Norwich Pharmacal Orders and Costs: GEA Group AG v. Ventra Group Co.

I previously blogged about Norwich Pharmacal Orders back in August when discussing the Court of Appeal for Ontario decision in GEA Group AG v. Ventra Group Co., 2009 ONCA 619, which allowed the appeals in part, by setting aside the order of Wilton-Siegel J. of the Superior Court of Justice, dated July 9, 2008, granting “Norwich” relief to the respondent, GEA Group AG (“GEA”), based on the principles articulated in Norwich Pharmacal Co. v. Comrs. of Customs and Excise, [1974] A.C. 133 (H.L.) (the “Norwich Order”).

In its reasons, the Court of Appeal for Ontario also: (1) awarded the appellant, Flex-N-Gate Corporation (“FNG”), the costs of its appeal and of an earlier stay motion before this court, in the total amount of $35,000, and (2) awarded the appellants, Ventra Group Co. (“Ventra”) and Timothy Graham (“Graham”), the costs of their appeal and of the stay motion, in the total amount of $22,000.

Through inadvertence, the Ontario Court of Appeal failed to confirm its decision to set aside the order of P.A. Cumming J. of the Superior Court of Justice (the “motion judge”), dated December 9, 2008 (the “December Order”) – the formal order from which the appeals were launched and ultimately were partially successful.

In Ontario, the usual rule is that costs follow the event and the successful party is awarded costs throughout the interlocutory proceedings. However, in an Addendum and Costs Endorsement dated December 11, 2009, the Court of Appeal for Ontario departed from the general rule based upon the “unusual circumstances of this case” denying both sides any costs of the proceedings in the Superior Court leading to the December Order . In per curiam, the learned Justices held:

[10] The matters raised on the appeals  [confidentiality and refusals on cross-examinations] thus marked a significant shift in the appellants’ positions and in the focus of their attacks on the Norwich Order.  One consequence of this was that much of the evidential record from the proceeding before the motion judge was not relied on by the appellants and became essentially irrelevant for the purpose of the appeals.
The Court of Appeal further downplayed the role of the necessity to plead as a criterion under the test for a Norwich Order played in the underlying motions and appeal, noting that:
[11]… not only bore little, if any, relation to the issues in play before the motion judge, it also involved questions of unsettled law in Ontario.  The guidance which this court ultimately sought to provide on the test for obtaining a Norwich order was not available previously under existing jurisprudence.  Nor was it considered or developed before the motion judge.”
Finally, the Court of Appeal reiterated the final ruling of a German arbitral tribunal, which found that FNG had breached its contractual obligations to GEA, for which FNG remained indebted to GEA for damages, as well as for an unsatisfied costs order made in Germany in the amount of €228,760.
The Court of Appeal for Ontario concludes thusly:
“[13] In combination, all these factors militate against awarding any of the appellants their costs of the proceedings below.  That said, the effect of our decision is that the Norwich Order was unnecessary and should not have been granted.  The latter factor compels the conclusion that no costs should be awarded to GEA in respect of the proceedings below.
[14] According, while our costs awards set out in our August 2009 reasons regarding the appeals stand, there shall be no order in favour of any party concerning the costs of the proceedings below.  To the extent that it may be necessary to give effect to these reasons, we direct that the costs award made by the motion judge be set aside.”

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