel for the
seven companies other than the plaintiff which
would be involved in the outcome.
This statement by Chief Justice Thurlow also
prevails over the statement by Justice Cattanach
in Spur Oil Limited v. The Queen, [1983] 1 F.C.
244 (T.D.), in which at page 250 he found that
section 3 of Tariff B does not exclude fees to be
paid to junior counsel when their presence can be
justified. While it was not perhaps a test case
Justice Cattanach states at page 251:
There were three other appeals pending, the results of which
were dependant on the outcome of the present matter.
In the Manitoba Fisheries case there was a
dissenting judgment by Justice Pratte in the
Appeal decision but the majority judgment ren
dered by Justice Heald, [1980] 2 F.C. 217, at page
222, states:
The practice adopted by counsel in this case and in the other
seven actions affected by the decision of the Supreme Court of
Canada in this case is one which, in my view, needs to be
encouraged, rather than discouraged. Rather than proceeding
with eight parallel actions at an equal pace, with the result that
much larger costs would have been incurred, the plaintiffs and
their counsel chose rather to proceed with one case, for a final
determination of the very important legal principle established
in this action by the Supreme Court of Canada.
They should not, in my view, be penalized for adopting such
a course. To hold them strictly to the items in the Tariff would
penalize them severely. For these reasons I would dismiss the
appeal with costs.
The Warwick Shipping judgment (supra)
appears to be the latest consideration of the matter
by the Court of Appeal and it would appear that,
without reversing the Smerchanski decision, there
is now a tendency to be more generous in making
special directions as to costs rather than rigidly
adhering to the hopelessly outdated and inade
quate Tariff whenever the discoveries or days of
hearing are shortened by the cooperation of the
parties in the preparation of same and at the trial.
That appears to be the situation in the present
case. While it is not strictly speaking a test case to
the same extent as the Manitoba Fisheries case
but rather merely an important and difficult case
which by virtue of the Smerchanski judgment
would not justify departure from the Tariff, it
certainly clearly resembles a test case in that it is
the first such case on the issue. While it is true
that there are no other actions at present before
this Court which would be disposed of as a result
of the decision in this case and as a result it differs
from the Manitoba Fisheries case, plaintiffs never
theless point out that in proceedings before the
Public Service Staff Relations Board, file
166-2-14941 Jacob W. Rempel, grievor and Trea
sury Board, employer, in a decision dated October
31, 1985 dealing with the validity of section 32 of
the Public Service Employment Act in view of the
Charter of Rights, the presiding Board member
stated that he was advised that it was expected
that this issue would come before the Federal
Court on three cases and that the argument would
be the same. As a result the hearing was adjourned
until judgment was rendered by the Federal Court.
This has now been done. It can therefore fairly be
said that pending cases in another jurisdiction
were not proceeded with while awaiting the out
come of the present actions, making them there
fore equivalent to test cases.
It is of interest to note that the Proposed
Amendments to General Rules and Orders of this
Court number 11 published in the Canada Gazette
[Part I] of October 4, 1986 [at page 5041] radical
ly change the existing Tariff of costs including
much more realistic figures in the light of contem
porary conditions. Moreover, they also greatly
extend the use of judicial discretion and in particu
lar overcome the Smerchanski case by permitting
the importance of the issues, volume of the work,
and the complexity of the proceedings to be taken
into consideration as well as the conduct of the
parties that tends to shorten or lengthen the dura
tion of the proceedings. These rules will even to
some extent alter the finding of the Court of
Appeal in the Warwick Shipping case that the
allowance for services of solicitors and counsel
must cover any number of solicitors and counsel
engaged in the action, since they now specifically
provide a fee for the principal counsel conducting
the trial, and as a matter of discretion for special
reasons another fee for participation by junior
counsel in the amounts of $300 and $100 respec
tively per one half day in Court. Proposed Rule
346A (Can. Gaz., Part I, No. 11) provides that
except for costs that have already been fixed or a
taxation of costs has been applied for before the
date when the new rules come into effect, costs
shall be governed by the new rules unless within 90
days of the coming into effect a party to the
proceeding commenced before that date files with
the Court a notice that costs should be determined
in accordance with the previous rules. Since sec
tion 46 of the Federal Court Act [R.S.C. 1970
(2nd Supp.), c. 10] provides for a delay of 60 days
after publication of the proposed amendments
before any application can be made for an Order
in Council adopting them, they are clearly not in
effect at this time, and moreover no notice of
taxation has formally been applied for, but merely
a notice to give directions to the taxing officer.
While the new rules as such cannot therefore be
applied they are representative of current judicial
thinking in the matter by the Judges of this Court
including the Judges of the Court of Appeal. They
can perhaps therefore be considered as an indica
tion of what is now deemed to be fair and reason
able which it is generally admitted the former
rules no longer are.
The present motion seeks directions to the
taxing officer to increase the amounts allowable
under paragraphs 2(1) (d) and 2(1)(e) of Tariff B.
Relying on Tariff A paragraph 1(4)(a), I would
direct that the present proceedings be considered
as a Class III action. The taxing officer shall
analyse the time sheets of plaintiffs' attorneys
deleting any charges for law students and consid
ering time charges of Messrs. Nelligan and Brown
only in preparation for trial and eliminate any
duplication of these charges which are attributable
to both the Osborne and Millar cases. Converting
the total time to days at a suggested rate of 6
hours per day and applying the rate of $350 in
Tariff paragraph 2(1)(d) (which is however a
single sum and not a per diem amount) to the
number of days involved will lead to an amount
which I would allow as preparation for trial. (See
in this connection Warwick Shipping (supra)
where the Court found that an increase in allow
ance for preparation for trial from $350 to $3,000
was reasonable in the circumstances.)
With respect to the amounts allowed in Tariff
paragraph 2(1)(e) which allows $400 per day plus
$200 for every day after the first, I will now allow
amounts similar to those allowed in the proposed
new Tariff although same is not yet in effect, that
is $300 for each half day for Mr. Nelligan and
$100 for each half day for Mr. Brown. While these
amounts are considerably less than the time
charges of Messrs. Nelligan and Brown which may
be proper in a solicitor and client taxation, the
principle that taxed costs are not intended to cover
all the cost of an action must be adhered to. The
special circumstances of this case and the fact that
it was considerably shortened by the cooperation
of all parties including plaintiffs in not requiring
defendant to call witnesses to introduce evidence
from other jurisdictions in connection with the
section 1 Charter argument, which would have
greatly lengthened the trial must be taken into
consideration however to justify a reasonable
increase in the amounts permissible under the
existing Tariff. The taxing officer can conduct his
taxation in accordance with these directions.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.