Alberta Treasury Branches v. Weatherlok Canada Ltd., 2011 ABQB 15

Court of Queen ’ s Bench of Alberta Citation: Alberta Treasury Branches v.

Weatherlok Canada Ltd., 2011 ABQB 15 Date: 20110110 Docket: 0303 22127 Registry: Edmonton Between: Alberta Treasury Branches Plaintiff - and - Weatherlok Canada Ltd., Mark Wesley Trinier also known as Mark Trinier, Deborah Ellen Trinier also known as Debbie Trinier, Donald Shurniak and Debbie Shurniak (Appellants/Defendants/Judgment Debtors) (Respondents/Defendants/Judgment Debt Assignees) Editorial Notice: The date code above has been corrected to read 20110110. _______________________________________________________ Memorandum of Decision on an Appeal from Taxing Officer Christensen of the Honourable Mr.

Justice D.R.G. Thomas _______________________________________________________ I. Introduction .......................................................................................................... Page: 3

II. Background Facts .............................................................................................. Page: 3 III Issues on Appeal ................................................................................................. Page: 7 IV Positions of the Parties ..................................................................................... Page: 8 (

a) Appellants ................................................................................................. Page: 8 (

b) Respondents ............................................................................................ Page: 8 V Analysis ................................................................................................................. Page: 9 (

a) Do the Triniers have a contractual entitlement to solicitor-client costs arising from the Continuing Guarantee which they had signed with the ATB? ............................................................................. Page: 9 (

b) Do the Triniers have a contractual entitlement to solicitor-client costs arising either from the Default Judgment or the Assignment? Page: 9 (

c) Do the Triniers have a judicial entitlement to solicitor-client costs arising from the 2007 Order and the 2008 Order insofar as they deal with costs? .................................................................................... Page: 10 (

d) Do the Triniers have a judicial entitlement to solicitor-client costs arising from the directions made by Lewis, J. in October 2007? Page: 10 (

e) If the Triniers do not have any of the contractual or judicial entitlements outlined above, can the Taxing Officer order any solicitor-client costs in favour of the Triniers? ............................. Page: 11 VI Relief Granted .................................................................................................... Page: 11 I.

Introduction [ 1 ] This is a decision on an appeal from a costs award in the amount of $65,548.71 made by Taxing Officer James Christensen (the “Taxing Officer”) against Donald Shurniak and Debbie Shurniak (the “Shurniaks”) in favour of Mark Trinier and Debbie Trinier (the “Triniers”). [ 2 ] The appeal is allowed and the matter remitted to the Taxing Officer to be taxed on a party-party basis, unless the parties are able to agree on an amount of costs within 30 days of the issuance of this decision.

II. Background Facts [ 3 ] In 2002 Weatherlok Canada Ltd. (“Weatherlok”) borrowed $300,000.00 from the Alberta Treasury Branches (the “ATB”).

As security for the loan, the ATB required and received personal guarantees (the “Continuing Guarantee”) from the Shurniaks, Triniers and Philip Unland. [ 4 ] Paragraph 17 of the Continuing Guarantee states: The undersigned shall pay to you on demand (in addition to all debts and liabilities of the Customer hereby guaranteed) all costs, charges, and expenses (including, without limitation, lawyers’ fees as between solicitor and his own client on a full indemnity basis) incurred by you for the preparation, execution, perfection and enforcement of this guarantee and of any securities collateral thereto, together with interest calculated from the date of payment by you of each of such costs, charges and expenses until payment by the undersigned hereunder at a floating rate per annum equal to 3% above the prime lending rate established by you from time to time. [ 5 ] Weatherlok defaulted on the loan and in 2003 the ATB demanded that the guarantors repay the outstanding balance of $188,100.00. [ 6 ] The ATB commenced Action No. 0303 22127 (the “Action”) against, inter alia, the Triniers and the Shurniaks.

Mark Trinier arranged new security and paid approximately $170,000.00 to the ATB. The ATB discontinued the Acton against the Triniers as part of a settlement. [ 7 ] On April 21, 2004 the ATB entered a Default Judgment (the “Default Judgment”) against the Shurniaks. The Default Judgment states, inter alia , that the Shurniaks had failed to file either a statement of defence or a demand of notice and computes the amount to be paid as follows: $188,100.00 (debt), less $20,000.00 (payment), plus $2,699.49 (interest), plus $5,332.50 (solicitor-client fees), plus $1,834.46 (disbursements).

The total amount reflected in the Default Judgment, as filed, is the sum of $177,966.45. This amount was amended to reflect a debt owing before an allowance for solicitor-client costs in the amount of $170,799.49 (the “Judgment Debt”).

The Default Judgment also contains the words “... costs to be taxed ...” in relation to costs not already included in the total of $177,966.45. [ 8 ] As part of the settlement the ATB assigned the Judgment Debt and the Default Judgment to the Triniers pursuant to an Assignment of Judgment (the “Assignment”). [ 9 ] The Assignment which has an effective date of May 17, 2004 reflects that the Default Judgment entered against the Shurniaks requires that Judgment Debt be paid to the ATB, plus a costs amount of $7,166.96 in fees and disbursements.

In consideration of an agreed upon sum, the ATB assigned to the Triniers “all of its interest in the Judgment Debt, together with its interest in the Writ, and all costs or interest now payable to, or to become due and payable, on the sum after the date of the entry of the Judgment and also the Judgment and all monies recoverable under it to hold the same to the Assignee absolutely”. In the Default Judgment the solicitor- client costs incurred by the ATB had been fixed at the amount of $7,166.96 and were made up of fees and disbursements.

That specific sum was included in the amount assigned to the Triniers. [ 10 ] In 2004 the Triniers took steps to execute on the Default Judgment through enforcement processes. In response the Shurniaks filed an Application in July, 2005 to set aside the Default Judgment and also filed a further Application in September, 2006 seeking a declaration of the true amount owing to the Triniers under the Default Judgment. [ 11 ] The Triniers continued with their efforts to execute on the Default Judgment and applied for the sale of real property owned by the Shurniaks.

The Triniers appeared in Chambers on August 22, 2007 and I ordered that the lands be listed and sold. I also directed payment of solicitor-client costs to the Triniers for that Application and an Order was taken out (the “2007 Order”). [ 12 ] Later in 2007 Lewis, J. heard the outstanding Applications on two separate dates in October of that year. On October 16, 2007 he determined that the Triniers were owed 45% of the amount which they had paid to the ATB and directed that a trial be held to determine if they were owed more than that amount by the Shurniaks.

[ 13 ] At a second hearing held on October 30, 2007 the subject of costs was briefly discussed with counsel. Mr. Moroz, who appeared for the Triniers, advised Lewis, J. that his clients had a judgment to enforce and that solicitor-client costs were called for under that judgment. The brief exchange on the subject of costs was as follows: MR. MOROZ:– we will have – then my clients have the ATB judgment to go ahead and enforce. THE COURT: Well, they can – they can take their execution proceedings on that without hesitation. MR. MOROZ: And that – and that would include solicitor – THE COURT: Anything. MR.

MOROZ: – solicitor-client costs that are called for under the judgment? THE COURT: Absolutely. (Transcript of the October 30, 2007 hearing at pp. 15 and 16.) [ 14 ] On January 25, 2008 the parties appeared before me on an Application by the Triniers to have a certificate of lis pendens discharged from the title of a property owned by the Shurniaks and which the Triniers were attempting to sell to satisfy the Default Judgment. The certificate of lis pendens had been filed against the title by the Shurniaks and was preventing the sale of the real property.

At that hearing I granted the Shurniaks a short grace period to make arrangements to pay out the Triniers. Failing that, I ordered that the certificate of lis pendens be discharged from title and that vacant possession of the property be delivered such that a sale could be finalized. [ 15 ] At that hearing on January 25, 2008 the following discussion occurred in respect to costs for that appearance: MR. MOROZ: Throughout the enforcement proceedings, my clients have been entitled to solicitor-client costs under the judgment and the back-up documents.

And that was Your Lordship (INDISCERNIBLE) direction and I would ask that we have that direction this morning. THE COURT: Well, I think you actually have given a judgment, I am the only Court of Queen’s Bench Judge and probably the Master are the only ones who can order solicitor-client costs and if you are giving me the assurance that in the underlying financing documents that the underlying basis there is a commitment to pay solicitor-client costs in the face of a breach , do you agree that is the case, Mr. Lintz? MR.

LINTZ: You know what, frankly I do not remember what it says, we’ve gone along on that basis, I’m assuming it says that and I think I actually have the document somewhere in a box so I can look at it. THE COURT: Well, Mr. Moroz, you must have looked at it. MR. MOROZ: I have My Lord and there is a promissory note, as well as a mortgage and so on, all of which speak to solicitor-client costs on the default .

THE COURT: Okay. Well, provided that there in the underlying financing documents, I will grant solicitor-client costs on these applications . (Transcript of the January 25, 2008 hearing at pp. 19 and 20.) (Emphasis and underlining added) [ 16 ] As can be seen from this exchange, I made a determination on costs. Mr. Moroz advised me that his clients had an entitlement to solicitor-client costs based on both the Default Judgment and the underlying financial documents. Mr. Lintz, counsel for the Shurniaks, did not express any concern in respect to the granting of solicitor-client costs on that occasion.

Accordingly, based on the representation by Mr. Moroz that there was a legal basis for awarding solicitor-client costs, I directed that such costs be paid in relation to the application being heard that day.

This resulted in a further Order (the “2008 Order”). [ 17 ] Counsel for the Triniers then proceeded to set dates to tax his accounts before a Taxing Officer on a solicitor-client basis. [ 18 ] At the first taxation meeting on September 14, 2009, Taxing Officer Christensen made a determination that my 2007 Order and my 2008 Order granted the Triniers a clear entitlement to solicitor-client costs throughout the course of the proceedings, but that there were problems in respect to the outcome of the applications which had been heard by Lewis, J. in October 2007.

In an attempt to determine what costs order should be made in respect to the October 16 and October 30 hearings before Lewis, J., the Taxing Officer asked that the parties attempt to settle the terms of the orders arising from those two hearings and otherwise adjourned the taxation proceedings until that could be done. [ 19 ] At the second taxation meeting on October 27, 2009, the Taxing Officer directed a further adjournment to allow Mr. Lintz an opportunity to investigate concerns arising from certain time records provided by Mr.

Moroz and also to allow counsel to settle the terms of the orders arising from the October 2007 hearings before Lewis, J. [ 20 ] A third and final taxation meeting occurred on November 5, 2009 at which time the Taxing Officer attempted to settle the terms of the Lewis, J. orders and to come to a conclusion on an appropriate award of costs throughout. After making a finding that Lewis, J. had directed solicitor-client costs in favour of the Triniers, the Taxing Officer found that the Shurniaks were responsible for the payment of solicitor-client costs to the Triniers in the total amount of $65,548.71. Mr.

Moroz drafted forms of orders in relation to the appearances before Lewis, J. in October, 2007. Those orders have never been signed by any Judge of this Court, nor have they been filed with the Clerk. Therefore, to this date there are no formal filed orders of Lewis, J. in respect to the two October 2007 hearings. [ 21 ] The Shurniaks appealed the decisions of the Taxing Officer and the appeal was heard before me on two separate days in 2010.

III Issues on Appeal [ 22 ] The Shurniaks appeal the amounts determined by the Taxing Officer on the basis that the Triniers are not entitled to solicitor- client costs on any basis. [ 23 ] As a matter of law an award of solicitor-client costs is a departure from the norm and should only be granted when the parties either have come to a mutual agreement that costs on that basis should be paid (a “contractual entitlement”) or when a Judge of this Court or a Master orders them (a “judicial entitlement”): Arbitus Leasing Ltd. v.

X-Zibit A Inc., 2006 ABQB 764 , 405 A.R. 288 at paras. 18 - 19 . [ 24 ] Based on these legal principles, the issues that arise on this appeal are:

(

a) Do the Triniers have a contractual entitlement to solicitor-client costs arising from the Continuing Guarantee which they had signed with the ATB? (

b) Do the Triniers have a contractual entitlement to solicitor-client costs arising either from the Default Judgment or the Assignment? (

c) Do the Triniers have a judicial entitlement to solicitor-client costs arising from the 2007 Order or the 2008 Order insofar as they deal with costs? (

d) Do the Triniers have a judicial entitlement to solicitor-client costs arising from the directions made by Lewis, J. in October 2007? and (

e) If the Triniers do not have any of the contractual or judicial entitlements outlined above, can the Taxing Officer order any solicitor-client costs in favour of the Triniers? IV Positions of the Parties (

a) Appellants [ 25 ] In respect to my 2007 and 2008 Orders, the Appellants take the position that this case falls within the second exception found in the Ensign Estate v. Hart decision, 1998 ABCA 13 ; 64 Alta. L.R. (3d) 1, since I was only ordering solicitor-client costs on the condition that the “underlying documentation” supported it. The Appellants submit that since the underlying documentation does not support costs on a solicitor-client basis my 2007 and 2008 Orders do not reflect the true intention of the Court.

The Appellants also submit that the directions made by Lewis, J. should not have been taxed on a solicitor-client basis, because he made no such direction. [ 26 ] The Appellants further submit that if my 2007 and 2008 Orders are allowed to stand, then they “can live” with the amount of $3,100.00 awarded in relation to the 2007 Order. However, they argue that the $12,000.00 awarded by the Taxing Officer in respect to the 2008 Order should have been taxed in a similar range as the 2007 Order. The Appellants argue further that the Taxing Officer's decision should have been made on a party-party basis.

The Appellants submit the Court is not bound by the Taxing Officer’s decisions. (

b) Respondents [ 27 ] The Respondents take the position that the 2007 Order and the 2008 Order, both of which granted solicitor-client costs to the Triniers, cannot be amended or altered because the Court is functus with respect to those Orders. The Respondents cite Ensign Estate, supra , for the proposition that an order which has been made and entered cannot be amended or altered, except through an appeal of that order. The Alberta Court of Appeal set out two exceptions to this general rule: (

a) Where there has been a slip in drawing up the judgment; or (

b) Where the judgment as entered does not truly reflect the intention of the Court.

The Respondents submit that neither of these exceptions apply and therefore my 2007 and 2008 Orders should be allowed to stand. [ 28 ] Further, the Respondents submit that the decision made by the Taxing Officer related to the 2008 Order was not entered within a one year period, as stipulated by the Rules of Court . Therefore, leave of this Court is required to enter the Taxing Officer’s directive on costs and that should be granted.

The Respondents further submit that obtaining leave is merely a procedural matter and that this Court should defer to the determinations of the Taxing Officer who has carried out a lengthy and careful scrutiny of all of the accounts involved in this lengthy litigation. V Analysis (

a) Do the Triniers have a contractual entitlement to solicitor-client costs arising from the Continuing Guarantee which they had signed with the ATB? [ 29 ] I have set out above the terms of para. 17 of the Continuing Guarantee which deals with the subject of costs. There is no evidence that the Triniers were assigned any of the rights of the ATB in respect to the collection of costs under the Continuing Guarantee. Instead, pursuant to the Assignment the Triniers were assigned the Default Judgment and the Judgment Debt. The Triniers enjoy no contractual entitlement to solicitor-client costs based on the Continuing Guarantee as against the Shurniaks. (

b) Do the Triniers have a contractual entitlement to solicitor-client costs arising either from the Default Judgment or the Assignment? [ 30 ] Under the Default Judgment the solicitor-client costs of the ATB were fixed at $7,166.96. That costs amount became part of the total sum owing under the Default Judgment which was assigned to the Triniers. While the amount itself was assigned, no right or entitlement to solicitor-client costs was ever explicitly assigned by the ATB to the Triniers. [ 31 ] The Assignment assigns “... all costs or interest now payable or to become due and payable on the sum”.

However, the specific words of the Default Judgment in relation to future costs do not describe such costs as ‘solicitor-client costs’. The statement made by me at para. 18 of Arbitus , supra, applies, because exactly the same words about future costs, i.e. “... costs to be taxed” also appear in the Default Judgment.

These are the same words which were considered by me in para. 18 of Arbitus in respect to the default judgment entered in that case: 18 Because the default position in law is to award party-and-party costs, this Court should be reluctant to “read in” the notion of solicitor-client costs where the judgment merely refers to “ costs to be taxed ”.

In the absence of explicit language confirming the solicitor-client costs, it should be assumed that the Court intended that costs be paid on a party-and-party basis. (Emphasis added.) [ 32 ] As in Arbitus I am not prepared to “read in” a reference to solicitor-client costs to either the Default Judgment or the Assignment. As a result, the Triniers do not enjoy a contractual entitlement to solicitor-client costs under either the Default Judgment or the Assignment.

(

c) Do the Triniers have a judicial entitlement to solicitor-client costs arising from the 2007 Order and the 2008 Order insofar as they deal with costs? [ 33 ] In respect to the solicitor-client costs awarded by the Taxing Officer for my 2007 Order, the Appellants state that they “can live” with the requirement to pay the sum of $3,100.00.

As a result, that question is resolved and that amount shall be payable by the Shurniaks to the Triniers in any event. [ 34 ] However, in respect to the amount awarded in the 2008 Order and having regard to the exchange which has been set out above, it is clear that I premised my 2008 Order awarding solicitor-client costs on the representations made by Mr. Moroz to the effect that both the Default Judgment and the financing documents contained terms entitling his clients to solicitor-client costs.

I have concluded that all of the underlying documents, whether they be the Continuing Guarantee, the Default Judgment or the Assignment do not, in fact, entitle the Triniers to solicitor-client costs for the entire collection process. While I acknowledge that Mr. Moroz’s statement to the Court was not an intentional misrepresentation, the fact remains that the wording of the underlying documents do not support what he was saying to me. Accordingly, no costs other than party-party costs should be payable in respect to that appearance on January 25, 2008. (

d) Do the Triniers have a judicial entitlement to solicitor-client costs arising from the directions made by Lewis, J. in October 2007? [ 35 ] A review of the very brief exchange between Mr. Moroz and Lewis, J. on October 30, 2007 is ambiguous as to whether the Judge was ordering that costs were to be paid in respect to the two October 2007 appearances. [ 36 ] It appears to me that at the October 30 appearance Lewis, J. was simply confirming that the Triniers were entitled to enforce the Default Judgment.

As I have noted above, neither the Default Judgment nor the Assignment could, or did, give rise to an entitlement to solicitor-client costs in favour of the Triniers. [ 37 ] There is no clear statement by Lewis, J. that he was ordering solicitor-client costs in respect to the two October 2007 appearances. As I have stated in Arbitus at para. 18, an entitlement to solicitor-client costs should be the subject of “explicit language”. There is no such clear statement by Lewis, J. and the exchange with counsel was ambiguous at best.

Accordingly, I conclude that Lewis, J. was not ordering solicitor-client costs and his statements provide no judicial entitlement to solicitor-client costs on the part of the Triniers. (

e) If the Triniers do not have any of the contractual or judicial entitlements outlined above, can the Taxing Officer order any solicitor-client costs in favour of the Triniers? [ 38 ] It follows that when the parties appeared before the Taxing Officer on three occasions the Triniers had neither contractual nor judicial entitlements on which they could base a claim to solicitor-client costs for most of the steps taken in the Action after receiving the benefit of the Default Judgment through the Assignment.

Further, the Taxing Officer may have thought that he was following the directions of two Judges of this Court, but that was an error. He erred in awarding solicitor-client costs and his decision is quashed. VI Relief Granted

[ 39 ] The appeal by the Shurniaks from the decision of the Taxing Officer is allowed. The issue of costs is remitted to a Taxing Officer to be determined on a party-party basis, unless the parties are able to resolve a global amount of costs within 30 days of the issuance of this Memorandum of Decision. [ 40 ] The Shurniaks shall have their costs of this appeal on a party-party basis. Those costs shall be calculated by a Taxing Officer unless the parties otherwise resolve the question.

Appeal heard on the 15 th days of January and April, 2010 Dated at the City of Edmonton, Alberta this 10 th day of January, 2011. D.R.G. Thomas J.C.Q.B.A. Appearances: Mr. Greg Lintz for the Shurniaks (Appellants/Defendants/Judgment Debtors) Mr. Jeff Moroz for the Triniers (Respondents/Defendants/Judgment Debt Assignees)