Attila Dogan Construction v. AMEC Americas Limited (AMEC E & C Services Limited and AGRA Monenco Inc.), 2012 ABQB 438

Court of Queen ’ s Bench of Alberta Citation: Attila Dogan Construction v. AMEC Americas Limited (AMEC E & C Services Limited and AGRA Monenco Inc.), 2012 ABQB 438 Date: 20120705 Docket: 0701 09436 Registry: Calgary Between: Attila Dogan Construction and Installation Co. Inc Applicant - and - AMEC Americas Limited, formerly AMEC E & C Services Limited and AGRA Monenco Inc. Respondent _______________________________________________________ Reasons for Decision on Costs of Chief Justice Neil Wittmann _______________________________________________________ Introduction

[1] The Applicant, Attila Dogan Construction and Installation Co. Inc. (“AD”) is a corporation based in Turkey and at allmaterial times was engaged in a Joint Venture with AMEC Americas Limited (“AMEC”) to design and build a magnesium oxide plant inthe Kingdom of Jordan for the Jordan Magnesia Company Limited (“JorMag”).

The litigation that AD and AMEC are presently engagedin, is a dispute over their respective rights and obligations arising from the performance of the Joint Venture pursuant to and arising fromthe Joint Venture Agreement between them. [2] One of the issues this Court has dealt with, as the Case Management Judge, involved a claim of privilege by AMEC over25,000 to 28,000 records asserted by AMEC and disputed by AD. This Court issued a judgment, Attila Dogan Construction v.

AMECAmericas Limited, 2011 ABQB 794 (“the Decision”), with respect to the privilege claim and another issue. [3] In this application, AD asked the Court for party and party costs on a solicitor-client basis or alternatively, enhanced costs,against AMEC. AD says AMEC made “clearly inappropriate claims of privilege concerning records”. AMEC resists this application andcounters that success was divided and that therefore each party should bear its own costs with respect to costs arising from the Decision.

Background Facts [4] AMEC claimed privilege over 3 categories of records that were made in connection with the preparation of the JointVenture’s claim against JorMag that was the subject of an arbitration. The three categories were communications between AMEC andexternal legal counsel, unless copied to AD; communications with experts and documents compiled and forwarded to experts, includingwork product sent to or received from experts, unless copied to AD and internal AMEC communications and work product not sent to in-house or external legal counsel or to experts.

In addition, AMEC claimed privilege over so-called “lessons learned” documents, all ofwhich are described in the Decision. [5] AD cross applied to the Court for an Order to compel AMEC to provide a detailed description of the records over whichAMEC had claimed privilege, and sought production of AMEC’s key learning records and review records. [6] The Court, on the main application, ordered the production of all records including all communications and documentationprovided to or received from experts, consultants and legal counsel retained to act on behalf of the Joint Venture in connection with theclaim against JorMag, as well as the key learning documents and directed that the review records and mediation records be reviewed andproduced in accordance with the reasons in the Decision: paras. 69; 58. [7] On the cross-application, AD sought to compel AMEC to provide answers to undertakings asking for certain particulars inrespect of more than 28,000 documents over which AMEC claimed privilege, including specific information relating to the grounds ofprivilege such as authors, recipients, and dates.

Relying on Dorchak v. Krupka (1997), 1997 ABCA 89 , 196 A.R. 81 (C.A.), thisCourt indicated that the new Alberta Rules of Court (“ARC”) specifically, the new ARC 5.8, did not suggest a departure from thepractice under the old ARC 187.1(2) set out in Dorchak. It held that Dorchak was not distinguishable on the basis of number ofprivileged records in question, nor the complexity of the lawsuit. Dorchak is a decision binding on this Court. AD’s cross application forparticulars was refused in the Decision: paras. 50-57. Position of the Parties 1.

AD [8] AD has now applied to this Court, for party and party costs on a solicitor-client basis, or an enhanced basis, against AMECas it pertains to the privilege application on the grounds that of the some 28,000 documents in issue, as a result of the Decision, therehave now been produced 27,914 records.

AD argues that many are preexisting project and project related records which should neverhave been the subject of any privilege claims on the part of AMEC and that AMEC never should have asserted privilege over thousandsof project related records that were already in existence prior to any contemplated litigation between AMEC and AD.

[9] Further, AD points out that an estimated 18,000 - 19,000 of these records were created prior to the existence of any solicitor-client relationship the Joint Venture had with lawyers with respect to advice for and the preparation of, the claim against JorMag. At allmaterial times, AMEC dealt with lawyers and experts with respect to the claim against JorMag on behalf of the Joint Venture.

AD saysthe only possible claim of privilege for these records is that they were boxed and sent to Hammonds (outside lawyers) for the purpose ofpreparing the claim. [10] In support of its position, AD cites the following authorities: British Columbia Securities Commission v. Branch, (SCC), [1995] 2 S.C.R. 3 at para. 43; Mitsui & Co. (Point Aconi)Ltd. v. Jones Power Co., 2000 NSCA 96 , 2000 N.S.C.A. 96 at para. 36 citing Mutual Life Assurance Co. of Canada v. DeputyAttorney General of Canada (1988), 28 C.P.C. (2d) 101 (Ont.S.C.); General Accident Assurance Co. v. Chrusz (1997), (ON SC), 34 O.R. (3d) 354 (C.J.

Gen.Div.) at paras. 46 and 131, varied on other grounds (1999), (ON CA), 45O.R. (3d) 321 (C.A.); Young v. Young, (AB KB), [1993] A.J. No. 218, 138 A.R. 161 (Q.B.) at 12-13, varied on othergrounds 1994 ABCA 199 , [1994] A.J. No. 445, 155 A.R. 42 (C.A.); Mo v. Ha, 2012 ABQB 29 at paras. 6 and 14; Rule 5.25 ofthe Alberta Rules of Court; Dreco Energy Services Ltd. v. Wenzel, 2007 ABQB 611. 2.

AMEC [11] AMEC submits that success was divided on the basis that AD’s application for particulars of the claimed privilegeddocuments was denied by the Court and that the law relating to costs simply does not support the award asked for by AD. Moreover,AMEC says because success was divided, each party should bear their own costs. [12] AMEC relies upon the following authorities for its position: Mobil Oil Can. Ltd. v. Canadian Superior Oil Ltd. (AB KB), [1980] 1 W.W.R. 453, 21 A.R. 111, 14 C.P.C. 101, 105D.L.R. (3d) 355, 21 A.R. 111; L.(A.) v. C.(C.) 2012 ABQB 165; Dorchak v.

Krupka (1997) 1997 ABCA 89 , 196 A.R. 81(C.A.); Blank v. Canada (Department of Justice), 2006 SCC 39 , [2006] 2 S.C.R. 319; Teck Cominco Metals Ltd. v. ShanghaiBoiler Works Co., 2010 BCCA 51; L.M.B. v. I.J.B., 2005 ABQB 336; Edmonton (City) v. Lovat Tunnel Equipment Inc., [1997] A.J. 1430(Q.B.) (QL) at paras. 4-6; see also Edmonton (City) v. Lovat Tunnel Equipment Inc., 2000 ABQB 206. Analysis [13] Young is cited by AD for the proposition that solicitor-client costs between parties “are generally awarded only where therehas been reprehensible scandalous or outrageous conduct”: paragraph 37 of AD’s brief.

But that quote is incomplete. In Young, atparagraph 251, McLaughlin J. as she then was, said this: The Court of Appeal’s order was based on the following principles, with which I agree. Solicitor-client costs are generally awarded onlywhere there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties. Accordingly, the fact than anapplication has little merit is no basis for awarding solicitor-client costs ... [14] AD also cites Jackson. In that case, Hutchinson J. reviewed the authorities to that point in time and adopted some generalprinciples.

First, that costs are usually the subject of a wide discretion by the Court. Secondly, the general rule is that party and partycosts be awarded and that it is only in “rare and exceptional cases” that they are awarded on a solicitor-client basis. After an extensivereview of the authorities, Hutchinson J. at pages 12-13 gives a number of examples of the rare and exceptional case by category. Three ofthose categories are stated as being applicable to the present case at paragraph 38 of AD’s brief.

They are where there are circumstancesconstituting blame worthiness and the conduct of the litigation by a party, cases in which justice can only be done by a completeindemnification for costs and where there is evidence that the Plaintiff did something to hinder delay or confuse the litigation, wherethere was no serious issue of law or fact which required lengthy and expensive proceedings, where the positively misconducting partywas contemptuous of the aggrieved party and forcing that agreed party to exhaust legal proceedings to obtain that which was obviouslyhis.

[ 15 ] What is instructive from Jackson is the application of the facts in that case to the principles and examples. At page 14, Hutchinson J. described the conduct of J.R., the dominant force behind the control block of shareholders of Trimac and the person solely responsible for making the lengthy trial necessary.

He found J.R.’s conduct was “calculated” to put Jackson in the position where he had to exhaust legal proceedings to get what was obviously his and that J.R. was contemptuous of Jackson’s rights, that J.R.’s evidence given during the trial was unreliable and that “This is as charitable a view as I can place on J.R.’s testimony.

It affected the conduct of the action.” [ 16 ] More recently, in Mo , increased party and party costs were awarded rather than solicitor-client costs on the basis that there were a number of instances non-compliance with Court Orders and delays in providing disclosure and undertakings on the part of Ha . Enhanced party and party costs were awarded to Mo. Exactly how much the costs were “enhanced” is not clear from the decision.

What is clear from the decision is that Kenny J., relying on Jackson , decided that an award of solcitor-client costs would be inappropriate. [ 17 ] It seems to this Court to be clear from the authorities that “positive misconduct” as used in the context, must be a conscious, intentional act, calculated to pervert the due administration of justice in any given case.

Most of the words referring to the blame worthy conduct, such as “reprehensible”, “scandalous”, “outrageous”, “fraudulent”, “deceitful”, denote something far more than the exercise of poor judgment, miscalculation, or a lack of understanding of the law or the likely result of a contest. [ 18 ] In this case, the best that can be said is that AMEC fought a fight it was doomed to lose on the issue of solicitor-client privilege and it ought to have known better. But one counsel’s, or judge’s, no brainer, is another’s arguable case.

Perhaps this is why there is a high threshold for misconduct of the action before solicitor-client costs will be awarded. I therefore decline to do so in this case. [ 19 ] In doing so, I recognize that AD characterizes AMEC’s privilege claims as “improper and frivolous” over the vast majority of the disputed privilege records. It is not the view of this Court, that even if one could characterize AMEC’s privilege claims as “improper and frivolous” that it would rise to the threshold of “reprehensible, scandalous or outrageous conduct” as that term is used in context in Young . This is what AD submits.

But, applying Young , there was simply “little merit” to AMEC’s position, which provides “no basis for awarding solicitor-client costs.” [ 20 ] I am mindful of the fact that, in addition to asking for solicitor-client costs, AD submits in the alternative that an award of enhanced costs ought to be made. I also decline to make this award. As stated earlier, I am the Case Management Judge.

Should I later detect a pattern by either party, which could cumulatively satisfy me that a number of frivolous or improper positions are being taken to thwart or delay the due progress of this case, I may be persuaded to revisit the issue as to whether cumulative conduct could rise to the solicitor-client costs threshold or alternatively, enhanced costs. [ 21 ] In exercising my discretion, it is to be remembered that the uncomfortable position that AD and AMEC now find themselves in, stems from their being in a Joint Venture Agreement and the Joint Venture.

In a publication of the Alberta Law Reform Institute, Final Report 99, Joint Ventures 2012 , it is stated on page 11 that the advice of an Advisory Group is that there are significant problems with the law relating to joint ventures, which arise because it is unclear whether or not joint ventures are partnerships under the general law and changes are recommend. Those problems do not include express reference to issues of joint interest privilege.

However, the lack of an express reference to that issue does not mean the area of joint ventures does not attract difficult privilege issues when joint venture participants later litigate issues between themselves. [ 22 ] Therefore, without more, AD is entitled to the costs of the Decision on solicitor-client privilege on a party and party basis, not enhanced. Is there more? [ 23 ] AMEC submits success was divided. While I would not suggest that this claim is improper or frivolous, it is without merit.

The Dorchak ruling I made was arguably unnecessary in the context because I was able to decide the issues of privilege without directing that AMEC provide a detailed description as requested by AD of each document over which privilege was claimed. One only has to ask what purpose would be served by making that order, even if I decided Dorchak was not binding and that it could be made by

this Court. The disputed documents were ordered to be produced based on the information available without the detailed description asked for. Thus, that ruling was not technically necessary to my decision. It was a ruling asked for and delivered as part of the process of deciding the privilege issue put forward to the Court by AMEC. Although AMEC was successful on this issue, it is not a reason to deprive AD of its party and party costs, in light of its successful result in the Decision.

Conclusion [ 24 ] The application of AD for solicitor-client costs of the privilege application or enhanced costs of the privilege application is denied. The application of AMEC that no costs be awarded to either party is also denied. Therefore, AD will have its party and party costs to be fixed by an assessment officer, pursuant to Column 5 of

Schedule C of the Alberta Rules of Court. Costs of this application will be borne by each party because success on this application was divided. Heard April 13, 2012. Dated at the City of Calgary, Alberta this 5 th day of July, 2012. Neil Wittmann C.J.C.Q.B.A. Appearances: John N. Craig, George M. Vlavianos and Desislava Docheva Bennett Jones LLP for Attila Dogan Construction and Installation Co. Inc. David Tupper and Chris Petrucci Blake, Cassels & Graydon LLP for AMEC Americas Limited, Formerly AMEC E&C Services Limited and Agra Monenco Inc.