Broers v. Real Estate Council of Alberta, 2010 ABQB 774

Court of Queen ’ s Bench of Alberta Citation: Broers v. Real Estate Council of Alberta, 2010 ABQB 774 Date: 20101202 Docket: 1001 00795 Registry: Calgary Between: Daren M. Broers Applicant - and - Real Estate Council of Alberta and Bob Myroniuk, in his Capacity as the Executive Director of the Real Estate Council of Alberta Respondents _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice K.M.

Horner _______________________________________________________ Introduction [ 1 ] This Court delivered written reasons allowing an application for judicial review of the decision of the Executive Director of the Real Estate Council of Alberta ("RECA") to cancel the applicant Broers' mortgage broker licence: 2010 ABQB 497 . At the end of my reasons, I invited the parties to make submissions as to costs and they have now done so.

History [ 2 ] In my reasons, I found that Rule 38, pursuant to which the Executive Director of RECA cancelled Broers' licence, was invalid and that the Executive Director therefore acted without jurisdiction in cancelling the licence. In the alternative, I found that if the Rule was validly enacted, the procedure followed by the Executive Director afforded Broers the procedural and substantive fairness required by law and that, assuming the validity of Rule 38, the Executive Director was at liberty to exercise his discretion to proceed under the Rule.

However, I went on to find that the Appeal Panel should have reviewed the Executive Director's findings on the question of sanctionable conduct and punishment using the standard of correctness and that it erred in not doing so. Ultimately, the matter was remitted back to the Executive Director to consider whether he wished to proceed with a conduct hearing pursuant to

Part 3 of the Real Estate Act , R.S.A. 2000, c. R-5 (" Act "). In the alternative, I directed the Appeal Panel to reconsider the decision of the Executive Director to cancel Broers' licence using the correctness standard. [ 3 ] On each of the above points RECA made submissions on the merits. Issue [ 4 ] The issue before me is whether Broers is entitled to an award of costs in excess of those prescribed under Column 1 of

Schedule C. For the reasons given below, I find that he is. Application of the new Rules of Court [ 5 ] As a preliminary matter, I must address the coming into force of the new Rules of Court: Alberta Rules of Court , Alta. Reg. 124/2010 ("New Rules"). Judgment of this Court was rendered on July 23, 2010 and submissions with respect to costs were received in early September. The New Rules came into effect on November 1, 2010.

Given the timing involved, counsel did not make submissions as to which set of Rules should govern this application. [ 6 ] Rule 15.2(1) is clear that unless otherwise provided, the New Rules apply to every existing proceeding. Rule 15.1 provides that "existing proceeding" means a court proceeding commenced but not concluded under the former rules.

Rule 15.12 states as follows: Where these rules impose a new test, provide new criteria or provide an additional ground for making an application in an existing proceeding, these rules apply in respect of the application if the application was made but has not been heard prior to the coming into force of these rules. [ 7 ] An issue exists as to whether a costs application on a judgment which has already been rendered constitutes an "existing proceeding" such that the New Rules will apply.

When a gap exists as between when an application is made and when it is heard, the application of any test or criteria is governed by the time of hearing. [ 8 ] At para. 147 of my original decision, I indicated that the parties were to speak to me about costs within 30 days of judgment. The parties elected to file written material instead of an oral hearing. The terminology used indicates that as the issue of costs remained outstanding, the matter remained a proceeding which had commenced but not concluded. This would bring the costs application under the New Rules as an "existing proceeding".

However, in this instance counsels' submissions with respect to costs were heard (or in this case written submissions were received) prior to the New Rules coming into effect therefore the application was both made and heard prior to the New Rules coming into force. [ 9 ] The only step which remained outstanding was the reduction of my decision into writing.

Had I issued judgment with an invitation for counsel to speak to costs with the New Rules coming into force before any such submission as to costs had been made, it seems clear to me that the New Rules would apply with regard to any test or criterion governing a costs award; see New Rule 10.33 which lays out those factors to be considered in making a costs award. However, as submissions with respect to costs were both made and heard prior to the New Rules coming into force, I find that the former Rules must govern. This finding is in keeping with the purpose

and intent of the New Rules , which aim to facilitate a means of providing a fair and just resolution of claims in a timely and cost-effective manner through the effective use of court resources: see

Part 1 of the New Rules. Argument [ 10 ] Broers submits that a number of factors support his claim for an increased costs award.

Such factors include the fact that he was represented by legal counsel at both levels of proceedings before RECA, that he was required to seek judicial review in order to protect his reputation and his livelihood, that the judicial review dealt with complex issues within developing areas of the law, that he was largely successful in the application, and that the arguments raised matters of public interest. [ 11 ] Broers put forward a number of alternative costs calculations including taxing the matter as a trial on Column 4, or taxing the matter as an application on Column 5 at either two times Column 5 or by substituting Item 15 for Item 8.

I note that counsel for Broers agreed to cap his fees for the judicial review at $10,000 plus disbursements. If the Court agrees to award costs using certain of the calculations suggested by Broers, the party and party costs will exceed this cap and could therefore constitute recovery of costs in excess of that paid. [ 12 ] In contrast, RECA submits that Broers' costs should be limited to Column 1 of

Schedule C. RECA argues that complicated judicial reviews are not uncommon and that while the issues raised were complex, the hearing was limited to one day. RECA further submits that the issues raised were not of public importance but instead were limited to RECA members. RECA further submits that Broers was not successful in halting the disciplinary process against him, as the primary remedy was to send the matter back before the Executive Director in order to determine whether the Director wished to proceed with a conduct hearing pursuant to

Part 3 of the Act ; nor did the decision vindicate Broers, as his reputation was tarnished as a result of the events which lead to the Alberta Securities Commission's ("ASC") investigation and hearing. [ 13 ] The parties have provided this Court with a number of helpful cases addressing the issue of costs. Alberta (Minister of Municipal Affairs v. Alberta (Municipal Government Board) , 2000 ABQB 639 , 272 A.R. 36 (" MGB ") involved a judicial review of a decision of the Municipal Government Board respecting a municipal tax assessment of computer software.

An Alberta provincial tax assessor found that Telus had to pay taxes on the software in issue. Telus appealed to the Board which determined that the assessor erred. The matter was brought before the Court on judicial review. The Court had to determine the proper standard of review of the Board's decision in determining whether to interfere with the Board's

interpretation of the phrase "linear property" as defined in the Municipal Government Act . The Court undertook a full Pushpanathan analysis in determining the standard of review and found that while the standard was reasonableness simpliciter, the decision of the Board was unreasonable. On appeal, the Court of Appeal was required to determine the proper standard of review to apply when reviewing a chamber judge's choice of standard of review.

Telus succeeded on appeal, with the result that the Court of Appeal restored the decision of the Board: 2002 ABCA 199 , 312 A.R. 40. [ 14 ] In making its costs submissions, Telus argued that costs should be awarded in Queen's Bench and on Appeal on Column 5 of

Schedule C of the Rules of Court , including a second counsel fee: 2003 ABCA 260 , 2 Admin L.R. (4th) 1. The Court of Appeal disagreed, holding that costs in both the Court of Appeal and the Court of Queen's Bench should be on Column 1, without a second counsel fee. The Court held, at paras. 4-5: Rule 605(6) provides that, unless otherwise ordered, costs shall be under Column 1 for judgments "other than ... the payment of money". There are a number of factors to take into account in determining the scale of costs: Eggertson v. Alberta Teachers' Assn . (2003), 2003 ABCA 101 (CanLII) , 327 A.R. 92 (C.A.).

Telus maintains that a higher scale is justified on the basis of complexity, importance, and national significance. This was a judicial review case that turned on the issue of the standard of review. Although the facts giving rise to the case were technically complex, that is often so in judicial review cases. The fact that the standard of review was the central issue makes this similar to many judicial review cases. The case was argued in each court in less than a day, which reflects the relative degree of its complexity.

Nor does the importance of the case to the parties set it apart in any way, as that is also typical. Nor are we persuaded that the amount of the tax liability at stake (said by Telus to be many millions) justifies a deviation from Rule 605(6). The argument about national importance is answered by the Supreme Court's refusal to grant leave. [ 15 ] More recently, in Eggertson v. Alberta Teachers' Assn , 2003 ABCA 101 , 327 A.R. 92, the Court of Appeal provided a

[ 15 ] More recently, in Eggertson v. Alberta Teachers' Assn , 2003 ABCA 101 , 327 A.R. 92, the Court of Appeal provided a number of factors to be considered in assessing a costs application. In Eggertson , the applicant, who was both a teacher and a parent, raised issues surrounding the competency of her child's teacher and in turn was charged with violating the rules of professional conduct of the Alberta Teachers' Association. The applicant was found guilty of professional misconduct before the Hearing Committee.

She appealed unsuccessfully to the Appeal Committee and to the Court of Queen's Bench for judicial review. The decision was subsequently set aside upon appeal to the Court of Appeal. The applicant was represented by counsel at all four levels of hearings. [ 16 ] In considering costs, the Court of Appeal confirmed that it lacked jurisdiction to award any costs in relation to the proceedings before the Hearing Committee or the Appeal Committee.

However, the Court continued on to note that it was "...entitled to consider the history of the proceedings when considering the scale of costs in Queen's Bench and this Court": para. 8. [ 17 ] While the Court found that costs on a solicitor and his own client basis were not justified in the circumstances, it went on to analyze the appropriate scale of party and party costs. In referring to the factors to be considered in a costs award as outlined in Pharand Ski Corp. v.

Alberta (1991), 1991 CanLII 5931 (AB KB) , 122 A.R. 395 (QB) the Court adopted the following, at para. 13: . . . in principle, costs on a party and party scale are awarded on the basis of a reasonable apportioning of the litigation expenses incurred by the successful party having regard to such factors as (

a) the difficulty and complexity of the issues, (

b) the importance of the case between the parties and/or the community at large, (

c) the length of the trial, (

d) the positions and relationships of the parties and their conduct prior to and during the course of the trial, and (

e) other factors that may affect the fairness of an award of costs. [ 18 ] The Court found that the following factors justified an award of party and party costs in excess of the Column 1 default scale: the applicant was required to defend her professional integrity and was ultimately vindicated; the issue was important to all "parent-teachers" as it reconciled their rights in straddling both roles, and; the applicant had incurred significant liability for legal counsel. The Court ultimately awarded a lump sum figure of $15,000 plus disbursements as opposed to making an award under

Schedule C. While the Court noted that its cost award would not indemnify the applicant for her actual costs, it stated that such an award represented a fair apportionment. The Court went on to find that the issues raised and the complexity of argument did not warrant a second counsel fee. [ 19 ] The factors listed in Eggertson were referred to in Court v. Alberta (Environmental Appeal Board) , 2003 ABQB 912 , 345 A.R. 179.

The applicant Court applied for double costs following her successful application for judicial review of a decision by the respondent Environmental Appeal Board which had refused her standing to appeal the approval of a gravel pit operated by Lafarge near her residence. During the judicial review, the Board and the Minister of Environment made submission as to jurisdiction and standard of review. The applicant sought increased party and party costs of the judicial review application at double Column 5 plus disbursements. The applicant's legal fees, excluding disbursements, totalled over $50,000.

Under Column 1 her costs, again excluding disbursements, would total just over $4,000. In arguing for an increased costs award, the applicant submitted, inter alia , that the matter was complex thus necessitating counsel, the issues raised were of importance, and the judicial review process was a necessity. The respondents submitted that they did not act arbitrarily or in bad faith at any point during the proceedings. [ 20 ] The Court referred to the factors outlined in Eggertson in deciding the scale of costs to apply.

The Court awarded double costs against the respondent Lafarge and no costs against the Board or the Director. In discussing costs in relation to the Board and the Director, the Court noted that costs are generally only awarded against administrative decision makers in unusual or exceptional circumstances. In discussing the nature of such costs awards, the Court commented as follows, at paras. 12 -13: There are costs principles specific to administrative decision-makers, principles on which the Board and the Director rely and to which the Applicant does not advert.

The costs principles specific to administrative decision-makers are summarized by Donald J.M. Brown and the Honourable John M. Evans in Judicial Review of Administrative Action in Canada, looseleaf (Toronto: Canvasback, 2003) at para. 5:2560:

Generally, an administrative tribunal will neither be entitled to nor be ordered to pay costs, at least where there has been no misconduct or lack of procedural fairness on its part....

However, costs have been awarded against an administrative tribunal where it cast itself in an adversarial position, acted capriciously in ignoring a clear legal duty, made a questionable exercise of state power, effectively split the case so as to generate unnecessary litigation, manifested a notable lack of diligence, or was the initiator of the litigation in question, or where bias among tribunal members had necessitated a new hearing. [Footnotes omitted.] and by the Honourable William A. Stevenson and the Honourable Jean E.

Côté in Civil Procedure Encyclopaedia (Edmonton: Juriliber, 2003) at 79-56: A court may decline to award costs against a tribunal where it has acted in good faith, there was no suggestion of malice, and the enabling legislation is unclear; or if it made no submissions, except on jurisdiction.... Costs do not necessarily follow the event.

They are awarded against tribunals in unusual or exceptional circumstances such as capricious or arbitrary conduct or a lack of good faith or circumstances otherwise contrary to rules of natural justice. [Footnotes omitted.] So, costs are generally not awarded to or against an administrative decision-maker that, on judicial review of its decision, limits its submissions to issues of its jurisdiction and makes no submissions on the merits. In R. v.

Ontario (Labour Relations Board) , 1969 CanLII 326 (ON SC) , [1969] 2 O.R. 116 at 120 (H.C.J.), aff'd 1969 CanLII 321 (ON CA) , [1969] 2 O.R. 501 (C.A.), Osler J. held: Following the usual practice, when counsel for the Board confines himself to the question of the Board's jurisdiction and makes no submissions on the merits of its position, there will be no costs for or against the Board. [ 21 ] In Waste Management of Canada Corp. v. Thorchild (County) , 2009 ABQB 157 , 463 A.R. 193, the applicant Waste Management applied for judicial review of a vote taken by the respondent Council.

In a separate application the applicant argued that one of the municipal councillors was biased and that his participation in the vote contravened the rules of natural justice. The Court found that such bias had not been demonstrated and dismissed Waste Management's application for judicial review. The councillor then sought costs against Waste Management on a solicitor and client basis or an increased party and party basis at three times Column 5.

The councillor argued that he was defending his own reputation as well as the interests of the voters in the County and that if adequate costs were not awarded, councillors would be limited from defending the rights of their constituents. The amounts provided for under

Schedule C included a half day examination and a special chambers application with briefs.

In reviewing the criteria discussed in Pharand and adopted in Eggertson , the Court determined that an increased costs award on a scale of three times Column 5 was justified on the following grounds: the councillor was defending his own reputation as well as the interests of his constituents; the issues were important not only to the parties but to the community at large, and; as a policy consideration an insufficient costs award could deter individuals from participating in municipal politics. [ 22 ] In International Assn. of Machinists and Aerospace Workers, Local Lodge No. 99 v.

Finning International Inc ., 2006 ABQB 594 , the union brought an unsuccessful application for judicial review of a decision of the labour relations board. In addressing costs, the respondent Finning sought costs based on Column 5 of

Schedule C as well as the application of Item 15 as opposed to Item 8. In arguing for increased costs, the respondent claimed that the proceedings were complex, with two separate board hearings followed by a two day judicial review for which extensive briefs were provided. The respondent also stressed that the matter was of general importance in the field of labour relations.

The Court noted, at para. 15 that "it is not unusual for this Court to award party and party costs beyond the default scale in judicial review applications and other proceedings where the matters at issue are particularly complex or involve matters of general importance to the public." In awarding costs based on Column 5 the Court stressed that: the matter was of general interest in labour relations; the judicial review related to a lengthy and complex tribunal decision lasting two full days; the matter was heard on an expedited basis which had the effect of increasing the cost to the parties, and; the parties were generally cooperative and efficient: paras. 16-20.

In further awarding costs using Item 15 as opposed to Item 8 the Court found that this was clearly a "complex chambers application" as contemplated by the Rule. Findings [ 23 ] The parties are in agreement that unless otherwise ordered, when a judgment other than for the payment of money is ordered,

the costs shall be taxed according to Column 1 of

Schedule C: Rule 605(6). The parties are further in agreement that the amount of costs ordered are within the discretion of the Court: Rule 601(1). This Rule also goes on to list a number of factors to be considered in making an award of costs, including as follows: (

a) the amounts claimed and the amounts recovered, (

b) the importance of the issues, (

c) the complexity of the proceedings, (

d) the apportionment of liability, (

e) the conduct of any party that tended to shorten or to unnecessarily lengthen the proceeding, (

f) a party's denial of or refusal to admit anything that should have been admitted, (

g) whether any step or stage in the proceedings was (

i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution, (

h) whether a party commenced separate proceedings for claims that should have been made in one proceeding or whether a party unnecessarily separated their defence from another party, and (

i) any other matter relevant to the question of costs. [ 24 ] These factors, of course, correspond to those enumerated by our Court of Appeal in Eggertson . In reviewing the above factors I find that the issues raised in this matter were quite complex. Each party submitted a thorough brief and I reserved judgment, subsequently authoring a decision of approximately 30 pages in length.

While I acknowledge RECA's submission that judicial review applications often involve complex legal and factual issues, I cannot accept that the default scale must be adhered to. [ 25 ] Although RECA relied upon MGB in mounting its argument, I find that this case can be distinguished. The Court in MGB noted that the issue of standard of review was central, thus making the case similar to many judicial review cases. In the case before me, the central issue involved the validity of Rule 38 and the ability of the Executive Director to proceed under this Rule.

While issues involving standard of review were raised, I note that the issue of whether the Appeal Panel applied the appropriate standard of review to the decision of the Executive Director necessitated a full Pushpanathan analysis as per Dunsmuir .

In addition, the matter in MGB took less than a day to hear whereas this matter necessitated an entire day, with the consent order scheduling the application providing for a half day reading for the Court. [ 26 ] Unlike in Court , the submissions made by RECA were not limited to issues of jurisdiction; rather it took positions on the merits. [ 27 ] Broers claims that the matters raised during the judicial review were of public interest, thus bringing this case into line with

Finning and Waste Management . I disagree. I find that the issues in each of these cases were clearly of greater public importance than the operation of the disciplinary provisions of the Real Estate Act .

Finning raised matters of general public interest in labour relations and Waste Management involved issues surrounding the ability of a municipal councillor's ability to represent the interests of his voter - an issue of obvious general public importance. [ 28 ] While the matter before this Court raised the discreet issue surrounding the process whereby RECA is able to discipline its members (its right to do so is not disputed), the lack of general importance to the community at large is not fatal to a claim for increased costs over the default scale.

Notably, in Eggertson , the Court of Appeal found that the issue raised was important to all "parent-teachers" as members of the Alberta Teachers' Association and parents in their own right.

In a similar fashion the matters raised before this Court are of import to all members of RECA and to a lessor extent to members of the public who might rely on the internal disciplinary process to "weed out" incompetent, inept or unsavoury brokers. [ 29 ] It should be noted that the Court in Eggertson stated that one of the factors to be examined was the importance of the case "between the parties and/or the community at large" [emphasis added]. In this instance, the ability to discipline its members and the loss of one’s ability to carry on a livelihood as a broker are of clear import to the parties.

Furthermore, in Finning , the Court stated that increased costs are often awarded where the issues were particularly complex or involved matters of general public importance. I have already held that the matters raised during this judicial review were quite complex. [ 30 ] There was some debate over whether the Court should infer harm to Broers' professional reputation as a result of the cancellation of his licence under Rule 38.

Broers' counsel invites this Court to do so, stressing that in both Eggertson and Waste Management , an application for judicial review was brought, in part, to defend the reputation of the applicant. RECA argues that these cases can be distinguished in that Broers was never vindicated of any misconduct; rather, this Court simply ordered the matter returned to the Executive Director in order for him to determine whether he wanted to proceed with a disciplinary hearing pursuant to

Part 3 of the Act . It further argues that any damage to Broers' professional reputation was as a result of the undisputed activities leading to the ASC sanctions. [ 31 ] While I agree that Broers' reputation was already tarnished to some extent prior to the Executive Director's decision to cancel his licence, I find that a distinction exists between any damage done to his reputation as a result of the activities surrounding the ASC hearing, and any damage done as a result of the Executive Director's findings.

The ASC finding did not comment on Broers' ability to act as a mortgage broker and the hearing did not relate to his capacity as a broker. In contrast, the Executive Director expressly stated that if Broers continued to hold a mortgage broker's license the integrity of, and public confidence in, the real estate and mortgage industry would be negatively affected. [ 32 ] While I acknowledge that my decision did not vindicate Broers of any misconduct (in that it merely directed that the Executive Director reconsider whether he wished to proceed with the disciplinary process under

Part 3 of the Act ) the fact remains that Broers was made to appeal the Executive Director's findings first to the Appeal Panel and then to this Court in order to obtain a direction that the matter be dealt with through proper channels. [ 33 ] While this Court cannot award any costs in relation to the proceedings before the Executive Director or the Appeal Panel (as established pursuant to Rule 39), it is entitled to consider the history of the proceedings when considering an appropriate scale of costs: Eggertson , para. 8 .

It is clear that the issues raised during the disciplinary hearings, including the question of jurisdiction, were complex enough with severe enough consequences to necessitate representation through counsel at both levels. [ 34 ] An interesting issue exists in that counsel for Broers agreed to cap his fees for the judicial review at $10,000 plus disbursements. As noted above, Broers has put forward a number of alternate forms of calculation. If the matter were taxed as a trial on Column 4 for items 1, 10 and 12, costs would come to $14,500.

If it were taxed as an application on two times Column 5 (as per Court ) for items 1 and 8, costs would total $13,000; if item 15 is substituted for item 8 on Column 5 (as per Finning ) the amount of costs would be $8,100. [ 35 ] RECA submits that an award of costs in excess of, or even close to, solicitor client costs for the judicial review application is inappropriate. I note that there is no indication that RECA acted in any manner other than in good faith throughout the proceedings. This is not a case in which the conduct of the parties must be addressed through the award of costs. RECA relies on Dechant v.

Law Society of Alberta , 2001 ABCA 81 , 277 A.R. 333 in arguing that costs party and party costs should not exceed a solicitor's fees absent special circumstances. In discussing the restriction of costs awardable to lay litigants, the Court of the Appeal made the following comments, at

para. 11: Rule 600 includes the fees of barristers and solicitors in its definition of costs. But even then, the courts have always been reluctant to order solicitor-client fees absent exceptional circumstances. Generally, a costs award beyond disbursements is only a partial indemnity of fees and should never, under any circumstances, exceed solicitor-client fees. In short, the possibility of a profit over and above expenses should not be an incentive to litigation or needless steps in litigation.

Costs should always bear a relationship to the result, the amounts involved, the importance of the issues, the efficiency with which the litigation was conducted, and the other matters set out in r. 601. [ 36 ] I agree that in the circumstances, any award of costs should not exceed Broers' solicitors fees.

Thus, bearing in mind the complexity of this case, the fact that Broers was successful on the main issue of jurisdiction, the fact that Broers was required to appeal the decisions of both the Executive Director and the Appeal Panel in order to have the matter dealt with through proper channels and the fact that although Broers' professional reputation was harmed by the Executive Director's findings, he was not fully vindicated by this Court in that the matter was sent back down for reconsideration, and that because the Executive Director proceeded without jurisdiction, Broers may have to face additional legal expenses should the Executive Director refer the matter to a Hearing Panel, I find that Broers is entitled to costs above the Column 1 default scale but not exceeding his solicitor's fees. [ 37 ] Rule 601(2) allows this Court to award costs either with or without reference to

Schedule C. I direct that costs should be awarded by treating this matter as an application under Column 5 and substituting Item 8 for Item 15 for a total of $8,100 plus disbursements. Briefs submitted September, 2010. Dated at the City of Calgary, Alberta this 2 nd day of December, 2010. K.M. Horner J.C.Q.B.A. Appearances: James T. Eamon, Q.C. Gowling Lafleur Henderson LLP for the Applicant James T. Casey, Q.C. Field LLP

for the Respondents