Copyright 2012, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Litigation & Dispute Resolution, February 2012

In 321665 Alberta Ltd. v. ExxonMobil Canada Ltd., the Court of Queen's Bench of Alberta released the first reported decision on a party's entitlement to costs pursuant to s. 36 of the Competition Act, R.S.C. 1985, c-34. In the course of doing so, the court also had the opportunity to address a number of novel costs issues, including entitlement to compound interest, the effect of the plaintiff's delay on the calculation of pre-judgment interest and entitlement to costs for litigation financing.

Following a damages award, 321665 Alberta Ltd. (the plaintiff) sought a substantial amount of costs including:

  • solicitor-client costs and investigation costs under s. 36 of the Competition Act
  • compound interest for a period of 14.5 years
  • costs incurred by the plaintiff for a litigation loan.

The plaintiff sought solicitor-client costs on the basis of the wording of s. 36 of the Competition Act. Section 36 provides that any person who has suffered loss or damage as a result of conduct that is contrary to Part VI of the Competition Act may sue to recover damages, together with "the full cost to him of any investigation in connection with the matter and of proceedings under this section."

The plaintiff submitted that the words "full cost" of proceedings meant solicitor-client costs of the action. In interpreting s. 36, the court held that "full cost" is not synonymous with solicitor-client costs. In doing so, the court relied upon numerous authorities that have held that the term "full costs" is consistent with party-party costs only, except in expropriation cases. According to the court, "Had Parliament intended that a successful claimant in a s. 36 action would be entitled to recover solicitor-client costs, it could have easily have said so."

The court's interpretation of s. 36 is significant since prior to the decision, a number of competition law practitioners and commentators had wrongly opined in various articles that the term "full costs" meant costs beyond those on a party-party basis. The court confirmed the common law principle that solicitor-client costs can only be awarded in instances where there is litigation misconduct. In the end result, the plaintiff was awarded only party-party costs.

The court also clarified when investigation costs can be awarded under s. 36. In particular, the court held that any claim for investigation costs must be supported by evidence. The plaintiff sought costs to investigate the matter but had failed to provide sufficient evidentiary support for the amounts being claimed. Moreover, the court noted that the evidence in support of the investigation costs did not distinguish between investigation costs and the plaintiff's personal time and expense as a private litigant, the latter of which was not compensable. Having failed to provide sufficient and particularized evidence necessary to claim investigation costs under s. 36, the court rejected the claim of about C$1-million and awarded C$75,000.

In its decision, the court also had the opportunity to revisit the issue of a party's entitlement to compound interest. The plaintiff sought compound interest for a 14.5-year period, representing a substantial amount. In denying compound interest, the court found that the plaintiff had failed to plead compound interest both in its prayer for relief as well as in the facts necessary to support such a claim. As a result, the failure to plead such relief was sufficient to dispose of the claim.

Moreover, the court found the plaintiff had failed to provide evidence sufficient to meet the legal or equitable test required for compound interest as articulated in 2002 by the Supreme Court of Canada in Bank of America Canada v. Mutual Trust Co. In the end result, the plaintiff was confined to simple interest under the Judgment Interest Act as the alleged damages arose. The court further reduced the amount of time that the plaintiff was entitled to interest on account of the plaintiff's significant delay in advancing the matter to trial.

Finally, the court rejected the plaintiff's argument that it was entitled to claim the cost of money borrowed to finance the litigation. In relying upon earlier decisions from the Court of Queen's Bench of Alberta, the court confirmed that the costs of borrowing funds to finance litigation are not properly recoverable.

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