Canadian COMPETITION LAW

On February 7, 2012, the Alberta Court of Queen’s Bench issued an important decision on the award of costs in private competition law civil actions under section 36 of the Competition Act. This case is the first reported decision regarding a party’s right to claim costs under section 36 of the Competition Act (see: 321665 Alberta Ltd. v. ExxonMobil Canada Ltd.).

In 321665 Alberta Ltd. v. ExxonMobil Canada Ltd., 2012 ABQB 76 (Alta. Q.B.), the Alberta Court of Queen’s Bench interpreted the plaintiff’s right in a successful upstream cartel case to recover costs in the action under section 36 of the Competition Act.

Section 36 of the Competition Act is the operative provision for commencing competition law private actions in Canada, which provides that private plaintiffs may sue for, among other things, violations of the criminal provisions of the Act (e.g., conspiracy agreements, bid-rigging, criminal misleading advertising) and recover actual loss or damage suffered, “together with any additional amount that the court may allow not exceeding the full cost to him of any investigation in connection with the matter and of proceedings under [section 36]”.

To date, however, it has not been clear what the scope of a plaintiff’s right was to recover the costs of bringing a private action under section 36.

The plaintiff in this case sought costs on a solicitor-client full indemnity basis (including investigation costs incurred in advancing the claim), interest incurred for a litigation loan and compound interest for the entire duration over which damages at large were awarded.

The defendants in the action argued that the plaintiff was only entitled to an award of party and party costs and was not entitled to an award of compound interest, investigation costs or the costs of a litigation loan.

In considering the scope of costs to award in this case, the Court relied partly on existing case law and partly on statutory interpretation, interpreting the language of section 36.

Compound Interest

With respect to compound interest, the Court held that the plaintiff had failed to plead compound interest, both in its pleading and facts to support this claim (and, as such, this defect was a sufficient basis to dismiss the claim).

The Court also held that, in addition to limited common law authority, section 36 of the Competition Act could not be read to support the award of compound interest.  The Court also noted the plaintiff’s failure to cite any authority to support this argument.  As such, the Court held that the plaintiff was entitled to recover simple interest only (reduced by the Court as a result of the plaintiff’s delay in moving the matter to trial).

Solicitor-Client Costs

With respect to the plaintiff’s claim for solicitor-client costs, the Court began with the general position in Alberta that costs are normally awarded on a party and party basis only, with solicitor-client costs awarded only in rare and exceptional circumstances.

As for the plaintiff’s argument that section 36 of the Competition Act supported its argument for an award of solicitor-client costs, the Court rejected the argument that section 36 mandates the awarding of solicitor-client costs to a successful party.  The Court noted that if Parliament had intended this meaning, it could have stated so expressly in section 36.  The Court also held that the term “full cost” in section 36 was not synonymous with solicitor-client costs, except in certain limited circumstances.  As such, the Court held that “full cost” meant party and party costs.

The Court also noted the absence of any reported decision in which solicitor-client costs were awarded for pre-litigation misconduct in relation to a section 36 Competition Act claim.

Investigation Costs

Finally, the Court considered whether the plaintiff was entitled to its costs of investigation in the case.  Again, as with the plaintiff’s other cost claims, the Court began with the general position under Alberta law that a successful plaintiff is generally not entitled to claim pre-action investigative costs.

The Court then, however, considered section 36 of the Competition Act, which specifically allows plaintiffs to recover “… the full cost … of any investigation in connection with the matter and of proceedings under this section.”

The Court observed, however, that while section 36 allows successful plaintiffs to recover investigation costs, the section provides no guidance as to the award of investigation costs or their calculation.

In this regard, the Court set out a number of relevant factors for the award of investigation costs, including the following: (i) the claim can be advanced regardless of filing a complaint with the Bureau (this is well established quite apart from this decision), (ii) the term “full costs” in section 36 includes reasonable disbursements, (iii) investigation costs must relate to actual investigation of a claim (i.e., not merely participating in the litigation, which is not compensable), (iv) assessing investigation costs must be viewed from the perspective of the plaintiff at the time the investigation was undertaken (i.e., not with the benefit of “perfect wisdom of hindsight” following the conclusion of a trial), and (v) there must be “an evidentiary basis for investigation costs” (but it is not “fair to apply too rigorous a standard of record keeping for a [plaintiff] who is not a trained investigator”).  The Court also set out a number of other relevant factors.

After evaluating these factors in this case, the Court awarded a portion ($75,000) of the investigation costs claimed by the plaintiff ($963,000) based, partly, on the plaintiff’s failure to sufficiently particularize its expenses.

This recent Court of Queen’s Bench cost decision under section 36 of the Competition Act sheds important light on the right of plaintiffs in Competition Act cases to claim costs in private actions (including investigation costs).

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