Federal Court of Appeal Offers Further Guidance on Elevated Costs Awards

The Federal Court of Appeal has provided further guidance on the circumstances under which litigants may obtain costs awards exceeding those stipulated in Tariff B of the Federal Court Rules.

In Teksavvy Solutions Inc. v. Bell Media Inc., 2021 FCA 181 — a costs appeal from the long-awaited decision concerning internet site-blocking orders — the Court rejected the Respondent's argument that an elevated lump sum award was justified. The Court explained that although all parties were sophisticated commercial litigants, the novelty of the site-blocking order on appeal and the fact that the Appellant was an innocent third-party intermediary to the underlying copyright infringement weighed in favour of keeping with Tariff B.^[1] The Court did, however, increase the costs award in accordance with Tariff B to reflect the importance and complexity of the issues on appeal.^[2]

In addition, the Court held that the confidential version of the Respondent's motion should be accepted for filing and treated as confidential on the basis that the redacted information concerning fees and the cost-sharing arrangement between the Respondents is limited to a few select sections in the public record and that the Respondents have a legitimate interest in maintaining that confidentiality.^[3]

Lastly, the Court discussed whether an exception to the rule of settlement privilege applied to the “without prejudice” emails which contained the Respondents’ offer to settle costs. The Court held that no exception to settlement privilege applied and that the Respondents’ offer to settle costs was not sufficiently probative to affect the costs award. In addition, despite being entitled to review any written offer to settle, the Court held that the “without prejudice” nature of the emails, having been accepted by all parties to the exchange, should have stopped the Respondents from sharing them with the Court. However, the Respondents’ violation of this mutual understanding was not sufficient to disentitle them to costs.^[4]

This case will act as a guide for any party seeking an elevated costs award against a party who is an innocent third party to the alleged infringing activity.