The Blacklock’s Perfectly Predictable Costs Appeal Dismissal & a Preview of Potential Problems

The Federal Court of Appeal (“FCA”) heard Blacklock’s appeal of Justice Barnes’ costs ruling on September 12, 2017 and perfectly predictably dismissed the appeal with costs. The FCA not only ruled “from the bench” but, as I understand, did not even call upon the Attorney General of Canada to respond. As practicing lawyers well know, this means that Blacklock’s did not raise any issues that even needed an oral response. This was a decidedly decisive disposition.

The FCA’s judgment, which is somewhat surprisingly specific for a judgment from the bench, is available here. Notably, the FCA:

•           Agreed with Justice Barnes that the issues – primarily the fair dealing issue – were “well-settled in the jurisprudence and, thus, neither novel nor of public significance” (para. 5)
•           Ruled that Justice Barnes’ costs award was “amply supported” by the factors in the rules and that the Federal Court considered, among other things:

o   the respondent’s success in the litigation and the one-sided nature of the outcome,

o   the appellant’s litigation strategy,

o   the existence of a settlement offer,

o   the complexity of the litigation, and

o   the actual costs of the respondent.

(para7)

The FCA effectively concluded that Blacklock’s submission that “the Federal Court should not have relied upon the appellant’s non-acceptance of the respondent’s settlement offer because this was a test case designed to settle issues arising in related proceedings” worked against Blacklock’s. Indeed, the Court concluded that “Further, to the extent this was a test case, this could have prompted a higher level of activity by the respondent and, thus, would have justified an elevated costs award.”

Appeals of Judge’s costs judgments are very rarely successful because such judgments are “quintessentially discretionary” and an appellant must establish “palpable and overriding error” in order to succeed. This case was particularly predictable because Justice Barnes judgment was so careful and detailed. What was not so obviously predictable is the extent to which the FCA actually reinforced Justice Barnes’ costs ruling. The FCA awarded costs of $3,500 for the appeal.

In my earlier blog entitled Blacklock’s Litany of Litigation Lengthens - Update on Four More Federal Court Actions, I made the following comments about Blacklock’s appeal of Justice Barnes’ $65,000 costs award:

 Costs judgments are normally very difficult to appeal successfully.  The $65,000 award in this instance flows directly from the normal  “mid-point of Column III” approach as explained by Justice Barnes in paragraph 6 of the costs judgment.  The Government was also able to benefit from the “double costs” rule because of “the failure by the Plaintiff to accept an early settlement offer in the amount of $2,000.00” (para. 4). Costs decisions by judges are “quintessentially discretionary” and are rarely set aside on appeal.

…

Blacklock’s’ resounding initial defeat on the fair dealing issue in Justice Barnes’ careful and convincing judgment (not appealed) and the resulting $65,000 costs award (which is being appealed) together with the Government’s clear and able determination to fight back and its success to date may be of interest to all Blacklock’s copyright litigation defendants, including those outside the Government, who may be considering with their counsel their next steps, such as whether or not to settle or to continue to fight back and to utilize strategic settlement offers.

Blacklock’s faces some further predictable problems. It would seem apparent that Blacklock’s “litany of litigation”, as I have called it, is not going very well for it. It has suffered three very clear and explicit setbacks at the hands of very experienced judges of the Federal Court and Federal Court of Appeal. Blacklock’s did not appeal the substantive judgment of Justice Barnes, which is a now a binding precedent that will be applied by the Federal Court in similar cases. Justice Barnes’s substantive and costs judgments and the FCA’s approval of the latter are all unusually tough, trenchant, and presumably very problematic for Blacklock’s. There is not only a clear comment about the “well-settled” jurisprudence on fair dealing. There is also a clear roadmap on the record as to the strategic use of settlement offers that may enable a defendant to recover “double costs” in appropriate circumstances in similar cases if Blacklock’s persists and insists on going to trial.

It is important to note Justice Barnes’s words in his costs judgment that has just been upheld:

[7] …I also reject the Plaintiff's argument that this case raised "strong public interest considerations". Rather, this case was about the Plaintiff's attempt to recover disproportionate damages without any apparent consideration to the legal merits of the claim or to the costs that it imposed on the taxpayers of Canada.

[8] Any reporter with the barest understanding of copyright law could not have reasonably concluded that the Department's limited use of the subject news articles represented a copyright infringement. Indeed, the fair dealing protection afforded by section 29 of the Copyright Act, RSC, 1985, c C-42, is so obviously applicable to the acknowledged facts of this case that the litigation should never have been commenced let alone carried to trial.

 [9] I am also troubled by Plaintiff's attempt to claim an excessive amount of damages beginning with its demand for compensation completely divorced from the Department's limited use of the two articles. In no circumstances would Blacklock's losses have exceeded the cost of individual subscriptions by the six officials who read the articles; yet Blacklock's demanded a license fee equivalent to its bulk subscription rate of over $17,000.00. This practice appears to be consistent with Blacklock's usual approach which is to hunt down, by Access to Information requests, alleged infringers and then demand compensation based on an unwarranted and self-serving assertion of indiscriminate and wide-spread infringement. The record discloses that in several instances government departments acquiesced for business reasons and paid the full amounts demanded. In this instance the Department appropriately took a hard line and succeeded in its defence.

(highlight, underline and emphasis added)

Blacklock’s faces other potential procedural hurdles and predicaments depending on the results of case management proceedings underway. There will be an important case management hearing at 90 Sparks St. in Ottawa on Monday, September 18, 2017 at 10:30 AM involving 13 cases against the Government of Canada and some of its agencies. It will deal, inter alia, with whether there should be a trial on the question of whether Blacklock’s even has standing to bring these actions and, whether, in the event that liability is ever established, what the quantum of damages might be. Blacklock’s is asking that it be allowed to proceed to trial against Health Canada and one “non-AG Canada Defendant” and that “pending the disposition of the actions described above, all other actions case managed by the Federal Court relating to copyright infringement of the Plaintiff be stayed”.

I shall follow up in due course.

HPK