Nova Chemicals Corporation v. Dow Chemical Company, 2017 FCA 25
The Court of Appeal dismissed Nova's appeal from the Federal Court's decision awarding the Respondents $6.5 million for costs consequent to their success in an action for patent infringement (see 2016 FC 91, our summary here). The lump sum award was comprised of $2.9 million for legal fees and $3.6 million for disbursements.
In the appeal, Nova asserted two errors. First, Nova submitted that costs awards should be guided by the standards established in Tariff B, and that any departures from the Tariff should be limited to exceptional cases. Second, Nova took issue with the sufficiency of evidence before the judge in respect of both the fees and disbursements claimed. After a review of the principles of lump sum awards and evidentiary considerations, the Court of Appeal concluded that the judge did not err in awarding costs in a lump sum, or in fixing them as a percentage of Dow's actual expenses; nor did the judge err in allowing the disbursement for testing without a supporting affidavit.
The Court of Appeal noted that, in the ordinary course, disbursements of this magnitude should be supported by affidavit evidence. However, given the unique circumstance of this case, the Court of Appeal found that the judge had a sufficient basis on which to conclude that the disbursement claimed by Dow for its testing was reasonable. For example, the circumstances of this case were such that the judge could gauge the reasonableness of the disbursement in a number of ways, including through a contested motion which considered the question of testing, how and when it was to be done, the measures necessary to protect intellectual property interests, the operational aspects including supervision, costs and disclosure of results.