COUNSEL:

M. H. Dale, Q.C., G. J. Draper, T. J. Williams, and C. S. Petersen for the Appellants

D. R. Pahl, Q.C., J. B. Laskin, H. Rubin for the Respondent

MEMORANDUM OF JUDGMENT

THE COURT:

[1] This is a very large lawsuit. Parts of it dropped by the way before trial, and others at the very end of the trial. The trial judge dismissed most of it, but allowed one claim against the defendant Caterpillar. He awarded $5,000,000, plus almost as much interest. On appeal, the award was reversed and the action dismissed entirely. The Court of Appeal awarded the defendant Caterpillar party-party costs of the suit and of the appeal against the plaintiff.

[2] This is a motion to clarify some aspects of those costs. The parties have agreed on the appeal costs. In the Queen's Bench costs, the biggest points of contention are the multiple of column 6 of Schedule C to be used (4 vs. 6), and whether there should be an adjustment for inflation. In addition, Caterpillar seeks certain lump sums for services outside Schedule C, and two items of disbursements. Other points have been agreed.

[3] The costs decision of the trial judge is not applicable to many of these questions, both because it does not address a number of them directly, and because facts have changed so much since. It gave the plaintiff 60% of its party-party costs, the 40% presumably reflecting dismissal of most of the suit. But Caterpillar's total victory means that there cannot be any award to the plaintiff, and there must be an award to the defendant Caterpillar. Nor are there any costs to offset, as there would be with a split verdict.

[4] At the end, an award of party-party costs becomes one lump sum. It is often calculated as a whole series of individual items, often under Schedule C. But that is only calculation. There are different ways to adjust Schedule C when its product seems inadequate: higher column, multiples of a column, a multiplier for inflation or otherwise, extra lump sums, some fraction of solicitor-client costs, and so forth. Several modes of adjustment may be reasonable; indeed several different modes may amount to much the same thing. The ultimate question is whether the final total is reasonable or not.

[5] The parties have filed detailed written costs submissions and replies to those submissions. The differences between them are not radical.

[6] Schedule C is addressed to taxing officers, not judges. For the sake of convenience and certainty, it arbitrarily selects certain steps in a lawsuit, and compensates for them. It omits all other steps. In a large suit such as the present one, if one awards multiples of the top column (6 ), on its face that may seem to overcompensate for certain work. But one must recall that on its face it awards nothing for much other work. And Rule 605(3) expressly says that the items in Schedule C cover all necessary or convenient work for fully completing the step described, which obviously includes preparation.

[7] There are other complexities in the present costs dispute. The suit was extraordinarily long. It ran from 1980 to recently, with much interlocutory jousting. And it is believed to have been the longest completed civil trial in Alberta history. Most of the plaintiff's claims alleged serious breaches of the Combines Act. And the sums claimed were enormous.

[8] Schedule C is a series of rubber stamps which a judge may approve for a bill of costs. But rubber stamps are not really adequate here in such an unusual case. They are well worth looking at, but merely stamping them onto a blank piece of paper does not describe the complete picture. It is also worth looking at the hours actually expended on certain tasks, at the conduct of the parties in the suit, and at the total bill to the client. Counsel for Caterpillar have given us all that information. We have detailed bills of costs, time records, and hourly rates.

[9] In an unusual case like this, one is more or less forced to calculate the proposed costs on a number of different bases, and then compare them with each other and with the solicitor-client bill to the winning client. All of those are cross-checks on reasonableness.

[10] At first blush, the amount claimed here may seem somewhat too high for an ordinary case. However, there are some special considerations.

[11] One big factor is inflation. It has two impacts. First, the existing Schedule C was adopted in 1984, but was based on a report calculated at least two years before that. Total inflation since 1982 has been considerable. The existing Schedule C was thus out of date almost as soon as it was adopted. It is very inadequate today, and indeed the Rules Committee recently adopted the report of a new committee recommending a much higher Schedule C. Second, much of Caterpillar's legal expenses were paid out years ago, in dollars worth a lot more than today's dollars.

[12] Another factor is the seriousness of this suit. The amounts were enormous, the charges were grave, and the business implications considerable. If ever there was a suit which did not call for penny- pinching half measures by the defendant, this was it.

[13] A third factor is that many lawyers were necessarily used, but Caterpillar has not calculated any fee for third counsel.

[14] The total fee portion of costs which Caterpillar proposes for Queen's Bench and appellate costs is $3,798,000. (The appellate part is agreed.) There is more than one way that one might calculate the Queen's Bench costs. The alternative ways all produce a sum in that neighborhood. But Caterpillar's reply concedes that there is some double counting of inflation if one makes post-judgment interest run from trial judgment (as we do below). That double counting should be eliminated. It amounts to 5% of the Schedule C items, and would amount to $113,198.80. If one deducts that and rounds a little, one gets a net fee figure of $3,685,000.

[15] In our view, that is a reasonable sum in all the circumstances. Canadian taxable court costs are traditionally designed to be a fraction of solicitor-client costs. The recent reports of Alberta's new Schedule C committee discuss that. Anything less than that sum would reimburse much too small a fraction of solicitor-client costs (or ignore some services, or ignore 18 years' inflation). It is not necessary to tax or file a detailed bill of costs. We simply award $3,685,000. plus disbursements as the Queen's Bench and Court of Appeal party-party costs.

[16] Two items of disbursements are disputed. The first is some $37,000 already paid out by Caterpillar as costs to non-parties for overbroad subpoenas to them. The trial judge set aside those subpoenas and awarded those costs against Caterpillar. We see no reason to interfere with that decision. It is true that narrower subpoenas might have been proper, but that did not happen, and those costs were paid out for the overbreadth. The overbreadth was not the plaintiff's fault. We will not allow that disbursement.

[17] The other disputed disbursement is as follows. The Caterpillar parent company sent a representative to attend the trial. No claim is made for his time or salary, but his travel and lodging are claimed in the amount of $81,416.80. No one suggests that he did not spend that much, or that he should have found a cheaper hotel. The objection seems to be one of principle. In our view, Caterpillar acted reasonably in having a responsible official present to watch, monitor the atmosphere, consult with counsel, and instruct counsel. Had the defendant been an individual who had been personally involved in the events litigated, nothing would have been more natural than that she should attend. It is common to tax a disbursement for the attendance of a key witness at the entire trial, even if she only testifies for a few hours. This seems to us broadly analogous, allowing for the fact that the parent Caterpillar is a large corporation located in another country. We allow that disbursement.

[18] In addition to the items described above, Caterpillar also claims a fee for the written costs submissions now ruled upon. Normally we would be sympathetic to such a request. However, the fees which we award above include a large item for preparation of a bill of costs. And the plaintiff has had some success on this costs dispute. It is a small percentage, but it is significant in absolute amount. So we add nothing for written argument about costs.

[19] The remaining question is when post-judgment interest should start to run on the Queen's Bench costs. Rule 520 says that interest runs from the date of trial judgment on a new or amended appellate judgment for a sum of money. If that does not apply directly to a costs judgment, then it would have to apply by close analogy under R. 4. The general principle of appeals is that the appeal court gives the judgment which the trial judge should have given. Indeed, it is certified to the Clerk and enforced as a Queen's Bench judgment: R. 528(2). Anything else would be unfair. We repeat that the interest in question is on Queen's Bench costs. And of course the plaintiff who is to pay the costs has had the use of the money in the interval. And post-judgment interest rates are very low now anyway; they are far lower than a business could earn on its capital. So post- judgment interest on the Queen's Bench costs should run from the date of pronouncement of the Queen's Bench judgment, which is March 8, 1994.

MOTION HEARD ON WRITTEN ARGUMENT

ALONE IN MARCH, 1998

JUDGMENT DATED at EDMONTON, Alberta,

this Day of ____ A.D. 1998

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COTÉ J.A.

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McFADYEN J.A.

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PICARD J.A..