Costs and Security for Costs - Case Summaries
The database contains 29 case summaries relating to Costs and Security for Costs. The summaries are sorted in reverse date order with 20 summaries per page. If there are more than 20 summaries, use the navigation links at the bottom of the page.
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Pleasure Craft Collision - Apportionment of Liability - Liability of Owner - Failure to Keep Lookout - Alcohol - Costs
Atkinson (Guardian ad litem of) v. Gypsea Rose (Ship), 2014 BCSC 1017
Précis: A small vessel collision case in which liability was apportioned 80% to the moving vessel whose operator was impaired and 20% to the stationary vessel. The case is also notable for holding that the owner of the moving vessel was not liable even though there were some maintenance issues with the boat that contributed to the accident.
On 30 June 2008 a vessel owned by Maridee Skidmore and driven by her son Cory Skidmore (the "Skidmore Vessel") collided with a vessel owned and operated by Norman Atkinson (the "Atkinson Vessel") causing personal injury and property damage. At the time of the collision, the Atkinson Vessel was stationary in the water with its engine off and had been stationary for about 30 minutes. The operator of the Atkinson Vessel was at the back of the boat attempting to untangle a tow line from the propeller. A passenger in the Atkinson Vessel noticed the Skidmore Vessel approaching at a distance of about 300 feet with its hull straight out of the water. She alerted the others in her vessel and jumped on the seat to wave her arms and scream at the approaching vessel. The operator of the Skidmore Vessel did not see the Atkinson Vessel because he could not see over the bow and did not hear the screams until it was too late. The Skidmore Vessel hit the starboard bow of the Atkinson Vessel at a speed of 15 mph. The operator of the Skidmore Vessel was impaired at the time and the Skidmore Vessel had the wrong propeller with the result that at a speed of 15 mph it would not plane and the operator could not see over the bow.
Three actions were commenced against the owner of the Skidmore Vessel, the operator of the Skidmore Vessel and the owner/operator of the Atkinson Vessel. The operator of the Skidmore Vessel admitted his liability. The issues were whether the Owner of the Skidmore Vessel and the owner/operator of the Atkinson Vessel were also liable and how liability ought to be apportioned.
The Owner of the Skidmore Vessel is not liable. The owner/operator of the Atkinson Vessel is liable. Liability is apportioned 80% to the operator of the Skidmore Vessel and 20% to the owner/operator of the Atkinson Vessel.
With respect to the liability of the owner of the Skidmore Vessel, it was held by the Nova Scotia Court of Appeal in Conrad v Snair, 1995 CanLII 4175, that a boat owner's responsibilities could be divided into three principal categories: (1) the ship must be seaworthy for the intended voyage, in good repair and properly equipped and safe for those on board; (2) the ship must be provided with proper navigational aids including charts, rules and information; and, (3) the ship must be properly and competently staffed. In addition, for the owner to be at fault there must be consent, express or implied, for the operator to have the vessel at the time of the accident. The owner of the Skidmore Vessel had a strict rule that no one was to drive or be on board the vessel if they had been drinking alcohol. The operator was aware of this rule and had been refused permission to use the boat on two prior occasions when he had been drinking. On this occasion, the operator did not ask for permission to use the boat as he knew it would be refused. On the facts, the owner did not provide consent and no consent can be implied. Further, although the Skidmore Vessel was unseaworthy to the knowledge of the owner because it had the wrong propeller, the lack of consent vitiates the breach of that duty.
With respect to the liability of the owner/operator of the Atkinson Vessel, he was not keeping a proper lookout and did not instruct the other adults to keep a look out.
The apportionment of liability under the Marine Liability Act is to be handled in the same way as under the Negligence Act. The Court is to assess the degree to which each party is at fault not the degree to which each party's fault has caused the loss. In other words, the Court is to assess the respective blameworthiness of the parties. The actions of the operator of the Skidmore Vessel are far more blameworthy than those of the owner/operator of the Atkinson Vessel. He drunkenly set out in an unseaworthy vessel with reckless indifference and disregard for the safety of others. In contrast, the negligence of the owner/operator of the Atkinson Vessel was a minor lapse of care. Therefore, liability is apportioned 80% to the operator of the Skidmore Vessel and 20% to the owner/operator of the Atkinson Vessel.
The costs of the action were similarly apportioned 805 and 20%. The decision concerning costs is reported at 2016 BCSC 8
The finding that the operator of the Atkinson vessel was 20% at fault for not keeping a proper lookout might be questioned. As is apparent from the facts, the Skidmore vessel was observed prior to the collision and efforts to alert the driver of that vessel were not successful. Under these circumstances, it is difficult to say there was not a proper lookout and, even if that was true, the lack of a proper lookout was not causative. Also, in the circumstances, one might question whether the owner of the Skidmore vessel should have been held liable as she was aware it had the wrong propeller and would not plane properly. Her lack of consent had nothing to do with the unseaworthiness of the vessel.
The costs decision relating to this matter can be found at 2016 BCSC 8
Judicial Sales - Priorites - Costs - Procedure in Priorities Disputes
Cameco Corporation v. The MCP Altona, 2013 FC 177
Précis: A party was ordered to pay the costs of a priorities hearing, an unusual order as normally costs are a charge on the funds in court.
The “MCP Altona” was sold by judicial sale following a spill of yellowcake uranium in one of her holds. Following the sale, the mortgagee of the vessel brought an application for payment out of the proceeds of sale. Cameco, the owner of the uranium cargo, defended that motion arguing that it had priority over the mortgagee. The court ultimately determined (at 2013 FC 23) that the mortgagee had priority and ordered payment of the proceeds to it. The mortgagee now moved for costs from Cameco on an enhanced basis.
Decision: The mortgagee is entitled to its costs against the cargo owner based on the tariff.
Held: The procedure in priorities disputes is similar to that for applications. Each party is to file written submissions supported by affidavits and documents to be relied on. Parties are entitled to cross-examine affiants. Although Cameco was unsuccessful in challenging the mortgagee’s priority, it had legitimate points. Further, although the issues were complicated and interesting, for the reasons given in Universal Sales, Ltd v Edinburgh Assurance Co, 2012 FC 1192, costs should be based on the tariff.
Comment 1: In Universal Sales, Ltd v Edinburgh Assurance Co, 2012 FC 1192, the court held that there must be reprehensible conduct to justify an order for enhanced costs.
Comment 2: The decisions addressing the taxation of the costs can be found at 2013 FC 1263 and 2013 FC 1264. An appeal from the taxation can be found at 2014 FC 255
Assessment of Sheriff's Costs
TAM International Inc. v. The MCP Altona, 2012 FC 1168 2013 FC 9
The defendant ship was ordered to be sold and the order of sale provided that all reasonable expenses and agency fees necessary for the preservation, safekeeping or maintenance of the vessel were to be treated as sheriff’s costs. Upon assessment of the sheriff’s costs certain invoices and expenses were contested by one of the parties. The contested invoices included: amounts paid to the ship’s manager; invoices for parts ordered before the arrest; invoices to maintain the registration of the vessel; wages and associated expenses of a full complement of crew members; invoices for alcohol; and other miscellaneous invoices. The Assessment Officer (2012 FC 1168) allowed some but not all of the disputed amounts. The Assessment Officer found the expenses paid to the ship’s manager were reasonable and necessary and were allowed. Invoices for items or services not necessary for the preservation, safety or management of the vessel were disallowed. The invoices for parts ordered outside of the period covered by the order of sale were not allowed. The invoices for maintaining the registration of the vessel were allowed only for the period applicable to the arrest and sale, which was 1/24 of the entire period. The wages and associated expenses of all but two crew members were allowed, the number being arrived at based on the safe manning certificate of the vessel. Invoices for alcohol were disallowed as not reasonable. The mortgagee appealed those parts of the award with regard to manning and flag registration.
Decision: Appeal dismissed.
Held: The Court should not intervene in an assessment officer’s decision absent an error in principle or an award of an amount so unreasonable as to suggest such an error. With regard to manning, no evidence was submitted as to the minimum crew required during anchorage. With regard to the flag registration, the decision to allow the expenses only to the date of sale does not reflect an error in principle.
Marine Insurance - Wreck Removal - Damages - Interest - Costs
Universal Sales Limited v. Edinburgh Assurance Co. Ltd., 2012 FC 1192
In prior reasons (2012 FC 418) the plaintiff had been awarded judgment against the defendants in the amount of approximately $5 million. These reasons dealt with the outstanding issues of interest and costs. With respect to interest, the issues were: should the plaintiff be deprived of part of the interest because of delay in prosecuting the matter; from what date should interest run; what should the rate be; and, should interest be compounded. With respect to costs, the issues were: should the plaintiff be entitled to enhanced costs; should costs be reduced because the plaintiff obtained less than 50% of the damages they sought; and should a settlement offer made by the plaintiff in the amount of $4.5 million but withdrawn 8 days before trial be taken into account.
Decision: Pre-judgment interest awarded at the legal rate of 5%. Costs fixed at $85,000.
Held: In admiralty interest is a function of damages and the trial judge enjoys a wide discretion. The delays were no more caused by the plaintiff than by the defendants. In the circumstances the plaintiff should not be deprived of interest for delay. Given that a particularized claim was only given to underwriters on 10 November 2000 and aspects of the claim had to be investigated, a reasonable start date for the interest calculation is the date the defendants were served with the Statement of Claim which was 12 July 2001. The rate of interest shall be at the legal rate of 5% as the commercial rates during the relevant period had been low. Although the court may order compound interest, the evidence must show compound interest is necessary to fairly compensate the plaintiff. As no evidence is led to justify compound interest, simple interest is awarded. Enhanced costs are not awarded merely because a case is complex. There must be more such as reprehensible conduct. The costs to be otherwise awarded to the plaintiffs should not be reduced because of partial success. The general principle is that costs follow the event and in this case the plaintiff obtained judgment. Rule 420 allows the court to consider offers of settlement in assessing costs that do not fall strictly within the Rule. The withdrawn settlement offer should have a bearing on costs.
Costs – Offer to Settle - Set-off
Calogeras & Master Supplies Inc v. Ceres Hellenic Shipping Enterprises Ltd., 2011 FC 1276 2012 FCA 244
The plaintiff, ship chandler, had been successful at trial and was awarded damages of approximately $100,000 for unpaid invoices. The plaintiff now sought to recover its legal fees, which were recoverable pursuant to the terms of the contract. The defendant also sought costs on the basis that the plaintiff's award did not exceed a settlement offer the defendants had made. Although the plaintiff claimed to have spent over $200,000 in legal fees, the Court assessed the reasonable legal fees at $35,000 as of the date of the defendant's offer and said that in the absence of the defendant's offer, it would have granted no more than $60,000 in total. The defendant was awarded its costs from the date of the offer but the Court only awarded the defendant's costs at 1.5 times the tariff rate. The defendant was awarded approximately $160,000 in costs. The defendant was also given the right to set-off the costs owing to it against the judgement amount owing to the plaintiff. Subsequent to these costs orders, the plaintiff's appeal was partially successful such that its award did exceed the defendant's offer. The plaintiff therefore appealed the costs awards.
Decision: Appeal allowed.
Held: Due to the plaintiff's success on appeal it is entitled to costs throughout. However, the trial Judge was prepared to award only $60,000 in recognition of the appellant’s conduct, and the appellate Court held it should give effect to the suggestion made by the trial judge.
Carriage of Goods - Intermodal - Rail Carriage - Himalaya Clause - Applicable Limitation - Double Costs
Cami Automotive, Inc v. Westwood Shipping Lines Inc, 2010 FC 26
This was a case involving a claim against a rail carrier and vessel for damage to cargo. The plaintiff recovered only the limitation amount of $50,000. The vessel and rail carrier each claimed entitlement to double costs on the basis that the rail carrier had paid the plaintiff Cdn$50,000 and the vessel had made an offer to settle in the amount of Cdn$50,001. The Trial Judge held that the payment by the rail carrier was not a clear and unequivocal offer within the meaning the rules and that the rail carrier was not entitled to double costs. With respect to the vessel, the Trial Judge held that as there was not yet a final judgment, there was no basis for application of the rules relating to double costs. Moreover, the Trial Judge questioned whether the offer made by the vessel would be as favourable as the minimum amount of the eventual judgment (this was presumably because the Cdn$ was worth less than the US$ at the time). In result, the defendants were awarded only normal costs. Two interesting points were considered during the course of the reasons on costs. First, the Trial Judge considered whether the salvage obtained from the sale of the damaged cargo should be deducted from the limitation amount and held it was not appropriate to do so. Second, it was urged on the Trial Judge that the plaintiff’s total claim was limited to US$50,000 rather than US$50,000 for each defendant. The Trial Judge declined to address this issue which was first raised at the hearing on costs.
Practice - Formal Offer to Settle
More Marine Ltd. v. The "Western King", 2009 BCSC 504
In this matter the plaintiff made an offer to settle and the defendants subsequently made a number of counter-offers, none of which were accepted. The defendants then purported to accept the plaintiff‟s first offer. The issue was whether the counter-offers extinguished the plaintiff‟s initial offer. The Court held that Rule 37B of the British Columbia Supreme Court Rules (which merely gives the court discretion to consider offers of settlement when deciding costs) did not alter the common law rule that a counter-offer extinguishes an offer.
Pleadings – Reasonable Cause of Action – Security for Costs – Solicitor's Affidavits
Addo v. OT Africa Line et al. , 2006 FC 1099 (CanLII)
The Plaintiff was the owner of goods that were damaged when the container in which the goods were stowed was dropped at the Port of Antwerp. The Plaintiff commenced proceedings against various parties including the operator of the port where the container was dropped. That Defendant brought this motion to strike the Plaintiff's claim on the basis that it disclosed no reasonable cause of action and, in the alternative, for security for costs. The Court held that the fact that the container was dropped in a foreign location did not deprive it of jurisdiction and that there were a number of significant factors tying the claim to Canada. The Court concluded that it was not “plain and obvious” that it was without jurisdiction and dismissed that part of the motion. With respect to the application for security for costs, the Court ordered that the Plaintiff post security of $5,000 because the Court was “concerned as to the plaintiff's credibility”. A final matter that was considered in the course of the Reasons was the admissibility of an affidavit prepared by one of the plaintiffs' solicitors. The Court reviewed Rule 82 of the Federal Court Rules noting that it was quite explicit and that case law had held that it was a violation of this rule for a lawyer to submit an affidavit when another lawyer in the same firm will argue the motion.
Dismissal for Delay – Security for Costs
Intertech Marine Limited v. The “Nautica” et al., 2004 FC 1456
This was an application by the Defendant to dismiss the Plaintiff's action for delay or alternatively for security for costs. The motions Judge noted that there had been significant delay in moving the action forward and further noted that the Plaintiff had failed to comply with a number of court orders and directions. She referred to the decision of the Federal Court of Appeal in Sokolowska v Canada,  FCJ No. 570, in which that court said; “Failure to comply with Orders or Directions from this Court and with the Rules of procedure as well as omission to provide a good justification for the delays and an action plan to speedily move the appeal forward justifies a dismissal of the appeal”. (Note the absence of a reference to “prejudice” in this test.) Notwithstanding this fairly strict test, the motions Judge did not dismiss the case but imposed very stringent conditions on the Plaintiff. The Judge then turned to the motion for security for costs. She noted that the Defendant had provided evidence of a number of outstanding judgements against the Plaintiff. She held however that this was not sufficient to obtain an order for security for costs. In addition, evidence was needed as to the assets of the Plaintiff.
Arrest – Release without Bail – Security – Security for Costs
Fish Maker LLC v. The “Zodiak” et al., 2004 FC 6700
The Defendants brought this application to release the Defendant vessel from arrest without bail or, alternatively, to set bail. The Prothonotary refused to release the ship without bail noting that this will only be done in rare instances where the circumstances are quite extraordinary or where the case is beyond doubt hopeless. Accordingly, the Prothonotary set security at an amount determined by the Plaintiff's reasonably arguable best case plus three years interest at 5% and costs. The Prothonotary also granted the Defendant security for costs on the basis that the Plaintiff was an American company not ordinarily resident in Canada.
Practice – Security for Costs
Goodman Yachts LLC v. The “Gertrude Oldendorff” et al., 2004 FC 40
This was a motion by the Plaintiff for additional security for costs. The underlying action involved damage to a yacht carried as deck cargo from Singapore to Vancouver. The Plaintiff was not a resident of Canada and had no Canadian assets. The Defendants had been previously granted security for costs in the amount of $50,000 with leave to apply for further security. The Defendants now applied for additional security of $100,000 and prepared a draft bill of costs supporting this amount. The Plaintiff contested the application arguing that the court should carefully scrutinise the draft bill submitted and should only allow those items that were firm and definite. The Prothonotary declined this approach in a case where the Plaintiff was a non-resident and had no Canadian assets. The Prothonotary also refused to disallow travel expenses for out-of-town counsel. The Prothonotary noted that the Federal Court is a Canadian and international court and litigants had the right to use counsel from anywhere in Canada but subject to a test of reasonableness. In the result the Prothonotary allowed the motion but ordered that the additional security be delivered in two stages.
Costs – Double Costs – Offer to Settle – Increased Costs
Strachan v. Constant Craving, 2003 FC 1175
This was a judgment dealing with costs of the trial in a simplified action where the Defendants were substantially successful on their counterclaim against the Plaintiff. The Court refused to award the Defendants solicitor-client costs as such costs are awarded only in rare circumstances where conduct in the proceeding is scandalous or outrageous or deserving of reproof or rebuke. The Defendants were entitled to double costs from the date of the offer whereby the Defendants offered to settle for less than the amount awarded at trial. Further, costs were awarded above the mid range of Column III of Tariff B because of rejection of the offer referred to above and the Plaintiff's late decision not to call an expert witness.
Costs – Offer to Settle – Double Costs
Elders Grain Company Limited v. “Ralph Misener”, 2003 FC 1163
The Defendant, who was successful on the main action and counterclaim, sought an order directing the taxing officer to tax its costs in accordance with the high side of Column V of Part II of Tariff B and doubling their costs after the date of their offer to settle the case on a “drop hands” basis. The judge exercised his discretion and held that the Defendant's costs should be taxed in accordance with the high side of Column IV and not Column V and that the Defendant was entitled to double costs from the date of the offer.
Costs – Offers to Settle
Francosteel Canada Inc. v. The “African Cape” et al., 2003 FCA 119
This matter concerned an action for damages to cargo in the alleged amount of $500,000. Early in the proceedings the Defendants offered to settle the Plaintiff's claim for $125,000. The offer was not accepted and the case proceeded to arbitration. The Defendants' offer of settlement was withdrawn on the fourth day of the arbitration. The arbitrator subsequently rendered an award in the total amount of $108,000, inclusive of interest. A hearing was subsequently held to decide the issue of costs. The Plaintiff argued that it was the successful party and was entitled to its costs. The Defendants argued that their settlement offer should be taken into account and they should be entitled to costs. At first instance, the Prothonotary agreed with the Plaintiff and held that as the Defendants' settlement offer had been revoked it could only be taken into account in determining the amount of costs not the entitlement to costs. The Prothonotary awarded the Plaintiff costs of $40,000. On appeal, the Prothonotary's Order was upheld. On further appeal, the Federal Court of Appeal held that the Prothonotary and the Judge on appeal misapplied Rule 400 in that they had failed to take into account the offer of settlement in determining entitlement to costs. The appeal was allowed and the Defendants were awarded their costs. (Note: In separate Reasons Letourneau J.A. was very critical of the present Rule 420 and suggested that it is in dire need of revision. This is something that is currently being undertaken.)
Security for Costs – Nominal Plaintiff – Subrogated Action
Offrey v. Ryan, 2003 FCT 35
This was an application to require the Plaintiff to post security for costs. The underlying action was for damages allegedly suffered in a collision between two fishing vessels. The action was a subrogated action brought by the Plaintiff's insurers, although the Plaintiff did have an interest in his deductible. The Court held that the Plaintiff was a nominal Plaintiff and, in the absence of any evidence that the Plaintiff had assets to satisfy a judgment in costs, ordered that security for costs be posted. The Court further noted that it might have been inclined to not make the order if the Plaintiff's insurers had undertaken to pay any costs.
Dismissal - Breach of Peremptory Orders
Angloflora Ltd. v. The “Cast Elk”, 2002 FCT 1230
This was an appeal from an order of a Prothonotary dismissing the Plaintiff’s claim for failure to comply with a peremptory order that required the Plaintiff to pay costs. The appeal Judge dismissed the appeal and upheld the order striking the Plaintiff’s claim. The appeal Judge noted that the only relevant consideration on such a motion is whether there was justification for the non-compliance. The standard of justification was whether the party had clearly demonstrated that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances. The failure to comply must be beyond the party’s control. Moreover, prejudice to the party that failed to comply is not a consideration in determining if the standard of justification is met.
Neves v. The “Kristina Logos", 2002 FCT 239
In a previous priorities hearing the Crown had been awarded priority in respect of its costs incurred in the sale of the defendant ship in a reasonable amount to be agreed or, failing agreement, to be taxed. The issue in this case was whether the Crown’s costs were to be taxed on a solicitor and client basis or on a party and party basis. The Taxation Officer held that in the absence of a special direction the costs were to be taxed on a party and party basis.
Security For Costs - Priorities claimant
Nedship Bank N.V. v. The “Zoodotis”, 2001 FCT 706
This was an application by the Plaintiff mortgagee for an order that one of the claimants to a priorities action be required to post security for costs. The Plaintiff argued that the claimant was a foreign corporation and that it was participating in the proceedings more as a party than a traditional lien claimant. Specifically, the claimant was challenging various aspects of the mortgagee’s claim. The Prothonotary declined the motion holding that there was no authority for ordering security for costs against a claimant. However, the Prothonotary noted such a claimant might be joined as a Defendant to the action and as a Defendant it would then be liable for security for costs.
Costs - Offer to Settle
Barzelex v. Ebn Al Waleed (The), 1999 CanLII 9203
In this matter the Defendant had delivered two offers of settlement. The first was lower than the amount the Plaintiff was later awarded. The second was higher. The court held that the Plaintiff was entitled to normal costs up to the time of the second offer and the Defendant was entitled to double costs pursuant to Rule 420 from the date of the second offer. The court refused to take into account the first offer of the Defendant. The court further refused a request by the Defendant that the costs be calculated according to Column V of Tariff B. The court considered the point raised in the case, while novel, did not justify more than the normal costs. The court did, however, direct the taxing officer that when exercising his discretion as to the number of units to allow to choose at the higher end of the range allowed by Column III.
Arbitration Clause - Stay - Counter Security - Costs
Frontier International Shipping Corp. v. The "Tavros",  2 FC 427  2 FC 445
In this matter the Plaintiff commenced proceedings to obtain security by arrest for arbitration proceedings in New York. Once the security was obtained the Plaintiff brought an application to stay the proceedings. The Defendant questioned the fairness of an arrest to obtain security for an arbitration and also requested counter-security for its counter-claim in the arbitration as well as security for costs for the arbitration and security for the costs of the Federal Court proceeding. The Prothonotary reviewed the authorities relating to the use of the court's in rem jurisdiction to obtain security for an arbitration and although he noted it had bothered judges from time to time he concluded that it was not open to the Defendant to urge any unfairness. He next considered the Defendant's request for counter-security. He accepted that Article 9 of the Commercial Arbitration Code gave the court the power to order interim measures of protection such as mareva injunctions, garnishment and arrest, however, these measures are based upon the presence in the jurisdiction of an asset which might be moved against. In the instant case there was no asset belonging to the Plaintiff in the jurisdiction. He next considered whether he could order that the Plaintiff post security for the costs of the arbitration. He held that this was the purview of the arbitrators, that the Federal Court Rules did not allow such security and that, in any event, there was not a demonstrated need for security. Finally, he considered the Defendant's request for security for costs of the Federal Court proceeding. Rather than ordering security for costs, however, he ordered that the Plaintiff pay costs to the Defendant as an interim measure of protection, including the costs of the security which the Defendant had posted. This latter part of the Prothonotary's order was overturned on appeal on the basis that it was not "interim protection" but was a final order.