Buchanan v. Lamoureux, 2011 ABQB 256

Court of Queen ’ s Bench of Alberta Citation: Buchanan v. Lamoureux, 2011 ABQB 256 Date: 20110412 Docket: 1001 13254 Registry: Calgary Between: Gregg Buchanan Appellant - and - Ian H. Lamoureux, Ian R. MacDonald, Field LLP Respondents _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice C.S. Phillips _______________________________________________________ Appeal from the Decision by The Honourable Judge N.P. Leveque Heard on the 27 th of April, 2010 Dated the 23 rd day of July, 2010 Filed on the 23 rd day of July, 2010

Introduction [ 1 ] I gave an oral judgment in this case on March 4, 2011, upholding the Trial Judge’s dismissal of Mr. Buchanan’s (the “Appellant”) claim of professional negligence against Mr. Lamoureux, Q.C. and Mr. MacDonald, Q.C. and their law firm, Field LLP (the “Respondents”) and dismissing the Appellant’s appeal. At that time, the Respondents indicated that they were seeking solicitor client costs. I will now deal with the matter of costs. [ 2 ] Briefly, this matter involved a claim of professional negligence against two lawyers.

The Appellant retained the services of the Respondents to pursue a claim for $60,000 against Walton Development (Asia) Inc. (“Walton”). A Statement of Claim issued against Walton and the action proceeded through Statement of Defence and Counterclaim, Defence to Counterclaim and other procedural steps. The Appellant later tried to instruct the Respondents to amend the Statement of Claim to include a claim of fraudulent misrepresentation.

The Respondents’ reluctance to amend the Statement of Claim to include fraudulent misrepresentation without the Appellant’s unequivocal written instructions led to the eventual breakdown of the solicitor client relationship. [ 3 ] The Appellant subsequently retained the law firm, Parlee McLaws LLP, who acting on written instructions with respect to costs’ liability, amended the Statement of Claim to include fraudulent misrepresentation.

The litigation was settled in the Appellant’s favour. [ 4 ] The Appellant claimed damages for legal expenses and delay in obtaining settlement of the litigation against the Respondents. The Trial Judge on retrial dismissed the claim and found that the damages’ claim was too remote. I dismissed the appeal. Notably, no receipts supporting the Appellant’s $25,000 claim for damages in Provincial Court were filed at the first trial or retrial.

For example, no documentation with respect to travel expenses, legal fees or any loss of interest on the settlement had he obtained an earlier settlement, was tendered in evidence at either the first trial or the retrial.

Further, there was no evidence as to what extent Parlee McLaws LLP relied on the previous work performed by the Respondents as the Appellant may have obtained the benefit of a reduced fee. [ 5 ] The Respondents are seeking solicitor client costs, in the amount of $25,000, on the basis of the serious and unsubstantiated allegations made against them in the proceedings taken against them by the Appellant. In support of this, the Respondents have also filed their Statement of Accounts, marked Exhibits 2 and 3.

In addition, the Respondents point out that there was a formal offer of judgment to settle this matter, which has been filed as Exhibit 1. [ 6 ] There are two significant factors in this case, first the serious allegations, which since they are unproven generally attract increased costs, and the second is the formal offer to discontinue the matter. Procedural History [ 7 ] The procedural history of this case includes a formal complaint by the Appellant to the Law Society of Alberta against each of the Respondents. The complaints were dismissed by the complaints officer of the Law Society of Alberta.

The Appellant then appealed those decisions to a panel of Benchers. The appeals were also dismissed. [ 8 ] The Appellant filed a claim in Provincial Court, which issued against the Respondents on November 2, 2007. The Respondents successfully applied for and obtained a non-suit at the first trial. The Appellant appealed to the Court of Queen’s Bench. Justice Sullivan heard and granted the appeal and ordered a new trial. The matter was heard before Judge Leveque on April 27, 2010. Judge Leveque ( the “Trial Judge”) reserved and delivered written reasons dated July 23, 2010. The Appellant’s action was dismissed.

The Appellant then appealed to the Court of Queen’s Bench and I upheld Judge Leveque’s decision and dismissed the appeal and reserved on the matter of costs.

Parties’ Positions [9] The Respondents argued that the Appellant’s egregious conduct throughout this litigation supports an award of solicitorclient costs.

The Respondents pointed out that if the statements made by the Appellant had been made outside of a privileged context,they would be actionable, but statements made in pleadings and other documents filed with the court and in open court are not actionable.The Respondents submitted that their only recourse against the Appellant is through solicitor/clients costs. [10] In particular, the Respondents submitted that the civil claim which started the process, contained allegations ofmisrepresentations.

In addition, the document written by the Appellant which he labeled “Reasons for Appeal”, filed on August 19, 2010,alleged that the Respondents deliberately withheld information from the Appellant that was essential to the case. The Respondents citedspecific words that were used by the Appellant throughout the proceedings to describe the Respondents’ actions which included, interalia: “deliberately concealed”; “unconscionable”; and “deceiving”. Counsel for the Respondents argued that the Appellant is legallyeducated and knowledgeable about the seriousness of making these types of allegations.

Therefore, he should have been aware of thecosts’ consequences in persisting in these serious and unproven allegations.

Further, the complaints made against the Respondents to theLaw Society of Alberta were dismissed but he persisted in pursuing the same allegations in a civil claim. [11] The Respondents indicated that they are seeking costs since the appeal before Justice Sullivan, starting with the account datedFebruary 26, 2010 and submitted with all of the following accounts marked collectively as Exhibit 2. [12] The Appellant argued that the allegations of negligence were not addressed by the Trial Judge or on appeal, which I found theTrial Judge need not have gotten into, given that the Appellant had failed to prove his damages at the retrial.

The Law [13] Rule 53(1)(

c) of the Provincial Court Act, RSA 2000, c-P-31 (the “Act”) states: 53

(1) The Court of Queen’s Bench shall (

a) hear and determine an appeal, (

b) give its judgment, and (

c) make an order awarding costs, if any, to the parties, including costs of all proceedings previous to the appeal.

(2) The decision of the Court of Queen’s Bench is final and cannot be further appealed. [14] Costs are always in the discretion of the Court. That position is consistently reiterated in the many cases dealing with costs,and in particular in cases where one of the parties seeks solicitor client costs. [15] The Provincial Court’s authority to award costs is set out in the Act at s. 44 and s. 9.8(1).

It is also important to note that s.8 provides that where the Act or the regulations thereunder do not provide for a specific practice or procedure of the Provincial Court thatis necessary to ensure an expeditious and inexpensive resolution of a matter before the Provincial Court, the Provincial Court may applythe Alberta Rules of Court and if necessary, modify the Alberta Rules of Court. The Provincial Court may look to the Alberta Rules ofCourt for guidance with respect to the issue of costs, but doing so does not make the application of the Alberta Rules of Court mandatory,but only permissive: Cormier v.

Len's Sandblasting and Painting Ltd. (1984), (AB KB), 64 A.R. 65 (Q.B.). [16] The costs in Provincial Court are discretionary to a degree, however there are suggested “Guidelines for Costs in theProvincial Court” which recommend 10% (with a lawyer) of the amount of the judgment awarded by the judge, or, where a claim isdismissed, of the amount claimed plus expenses for filing fees, service of documents, searches, witness fees etc. where authorized by

Regulation. This amount is within the discretion of the Provincial Court and is generally used as a starting point: Yorgason v. RanchersSupply Inc. 2008 ABPC 292 at para. 5. The costs of the appeal to the Court of Queen’s Bench are guided by

Schedule C of the newAlberta Rules of Court, A.R. 124/2010 which came into force on November 10, 2010. [17] Costs on a solicitor client scale should not be awarded unless special grounds exist to justify a departure from the usual scale.The threshold of wrong-doing is high as established in Young v. Young, (SCC), [1993] 4 S.C.R. 3, where the SupremeCourt stated at 134: “solicitor-client costs are generally awarded only where there has been reprehensible, scandalous or outrageousconduct on the part of one of the parties.” [18] In Walsh v.

Mobil Oil of Canada, 2008 ABCA 268, 440 A.R. 199, the Court of Appeal recognized the trial judge’s discretionin awarding costs. However, the majority of the Court overturned the reviewing judge’s award of solicitor client costs noting that theconduct must have occurred during the course of the litigation. [19] In College of Physicians and Surgeons of the Province of Alberta v.

J.H., 2009 ABQB 48, 468 A.R. 101, Justice Graesserreviewed some of the considerations, with respect to unproven allegations of impropriety, laid out by Fradsham P.C.J in Davis v. 840015Alberta Ltd., 2003 ABPC 68 , [2003] ABPC 68, 335 A.R. 172 at para. 27: Whether to award increased costs in such situations is a matter of discretion to be exercised judicially by the trial judge. The judge mustconsider the circumstances as a whole, including, but not limited to: 1.

The nature of the allegation made, and whether the particular circumstances of the party against whom the allegation was madewere such as to make the implication of the allegation more serious. 2. What, if any, information supportive of the allegation was known to the party making the allegation. 3. The strength and reliability of that information as it was known, or should have been known, by the party making the allegation. 4. The steps taken by the party making the allegation to verify the information upon which the allegation was based. 5.

When the information was made known to the party making the allegation, whether additional information subsequently becameknown, and whether the allegation was modified, or withdrawn, to reflect the new information. 6. The timeliness of any such modification or withdrawal. 7. Whether the party making the allegation knew, or should have reasonably known, the allegation's implications for the partyagainst whom it was made. [20] Even if solicitor client costs are not appropriate, improper allegations may still lead to an enhanced costs award.

In Conway v.Zinkhofer, 2007 ABQB 2, aff'd 2008 ABCA 392, Kenny J. concluded that solicitor client costs were not appropriate but awardedincreased costs for failed allegations of fraud. Justice Kenny addressed allegations which have the prospect of damaging the reputation ofan individual and in particular a professional at para. 26: In the best light, the allegations were made carelessly or negligently. The number of allegations, however, throughout the pleadings andthe affidavits lead me to believe that it was not accidental or an off-hand comment. It was a theme throughout.

While such allegations,and to some extent evidence, particularly when unsubstantiated, damage the reputation or have the prospect of damaging the reputationof any individual no matter who they are, it is particularly offensive when it deals with the professional reputation of lawyers and anengineer whose conduct is governed by their professional associations and who rely on the public trust in the work they do. [21] Therefore, if it is not an appropriate case for solicitor client costs, there is considerable scope for an increased costs award. Application to the Facts

[ 22 ] In the amended Notice of Appeal filed with the Provincial Court on August 19, 2010, in the Reasons for Appeal section, the Appellant alleged that the Respondents deliberately withheld information from him that was essential to the case.

In the “Revised Reasons for Appeal”, submitted by the Appellant, dated January 24, 2011, and filed January 26, 2011, (which in essence repeat what is said in the Revised Reasons for Appeal dated January 5, 2011), the Appellant makes the following statements at page 1: The Judge’s Reasons for Judgment also failed to consider that with no change in evidence during the period in question, the Defendants could not have both honestly and professionally advised the Plaintiff on the expansion of the Statement of Claim to include fraudulent misrepresentation (and thereby have legitimately earned their fees no matter how incorrect their advice proved to be) while at the same time, dishonestly concealing and misrepresenting the facts that they were vehemently opposed to and would never make those same changes. [ 23 ] In the third paragraph of this same document, the Appellant claims that the Respondents “violated their fiduciary duties to the Plaintiff by concealing . . .”.

He also claimed that Mr. MacDonald made “offensive and completely false statements” when he testified at the second trial (at page 2). At page 14, the Appellant refers to Mr.

MacDonald’s “inconsistent statements at trial which should have cast doubt on the honesty of his testimony.” At page 15, he states that the “Judge should also have considered these statements to indicate, at the very least, a suspicious pattern of evasion”. [ 24 ] At page 11, the Appellant alleged that the Respondents acted contrary to the Code of Professional Conduct of the Law Society of Alberta, in spite of the fact that the Respondents have already successfully defended themselves in front of the Law Society of Alberta, and had the Appellant’s complaints against them dismissed. [ 25 ] Although the Trial Judge did not specifically make any findings with respect to the allegations of negligence against the Respondents as he found the Appellant’s damages had not been proven, the Law Society of Alberta dismissed the same complaints against the Respondents.

I find that I am entitled to take notice of this finding. Allegations of misrepresentation, dishonesty, etc are serious allegations to make with potentially damaging consequences. These allegations have the prospect of damaging the reputation and professional careers of the Respondents. Further, the Appellant did not, at any time, withdraw any of the allegations and continued to press his position throughout the lengthy proceedings.

The Respondents have successfully defended themselves before the Law Society of Alberta, the Provincial Court and the Court of Queen’s Bench. [ 26 ] The Appellant is an educated man and possesses a common law degree but I had no evidence before me that he ever practiced law, therefore, he should not be held to as high a standard as a lawyer. On the other hand, the evidence established that he was well aware of the costs’ consequences of making unsubstantiated fraud allegations in his own claim against Walton.

In my view, the Appellant’s actions fall short of the test for solicitor client costs of being “reprehensible, scandalous or outrageous” and therefore, I am not satisfied that this is an appropriate case for solicitor client costs. However, I am satisfied that the allegations against the Respondents are serious and offensive and this is an appropriate case in which increased costs should be awarded.

Offer to Settle [ 27 ] The Respondents made an offer of judgment on December 31, 2008 to settle this matter on the following basis: Take Notice that the Defendants hereby offer to settle this matter upon entry of Judgment, dismissing the Plaintiff’s claim, without costs payable by or to any party. And further take notice that this Offer expires and is not capable of acceptance after 9:30 am., local time at Calgary, Alberta on January 6, 2009.

The Appellant never took up the offer and accepted it. [ 28 ] Although this offer is not subject to the cost consequences set out by the Alberta Rules of Court, the practice of the Provincial Court has been to increase the award of costs to a successful litigant if there was a “with prejudice” offer tendered before trial: Scorgie v. CCI Industries Ltd. , 2008 ABPC 65 . In my view this offer demonstrates the bona fide intention of the Respondents to settle early on this

claim with the Appellant and, therefore, also supports my finding that an enhanced costs award against the Appellant is warranted in this case. Conclusion [ 29 ] I find that, due to the seriousness of the unsubstantiated allegations made against the Respondents and their bona fide offer to settle this case early on in the proceedings, a finding of increased costs against the Appellant is warranted. [ 30 ] The “Guidelines for Provincial Court” suggest that the costs award should be $2,500, plus disbursements (ie. filing fees, etc.). With respect to the appeal to the Court of Queen’s Bench,

Schedule C in the new Rules, now includes a fee for an appeal from Provincial Court of $500 and includes an amount of $1,000 for the first half day for Applications requiring written briefs. In my view, the fees for the retrial are low, and I would increase them to reflect the fact that the Respondents were represented by counsel; there were witnesses and trial preparation was involved. In the normal course, I would therefore, set the fees for the retrial at $5,000 plus disbursements and the fees for the appeal at $1,500.

However, in these circumstances I am satisfied that this is an appropriate case in which increased costs should be awarded, given the serious and unproven allegations and the offer to settle made by the Respondents. [ 31 ] I am satisfied that it is appropriate to increase the award of costs in favor of the Respondents to the total amount of $14,500, inclusive of disbursements and GST. [ 32 ] I hereby order that this sum of $14,500 shall be payable by the Appellant to the Respondents within 30 days of today’s date; failing which, interest shall be due and payable thereon at the applicable rate of interest as set out in the Judgment Interest Act, R.S.A. 2000, c J-1, until paid. [ 33 ] Any Order submitted for my signature, which is prepared by Respondents’ counsel with respect to the dismissal of the Appellant’s appeal and the awarding of costs herein in favor of the Respondents, shall invoke Rule 9.4(2 )(c), such that the consent of the Appellant to the Order shall not be required.

Heard on the 4 th day of March, 2011. Dated at the City of Calgary, Alberta this 12 th , day of April 2011. C.S. Phillips J.C.Q.B.A.

Appearances: Gregg Buchanan for the Appellant Douglas Stokes, Q.C. for the Respondents