Hill v Hill, 2012 ABQB 694

Court of Queen ’ s Bench of Alberta Citation: Hill v Hill, 2012 ABQB 694 Date: 20121107 Docket: 0501 00476 Registry: Calgary Between: Daniel Walter Hill Plaintiff - and - Paul James Hill, the Trustees of the Frederick W. Hill Family Trust, Richard P. Rendek, Rand Flynn, Famhill Investments Limited and Harvard Developments Inc. Defendants _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice E.C.

Wilson _______________________________________________________ [ 1 ] The parties have not been able to reach agreement on costs after my decision where I dismissed the entirety of the Plaintiff’s action. As directed, they seek the court’s decision based solely on written submissions. [ 2 ] The Defendants - individual and corporate - seek party and party costs calculated on the basis of a lump sum award for certain steps, otherwise four times Column 5 of

Schedule C in addition to their reasonable disbursements.

[ 3 ] The Plaintiff concedes a lower lump sum award for only one item, otherwise costs based on Column 1; alternatively double Column 2 and the deletion or reduction of some disbursements. APPROPRIATE COLUMN [ 4 ] While it is true that damages were not at issue in the trial before me - because of the bifurcation order - I am satisfied that had my decision gone in favour of the Plaintiff, even in part, the result would have led to remedies carrying significant multi-million dollar monetary values. I accept Defendants’ submission in that regard. [ 5 ] This was no Column 1 ($50,000 or less) lawsuit.

Millions of dollars have been expended in fees, costs and disbursements as this case has been fought. Numerous counsel have been retained (and some dismissed) over the years. Up to eight counsel took

part in the trial before me. The plaintiff Daniel Hill and the defendant Paul Hill are sophisticated, experienced businessmen. Spending millions of dollars in a dispute over some $50,000 or even $150,000 (column 2) does not strike me as something either of these men would choose to do, let alone both of them. [ 6 ] The transcribed remarks of plaintiff’s counsel and the affidavit of the plaintiff all suggest that millions of dollars were in issue. The cross-examination evidence of Mr.

Downie heard March 9, 2012 elicited present asset values of approximately $70 million dollars. [ 7 ] The weight of the direct and circumstantial evidence leads me to find that this lawsuit has raged for years over claims in the multi-millions of dollars and who was entitled to that money. I find that Column 5 applies.

APPROPRIATE MULTIPLIER [ 8 ] The defendants assert that the base Column 5 amount is an insufficient contribution toward its costs to defend this action - a defence which turned out to be wholly successful. [ 9 ] The defendants rely on the following comments of the Court Of Appeal: There are different ways to adjust

Schedule C when its product seems inadequate: higher column, multiples of a column, a multiplier for inflation or otherwise, extra lump sums, some fraction of solicitor-client costs, and so forth. Several modes of adjustment may be reasonable; indeed several different modes may amount to much the same thing. The ultimate question is whether the final total is reasonable or not. ( Caterpillar Tractor Co v Edmiller Sales and Rentals 1998 ABCA 118 (para4)). [ 10 ] Defendants’ legal fees total $10.6 million.

The Plaintiff makes no complaint that those fees are excessive. [ 11 ] I find that it is not unreasonable for a wholly successful party to expect to receive a costs award that meaningfully compensates to defraying the financial burden of such significant fees. Surely it could not be argued that it was not money well spent if one measures this against the result achieved. [ 12 ] Reasonable apportioning of the litigation expenses incurred by the successful parties require consideration of a number of factors listed in Rule 10.33 when the matter of appropriate multiplier is to be determined.

COMPLEXITY OF THE ACTION [ 13 ] The litigation spanned 7 ½ years. Here is a flavour of this lawsuit. The plaintiff filed 3 amended Statements of Claim - the last of which was 20 pages long. Lengthy and complex case management occurred - 38 motions and case management meetings, 5 appeals or motions filed in the Court of Appeal; only 9 of which originated with the defendants.

Plaintiff’s allegations implicated approximately 35 years of individual defendant and corporate activity occurring in Canada and the United States resulting in document production exceeding 15,000 pages - 98% of which was produced by the defendants. Almost 300 undertakings were posed to the defendants resulting in over 200 pages of responses. Discoveries occupied several months (if the Court’s math is correct). The allegations of misconduct occurred over many decades and involved human and corporate defendants. The daily operations of the Famhill business and the Trust over decades were scrutinized.

Notable, in all this was the effort and cost associated with trying to locate some 30 plus years of business records and missing or scattered witnesses. Complicated issues of trust law, corporate law, and Saskatchewan corporate practice were targeted at the trial. [ 14 ] That is only an overview of some of the complicating matters which were implicated by this lawsuit. [ 15 ] The plaintiff’s pleadings included the following serious and complex causes of action - breach of trust, breach of fiduciary duty, knowing assistance, breach of statutory duty, oppression, unjust enrichment, etc.

Costly, time consuming and ultimately wasteful attention was spent on matters such as the allegation of document tampering referenced in Dan Hill’s Affidavit number 3; the alleged contempt of the defendants and their counsel which not only wasted four months but required defendants to retain other counsel; and the apparently multiple, contradictory motions whether the estate of Fred Hill would be pursued in this action. [ 16 ] The related litigation should not be ignored in this overview. The plaintiff commenced and then discontinued litigation in England.

He also commenced and then discontinued litigation in Alberta regarding his mistaken belief as to the existence of a Family Trust in 1973 and 1974. The case manager described the plaintiff as “reckless” at one point. My descriptions in my reasons for judgment were a bit more harsh. His belief in the creation of any 1973 or 1974 trust was illusory.

His claim of a belief in the settling of the trust upon himself and three siblings that could only be based upon his receipt of deliberately false and misleading information from his parents was dismissed by me as bizarre, absurd and unworthy of belief. [ 17 ] I am satisfied that this plaintiff will spare no effort nor expense when motivated to launch claims or allege misconduct.

The defence was forced to respond in kind. [ 18 ] As to the trial heard by me on the issue of liability, the Corporate Defendant’s Brief at para’s 20 and 21 is adopted by me as an accurate statement of what accured: 20 At trial the Plaintiff dropped almost all the allegations of oppression and claims of breach of corporate duty against the Corporate Defendants and Paul Hill. He also withdrew all his claims in relation to a number of the Transactions.

In short, he essentially restricted his case to the events surrounding the 1976 aborted transaction and claims of breach of trust and knowing assistance resulting therefrom. 21 The trial lasted 23 days. Twelve witnesses were called. Approximately 6,500 pages of documents were entered as exhibits at trial.

Thousands of documents were produced and many days of discovery spent solely focussed on alleged corporate oppression and breach of corporate duty relating to the impugned Transactions. (Footnote omitted) [ 19 ] All of the foregoing (ignoring, of course, the two other actions referred to paragraph 16) justify an enhanced award. I am however, ignoring the various claims and counter claims regarding the costs associated with the production of documents including the allegations of inconsistent and/or invasive claims and/or fishing expeditions and/or piece-meal or tardy production, be it accidental or deliberate.

At the end of the day I find that all these specific complaints and challenges hurled back and forth essentially cancel each other out and do not figure into my assessment of the complexity of the litigation when considering any enhanced award. [ 20 ] Specifically, however, I reject the submission of the plaintiff that any portion of my remarks regarding the issue of complexity and the need for a vigorous defence must include some costs reduction due to the “excessive steps taken by the Defendant” or that any tardy delivering in production by the Defendants reflected some sort of strategy to prevent disclosure to the Plaintiff.

I find there to be no such “excessive steps” nor any such strategy.

ALLEGATION OF FRAUD AND IMPROPRIETY AGAINST THE DEFENDANTS [ 21 ] The Court is very concerned that the plaintiff made extremely serious allegations of fraud and impropriety against the defendants - particularly Paul Hill - in pleadings, affidavits and in counsels’ submissions. All were found to be unproven. Sadly, these allegations of wrong doing involved family members. [ 22 ] Allegations of fraud, dishonesty and impropriety went to all defendants’ integrity and reputations. None of these serious allegations of fraud, dishonesty or impropriety were proven.

No discontinuance or modification of the scandalous conduct allegation was made. Paul Hill (and also Fred Hill - up until he died) was a highly successful businessman. False allegations of financial misconduct would reasonably cause both personal and corporate anguish. [ 23 ] If any of the allegations of impropriety had “stuck”, the effect upon Paul and the various companies that he ran could be incalculable.

Tab “B” of Corporate Defendants Costs Brief provides a table of these spurious attacks found in the Statement of Claim and affidavits sworn by the Plaintiff. [ 24 ] True it is that this trial only lasted 23 days with 12 witnesses called and approximately 6500 pages of documents being filed. I am satisfied that the trial would have lasted many more weeks but for the plaintiff’s abandonment of a number of his claims either at the outset of the trial or, 7 days later, at the close of his case. [ 25 ] Both the case manager and the Court of Appeal referred to this case being complex.

Nation J, as case manager, said this back in 2010: “There is no question in my mind, from the years and history of case management, that all parties to this lawsuit are sophisticated, and they have substantial time, money, energy and appetite to engage in litigation, with full access to legal advice. Their conduct and any cost consequences have to be assessed with that in mind”. [ 26 ] As was said by Cot​ J.A. at paragraph 12 of the Caterpillar case , cited above: “The amounts were enormous, the charges were grave and the business implications considerable.

If ever there was a suit which did not call for penny-pinching half measures by the defendants, this was it.” [ 27 ] In the result, I find an appropriate multiplier is four time the

Schedule C, Column 5 amount with the exception I note below. [ 28 ] The exception relates to counsels’ trial fees after the plaintiff had essentially closed his case on February 29, 2012 and discontinued a number of claims, thereby narrowing the case even further than was announced on the first day of trial - February 21, 2012. The case for the defendants then followed, which amounted to 29 additional half days. [ 29 ] I agree with the plaintiff that regard must be had to the fact that even a late narrowing of the issues, thereby reducing the length of a trial should be encouraged.

Awarding enhanced costs for trial time thereafter would serve to discourage counsel from continuously reassessing their case during a trial. Counsel fairly observes that awarding enhanced costs in such a circumstance would mean there is no incentive for litigants to have regard to the principles enunciated in Rule 1.2. [ 30 ] For these reasons I am satisfied that it is appropriate to set costs for the 29 additional half days needed for the defence case for lead and second counsel at Column 5 without any multiplier.

[ 31 ] The Plaintiff submitted that trial length was negatively impacted, for instance, by the defendant’s refusal to admit certain obvious facts including signatures (see paragraph 26 of Plaintiff’s brief). Since it took the plaintiff but a few seconds to identify the signatures, I fail to see how this refusal to admit can be elevated past the point of mere annoyance. LUMP SUM TARIFF ITEMS [ 32 ] I agree that Rule 10.31 (1)(b)(ii) permits the Court to award lump sums instead of or in addition to any assessed costs. In lieu of a quadruple Column 5, defendants seek lump sums for certain items.

a) Item 1(1) Commissioned Documents, Affidavits, Pleadings and Related Documents and Amendments. [ 33 ] Quadruple Column 5 works out to $14,000. The individual defendants seek a lump sum of $25,000. I am not persuaded by the defendant’s argument. Plus, to grant this increase would amount to a “double counting” inasmuch as I referenced this activity within my earlier remarks on complexity. This lump sum item is denied.

b) Item 3(1): Disclosure of Records under

Part 5, including Affidavit of Records. [ 34 ] The individual Defendants seek a lump some of $25,000, the corporate Defendants seek $10,000 for disclosure of records in this action rather than the quadruple Column 5 amount which would be $6,000 for each set of Defendants. The quantum of pages disclosed was approximately 15,000. The effort was time consuming, extremely burdensome and involved inquiries in Canada and the United States and of third parties. Given plaintiff’s narrowing of the issues at trial, the majority of these documents became unnecessary.

Complaints that the defendants responses were dilatory or inadequate are no answer. The plaintiff’s lawsuit implicated defendants activities over some 35 years. Not surprisingly, the paper generated would be expected to be massive - and it was. The inherent extra time and resources needed to ferret out all the material was exceptional in my view. Thus lump sum item is granted.

c) Item 5(4): Answers to Undertakings arising out of Questioning. [ 35 ] The defendants offer no argument for this lump sum item. Reference is however made to a spreadsheet prepared by Mr. Downie in 2008 and apparently revised over time. Ultimately it was entered as a trial exhibit. Defendants advise that they offered to do this and plaintiffs accepted. I find that this document was particularly useful for the defendants to help better explain and prove its case at trial. Neither the trial benefit for counsel nor its utility to the Court satisfies me that this claim is warranted. This lump sum item is denied.

d) Item 8(1) Case Management Motions Relating to Fred Hill ’s Estate . [ 36 ] Each set of defendants seek lump sum awards of $25,000 for each of 3 motions relating to this topic. The motions were heard on June 15, 2009, December 21, 2009 and April 14, 2010. The individual defendants were actually involved in two such motions on June 15, 2009 thus seeking $50,000 in lump sums for that date. But also heard on June 15, 2009 was an unrelated motion which at quadruple Column 5 amounts to $12,000 plus second counsel fee of $6,000.

The plaintiff offers a bit of a concession here but that is presumably predicated on his submission that this is but a double Column 2 case. However, I factored all those motions into my comments regarding the complexity of the case, so they have not been overlooked when I set costs at quadruple Column 5. These lump sums items are denied.

e) Trial Preparation . [ 37 ] Each set of defendants seek a lump sum award of $50,000. The plaintiff properly concedes in principle with this request. He says, however, that it is excessive and that less time would have been spent in trial preparation had timely production occurred and if the

requested admissions had been made in a timely manner. I disagree. The matter of unfulfilled admissions is practically picayune. Lack of timely production had no bearing on trial preparation. The plaintiff only signalled his narrowing of the issues at the opening and later at the closing of his case. I am satisfied that the broad and complex nature of the case the defendants anticipated they were meeting at trial properly warrants an increase of what would otherwise be a $40,000 tariff item.

This lump sum item of $50,000 for each set of defendants is granted DISBURSEMENTS - CORPORATE DEFENDANTS [ 38 ] The Plaintiff takes issue with one disbursement of the corporate Defendants - the expert witness and report expense for the Hay Group. The plaintiff makes two complaints about this $103,078.45 disbursement: 1) that the source material used by the experts came only from the defendants and; 2) that there was insufficient justification for this disbursement in the Defendants Costs Brief.

In its reply the Defendants respond to these two complaints and, in doing so, apparently satisfy the Plaintiff because he says nothing further in his sur-reply. Regardless, I have examined the report and the time dockets. I am satisfied that this is an entirely reasonable disbursement. I allow it along with all other disbursements of the Corporate defendants as being reasonable. DISBURSEMENTS - INDIVIDUAL DEFENDANTS [ 39 ] The first disbursement in dispute is the travel cost of out of town counsel.

Both sides rely on the recent decision of Wainwright (Town) v 876947 Ontario Ltd. , 2010 ABQB 23 at para’s 28 and 29. Defendants claim there were two “special reasons” to retain Regina counsel which should translate into the Plaintiff paying for same; 1) their involvement in the earlier, related action commenced in England which involved many of the same issues and defendants as were sued here; and 2) the case was highly connected to Saskatchewan with the suggestion being that Calgary retained counsel would have had to travel to Saskatchewan to interview witnesses, receive instruction, etc.

I find that neither are “special reasons” to depart from the usual rule against awarding such a disbursement. The Plaintiff’s submissions at paragraph 46 and 47 fairly respond to this claim and I adopt his argument. This disbursement is denied. [ 40 ] Regarding counsel trips to interview witnesses and potential witnesses I am granting only a portion of those claims. First, I will only consider costs incurred from September 1,2011 to trial as all of these witnesses were either called or going to be called but for developments during the trial which warranted them being called off.

I recognize there is arbitrariness in selecting September 1, 2011 but due to the absence of detail surrounding all earlier trips and their necessity eg to satisfy me that it was proper for counsel to travel as opposed to for example, telephoning I will not allow earlier disbursements. Secondly, I am not satisfied that all the meetings with Marilyn Horsman were warranted given the rather marginal role she played in the trial. I am therefore only granting the costs that have been detailed in the Brief for the January 10 to 13, 2012 meetings in Palm Springs - nothing more as it relates to Ms. Horsman.

Lastly I am not satisfied that it was a reasonable cost for two lawyers to travel to Scottsdale, Arizona to interview Mr. Krumweide November 1 to 4, 2011. Those total costs of travel will be accordingly halved. [ 41 ] The individual defendants seek recovery of the parties’ and their witness’ trial related expenses as detailed at Appendix K of their brief. I am satisfied it is reasonable to do so as versus what is permitted in

Schedule B. I find that the time spent in Calgary awaiting to testify was appropriate and that all the costs incurred were reasonable charges. I also find that it is reasonable for Mr. Flynn and Mr. Rendek’s expenses to be fully covered for the entire trial. The extract from paragraph 17 of the Caterpillar decision referred to by counsel supports this position.

[ 42 ] For greater certainty, I am also satisfied that the $4928.30 disbursement relating to all of the costs associated with the non- destructive testing of some original documents is appropriate. [ 43 ] With regard to the tariff item involving the appeal heard in October 2010, I am satisfied that the defendants did achieve substantial success and, accordingly, will be granted full costs of that appeal. [ 44 ] All other disbursements of the individual defendants are allowed as reasonable but for the item “Third Party Printing” which I believe properly falls under the heading of “Other Charges”. [ 45 ] Lastly I note the plaintiff says nothing regarding the various “charges” eg xeroxing and the like.

I presume this signals no disagreement with those charges. They are allowed. If I have misinterpreted Plaintiff’s silence, the parties may speak further to this one area. [ 46 ] Finally, I leave it to the parties to deal with the appropriate amount for the G.S.T. levy. Dated at the City of Calgary, Alberta this 7th day of November, 2012. E.C. Wilson J.C.Q.B.A. Appearances: Peter T. Linder, Q.C., Janet L. McCready and Matthew L.Vernon for the Plaintiff Maurice Laprairie, Q.C.,

Jodi R. Wildeman, Jordan P. Hardy and S. Leonard Polsky for the Defendants Paul Hill, Richard Rendek and Rand Flynn Frank Foran, Q.C. J. G. Hopkins for the Defendants Famhill Investments Limited and Harvard Developments Inc.