Executive Summary: Key Legal and Evidentiary Issues

• Disputed the reasonableness of a $498K expert disbursement for defendants’ economic loss analysis in a fraud and interference case.

• Considered whether out-of-province expert costs could be reimbursed at local Manitoba rates under court tariffs.

• Evaluated whether improper redactions and a second trial attendance by the expert justified partial disallowance of fees.

• Addressed allegations of expert bias and misconduct but found no judicial finding supporting these claims.

• Upheld the necessity and reasonableness of expert costs given the case's $90M claim, complexity, and cross-border elements.

• Affirmed that computerized legal research costs were recoverable in prolonged and complex litigation.

Background and dispute origins
This litigation arose from events beginning in 1994, when Wal-Mart Canada acquired Woolco department stores and entered into separate agreements with Magicuts Inc. and Ultracuts Franchises Inc. for in-store salon operations. Disputes emerged over the nature of these agreements, leading Ultracuts to allege that Wal-Mart failed to honour its commitments and that Magicuts and its officers, Christopher R. Cawston and Brian A. Luborsky, interfered through civil fraud. Ultracuts sued in both Arkansas and Manitoba, with the Manitoba action filed in 2001.

Claims and legal proceedings
Ultracuts alleged unlawful interference with economic interests by civil fraud. The trial finally commenced in 2019, with the trial court ruling in 2021 in favour of Ultracuts. However, the Manitoba Court of Appeal overturned the decision in 2023, dismissing all claims against the defendants. The Supreme Court of Canada denied leave to appeal in 2024. This prompted the present cost assessment proceedings.

Post-trial costs dispute
Following their appellate success, defendants sought recovery of trial and appeal costs, including two contested disbursements:

1. $514,189.82 paid to Cohen Hamilton Steger & Co. (CHS) for expert reports on economic damages.

2. $4,340.63 in computerized legal research fees.

Ultracuts objected to the CHS fees on several grounds:

• The fees were excessive compared to their own expert, Grant Thornton ($105,004.25).

• CHS was based in Toronto, unlike the local expert.

• Certain charges (e.g., Cohen’s second trial appearance and work done after the trial for the appeal) were allegedly unnecessary.

• The expert was alleged to be biased and untruthful.

Policy and clause considerations
The Court applied Rule 57.01(1) and 57.01(4) of the Court of King’s Bench Rules, and Tariff B, which governs recoverable disbursements. The analysis focused on:

• Whether disbursements were reasonably necessary or excessive;

• If costs related to out-of-province experts should be reduced to local rates;

• Whether legal research fees were overhead or recoverable disbursements.

Assessment decision and findings
Associate Judge Berthaudin made two partial reductions to the CHS fee:

• $9,562.73 disallowed due to Cohen’s re-attendance for cross-examination, which stemmed from improper redactions by the defendants.

• $5,739.19 disallowed for CHS’s work done post-trial for the appeal, deemed outside the scope of the King’s Bench proceedings.

This brought the recoverable CHS amount to $498,887.90. The Court found this reasonable and necessary based on:

• The $90 million damages claim against the defendants personally;

• The complexity and duration of the 19-year litigation;

• CHS’s specialized expertise and significant role compared to the plaintiff’s local expert;

• The absence of findings by any judge (pre-trial, trial, or appellate) that Cohen was untruthful or biased.

On the legal research disbursement, the Court approved the full $4,340.63, citing its necessity in such a complex and lengthy case, consistent with Albionex—a binding Manitoba authority.

Conclusion
The Court ruled that both disbursements were justified and recoverable:

• $498,887.90 for CHS expert services;

• $4,340.63 for legal research.

The judgment reinforced that high expert costs can be allowed when proportionate to the case’s financial stakes, complexity, and duration, especially in the absence of misconduct and where elevated costs are ordered due to unproven fraud allegations.