Home Trust Company v. Wagner, 2013 ABQB 456

Court of Queen ’ s Bench of Alberta Citation: Home Trust Company v. Wagner, 2013 ABQB 456 Date: 20130809 Docket: 1003 10776 Registry: Edmonton Between: Home Trust Company Appellant - and - Marie Wagner Respondent _ ________________________________________ ______________ Reasons for Judgment of the Honourable Mr. Justice Donald Lee _________________________________________ ______________ [ 1 ] Home Trust Company appeals the Assessment Officer’s decision in this matter because of the large reduction in fees in a foreclosure action that required substantially more work than normal.

This foreclosure action began in early 2010 and required five court appearances, not including an ex-parte application for an Order for substitutional service. If the fees were calculated based on hourly time records, the time charges for fees would amount to over $17,000.00. The Assessment Officer’s reduction in disbursements actually incurred by the law firm were also reduced with no reasons or specifics given.

Accordingly it is submitted that the amount for fees should be set at $12,317.50; non-taxable disbursements at $532.00; and taxable disbursements at $4,143.60 for a total of $17,815.61 including GST. [ 2 ] The Bill of Costs was assessed at an ex-parte basis and fees were reduced by the Assessment Officer from $12,317.50 to $5,000.00; disbursements were reduced to $4,675.60 to $3,395.10 for a total reduction from $17,815.61 to $8,788.26.

[3] The Bill of Costs in this matter was appealed on January 30, 2012. This Court granted the appeal and directed that the Bill ofCosts be reassessed. On April 23, 2012 the Bill of Costs was assessed again on an ex-parte basis and reduced to $8,788.26. The law firmadvises that it received the assessed Bill of Costs approximately five months later and appealed the assessment again. On October 9,2012 the appeal was adjourned sine die by the presiding Justice so that the law firm could obtain transcripts.

Analysis [4] Based on my reading of the transcript in this matter Home Trust was owed a relatively small amount of $67,000.00 initially,and there was substantial equity in the property to begin with. The reason that a number of the applications had to be made appears to meto be because there was so much equity was still left, that the Court was reluctant to proceed further. It appears that after the sale did gothrough, Home Trust remitted another $100,000.00 into Court, and that the Defendant Ms.

Wagner at the time of the initial assessmentwas still working with Counsel to get that money paid out of Court. [5] Each time Home Trust went to Court a market analysis from the listing realtor would have to be provided in Affidavit formdescribing their marketing efforts, and what they felt the property was worth given the apparent lack of interest in the property. Therewas also apparently some difficulty in getting access into the property to obtain an appraisal.

The property appears to have been listedinitially for $228,600.00; reduced to $207,500.00; and ultimately sold for $200,000.00. [6] There were also agent fees charged in this matter of $780.50; $819.53; and $525.00 relating to each of the three Courtappearances because this is a Calgary law firm conducting the action in the Edmonton Courts. [7] The Reviewing Officer determined that photocopying charges for the first four applications were always $158.75, which wasa standard charge, as opposed to a charge based on each page photocopied, used by the law firm to arrive based on an average rate.

In thismatter exact records of a number of photocopying, tele-copying and fax copies were all standardized in the first four stages. The onlything the law firm was keeping track of in this case was actual courier charges. The law firm’s explanation was that they were a smalloffice and did not have the capacity or the software to track every photocopy etc. [8] The Review Officer eventually allowed $5,000.00 for fees, at which point Counsel appears to indicate that the previousAssessment Officer was willing to offer $6,000.00.

However whatever the result the law firm felt it was required to report itself to theLaw Society of Alberta under the Code of Conduct because of a reduction in fees taxed by more than one half. Accordingly, it appearsthat the appeal from the first Review Officer’s decision turned out even less successful the second time. Analysis Standard of Review [9] The standard of review in these matters is found at para. 16 and 17 of Fraser Milner Casgrain LLP v.

Kristof Financial Inc.2012 ABQB 359: 16 When one reviews the many cases that deal with appeals from decisions of review officers (or taxing officers, as they wereformerly known), there are certain principles that emerge. A review officer's decision is entitled to curial deference: 509703 at para 11.Why? A review officer's "duties commonly call for him to do this type of vetting because of the nature of his position and the expertisethat he gathers in carrying out those duties": Carr & Co v. Markdale Ltd. (1996), (AB KB), 46 Alta LR (3d) 324 atpara 20 (QB) ["Carr & Company"]. See also McLennan Ross v.

Mercantile Bank of Canada (1988), 1988 ABCA 224 , 59 AltaLR (2d) 369 at para 6 (CA) ["McLennan Ross"]. The Alberta Court of Appeal in McLennan Ross went on to say that, "the taxing officer'sfunction is a specialized one and he may have to bring his own experience and expertise to bear" (at para 12). 17 Curial deference, however, is not absolute. A court hearing an appeal from a review officer's decision may interfere if the reviewofficer "operated on a wrong principle and thereby fell into error": McLennan Ross at para 6, citing Cape Breton Landowners v.

StoraKopparbergs Bergslags Aktiebolag (1983), (NS CA), 33 CPC 1, 146 DLR (3d) 369, 58 NSR (2d) 193, 123 APR(NSCA); Petty v. Bishop & McKenzie (1977), 2 AR 241 at 243 (QB). An error in principle may include a situation where the quantumthat the review officer awards is inordinately high or low: McLennan Ross ibid; 509703 at para 11. Similarly, a court hearing an appealfrom a review officer's decision may interfere if the review officer makes an error concerning the scope of the retainer agreement underwhich the parties are operating: Brown v. Snyder & Associates, 2004 ABQB 899 at para 20 ["Brown"].

Finally, a court hearing an appealfrom a review officer's decision may find that the review officer made a finding of fact that is clearly in error: Carter v. Blake (1982), 41AR 418 at para 7 (NWTCA) ["Carter"]. [10] Another more recent version of the standard of review is found at para. 38 of Rapchuk v. Silverberg 2013 ABQB 305: 38 A review officer may fall into error in at least the following ways: • 1. erring in fact, for which a party must demonstrate that the fact as found is "clearly in error": Sweetgrass First Nation v. Rath &Company, 2013 ABQB 165 at para 27 [Rath & Co ], FMC v.

Kristof Financial Inc, 2012 ABQB 359 at para 17, 215 ACWS (3d) 1010[FMC ], McLennan Ross v. Keen Industries Ltd (No 2) (1988), 1988 ABCA 224 , 86 AR 311 at para 7 (CA) [McLennan Ross2 ]; • 2. erring in principle (law), which will be shown if a party can demonstrate that the review officer proceeded on an erroneous principle,failed to apply a required principle or that the award of the review officer is so high or low as to betray an error of principle: Rath & Co

at para 27, McLennan Ross 2 at paras 6, 13; • 3. erring in true questions of jurisdiction (law), for which a standard of correctness will apply: Rath & Co at para 20, Panther PetroleumLtd v. Code Hunter, 2002 ABQB 158 at para 16, 112 ACWS (3d) 225, MacKimmie Matthews v. Hector (1998), 1998 ABCA 278, 219 AR 163 at para 7 (CA); and • 4. failing to provide a hearing that is procedurally fair, for which a standard of correctness will apply: Anderson v. Alberta SecuritiesCommission, 2008 ABCA 184 at para 30, 437 AR 55 [Anderson ]. [11] On either standard of review, I conclude that this appeal should be dismissed.

Legal Fees [12] The transcript in this matter appears somewhat confusing given that a number of reviews appear to have taken place, but whatis disconcerting about this file is that it appears that $100,000.00 in equity was still left even after the property was sold for $200,000.00;and the original debt owing to Home Trust at the beginning of the process was only $67,000.00.

Given these numbers, it is notsurprising that three applications over and above the norm had to be made before the Court would allow the sale to proceed. [13] The haste in which the Plaintiff acted in this matter reminds me somewhat of Master Waller’s short decision in CIBCMortgages Inc. v. Walji 2001 ABQB 169: 1 MASTER WALLER:-- • Too swift arrives as tardy as too slow. Shakespeare Romeo and Juliet Lawyers who conduct foreclosures like to do so with military precision, secure in the knowledge that they have an iron clad contractualindemnity for costs.

Occasionally their zeal must be tempered by a court's review of their overreaching costs. This is one such case. 2 The defendant, Mr. Walji fell behind in his mortgage. A demand letter was issued by solicitor, Mr. Vickers, and Mr. Waljiresponded quickly by paying all arrears including an inspection fee of $75.00 and a legal fee of $277.50 for the demand letter. In hishaste to serve his client, Mr. Vickers issued the demand letter without having first obtained a statement of condominium arrears. WhenMr. Walji paid the claimed indebtedness, he was advised by a member of Mr.

Vickers' staff that if there were condominium arrears, theywould have to be paid as well. 3 It transpired that there were in fact arrears of condominium fees and so Mr. Vickers again wrote to Mr. Walji giving him a shortperiod to pay the fees or a foreclosure would ensue. Mr. Walji in fact attended upon the condominium corporation to pay the fees butthey directed his cheque to other obligations he apparently owed the condominium corporation. Having not received a confirmation thatthe condominium fees had been paid the plaintiff paid those fees of some $1500.00 and Mr.

Vickers again demanded payment togetherwith a further inspection fee of $75.00 and a legal fee of $277.50. 4 Some discussion ensued as to a proper accounting for the funds that had been received but while those discussions were ongoing.Mr. Vickers filed his statement of claim. Both Mr. Walji and his sister Tasnim Datoo contacted Mr. Vickers by telephone and expresseda willingness to immediately pay the condominium arrears and both have deposed in filed affidavits that Mr. Vickers advised them to payhim $4,000.00 immediately or he would foreclose the home. Mr.

Walji at that point in time didn't have the funds to pay all the moneydemanded by Mr. Vickers and he shortly thereafter contacted counsel who now brings this application before the court for a decision thatthe acts of Mr. Vickers were oppressive and the plaintiff's claimed costs are excessive. 5 In the meantime, Mr. Vickers continued to prosecute his clients action with zeal ordering a valuators report and filing a motion foran Order Nisi/Sale.

He now claims fees of approximately $3500.00. 6 At an earlier hearing in this matter, I urged settlement between the parties but indicated that if settlement could not be achieved Mr.Vickers should file an affidavit disputing the allegations that he made a demand on about February 3rd, 2001, that the defendant pay$4,000.00 to resolve the matter.

Mr.Vickers did file an affidavit of one Karen Tassone a paralegal in his office who refuted the allegationby swearing: I have reviewed our file in this matter it being the practice of this office to place memos on files relative to telephone conversations withDefendants or otherwise and can find no record of the telephone conversation alleged by the Defendant in his Affidavit recently filed. 7 The affidavit of a compliant paralegal is a poor substitute for a sworn denial by the party alleged to have uttered the words. Evidencein this form deprive the defendant of any effective cross examination Kennett v.

Gill (AB CA), [1969] 71 W.W.R. 1Kerans, J.A. comments on the reliability of such affidavits in Schaffhauser Kantonalbank v.

Ulrich Chmiel Montenero International Co.,(Calgary C.A. 10023 p. 24 and 25 April 13, 1988): As to the adequacy of the affidavit, it is true that an affidavit based on information and belief in an interlocutory proceeding is admissiblebut it is also trued that, when it is based on hearsay, the Court may refuse to rely upon it. 8 I have no hesitation in finding that Mr.Vickers did in fact demand excessive fees on February 3rd, 2001 and that demand had theeffect of preventing the defendant from redeeming the mortgage.

I find that the plaintiff's solicitor acted throughout this foreclosure tooquickly and aggressively and without a degree of forbearance that could be characterized as fair dealing in the context of this action. Mr.Walji's actions in initially paying all the arrears demanded of him and his expressed willingness to pay the condominium arrears

warranted fairer treatment than that which was afforded to him by the plaintiff. There is a balance between protecting a client's interestand dealing fairly with an individual who is unrepresented by counsel. 9 If a mortgagee commences proceedings too aggressively and without respecting the balance to which I have referred, he may bedeprived of his costs and indeed costs may be awarded against him. Canada Permanent Trust Co. v. Bernhardt (BCSC), [1978] 6 W.W.R. 393; Sunlife Trust Co. v. Newman [1996] A.J. No. 1203; Sunlife Trust Co. v. Palaschuk 2000 ABQB 672, [2000] A.J.

No. 1128. 10 The plaintiff's foreclosure action is stayed for a period of fourteen (14) days to allow Mr. Walji to pay all outstandingcondominium arrears. Costs as awarded under paragraph 11 herein may not be offset against the amount of outstanding condominiumarrears. 11 In these circumstances the plaintiff is denied it's costs with the exception of the initial legal fee for the demand letter and the initialinspection fee. The defendant is awarded the costs of this application on a party/party basis under column 2 of

schedule C. [14] The admonishment contained in a recent Court of Appeal Memorandum of Judgment regarding costs and David M. GottliebProfessional Corporation re: Nahal 2013 ABCA 154 at paragraph 6 is also applicable here: - 6 Mortgages are generally drafted and priced on the basis that the interest on the funds advanced that is payable to the mortgagee willbe "net" of related expenses. That principle is often respected when costs of foreclosure proceedings are being awarded.

It is, however,generally undesirable to have a system whereby litigants are entitled to full indemnity for their legal costs, regardless of whether theywin or lose. This can lead to the prosecution of speculative litigation, and can encourage over litigation. The principle that the successfulparty is entitled to costs reflects the fairness of not requiring a successful party to bear all the expense of litigation. But the proviso thatthe successful party is entitled to some costs, but not complete indemnity, reflects the public policy in restraining litigation. [15] In Bridgewater Financial Services v.

Arceno 2003 ABQB 766 Master Laycock described the limitations regarding costawards when dealing with the collection of a small amount compared to the security lodged, as follows at paragraph [19]: 19 In the Newman foreclosure, proceedings were commenced for an outstanding balance of $1,248.93. Master Alberstat stated inparagraphs 9 - 11: 9. The obligation to pay costs for a collection of arrears in default in payment is not unconditional indemnity by a borrower to pay allcosts regardless of any circumstances that might arise.

The mortgagee also has to be reasonable, not only in attempts to collect arrears butalso in litigation process. 10. When such a small amount is owing compared to security lodged, the plaintiff ought to take more reasonable steps to collect thearrears before launching expensive procedures such as foreclosure. 11. I do not think the steps taken by the mortgagee to collect the balance owing prior to commencing these proceedings were reasonable. [16] Furthermore I agree with the way Master Smart at para. [9] and ]14] in AGF Trust Co. v.

Soos 2012 ABQB 747 characterized standard residential foreclosure actions; and closing charges for the final sale to the ultimate third party purchaser: 9 Standard residential foreclosure actions are not difficult. They are of a nature that I would describe as commodities work. Whencomparing it to other commodities type work such as residential real estate conveyancing it is very low risk from a lawyer liabilityperspective. The vast majority of the work on the file (I would estimate 95%) is done by paralegals filling in blanks of precedents andfollowing checklists which were by in large prepared years ago.

Seldom is there any real challenge or complex legal issues that need tobe addressed. The lawyers role is to review documents and provide general instruction although most is done without their direction orinvolvement.

Of course, the lawyer must attend in Court for the applications where, far too often, they demonstrate their limitedinvolvement in the file by knowing little beyond what notes someone (the paralegal) has prepared for them and present Orders forsignature that they clearly haven't reviewed. … 14 Recently, there was one item identified that was not being addressed the same by all assessment and review officers, at least, inEdmonton. That item was an additional fee for completing the conveyance of a property to a third party under an Order for Sale afterJudicial Listing or advertisement in some other fashion.

As there was a conveyance in this case there should be an adjustment to the bill.Reflecting back, there was once a tariff for conveyancing but that has long since been abolished. What followed was an extremereduction in fees charged for conveyancing although there has been a slow rise in what the market allows since the 80's. Recently, I aminformed the Alberta CBA Residential Real Estate sections adopted a Recommended Minimum Fee Guideline for legal servicesprovided for real residential real estate transactions.

The fee amount recommended for a conveyance (sale) under $600,000 is a fee of$700 and $850 for properties valued over $600,000. It is perhaps trite to say that these "simple" transactions have multiple requirementsthat create a minefield of potential liability. There is little doubt that the strategy for the CBA

section is to convince practitioners tofollow the guideline and increase what is charged by lawyers generally. Interestingly, it is still a far cry from that proposed by someforeclosure practitioners of $1,850 for a sale. This is particularly so as a foreclosure conveyance is covered by the virtually mandatorySchedule A which makes it clear the property is sold "as is" with no representations and warranties of any kind whatsoever and norequirement for other documentation like RPR's and compliance certificates.

Essentially all that need be tendered is the Order along withthe appropriate trust letter and a statement of adjustments. Furthermore, the "minefield" of potential liability simply doesn't exist.Regardless, the amount generally allowed in Edmonton is $250 to $350 for fees. In light of the correspondence with the previous ownerscounsel and the need to tender documents twice, I would allow the upper end of $350.

I see nothing remarkable or significant that wouldwarrant an overall increase in fees per se. [17] Accordingly I conclude with respect to the legal fees presently being appealed that the Assessment Officer did not operate onany improper principles given the straightforward simplicity of the situation, and the lack of risk that was actually being incurred by

Home Trust. The additional applications were quite normal in these circumstances and required. Although the Plaintiff is entitled to act as they chose fit, they should not be over compensated because of their actions in repeatedly attempting to foreclose on property where there was a significant equity still remaining. Agent Fees [ 18 ] Agent fees were also charged in this case which represent the hiring of a lawyer to appear at three court dates in Edmonton.

While they are an actual cost incurred by the Applicants, and it is submitted that the Defendant was not double charged because of the amount of the agent fees were subtracted from their normal offices fee, the reality is that this law office’s fees were often standardized charges, and the agent’s fees would never have to be paid but for the fact the Calgary law firm required Edmonton agents.

In my conclusion, agent fees for out of town law firms to hire local counsel to appear for it in multiple applications should not be allowed, just as fax filing fees are not generally allowed for out of town law firms dealing with matters in Edmonton.

The Plaintiff is entitled to retain counsel of their choice wherever that counsel practices, but those charges be the fax filing fees or agent fees should not be paid for by the Defendant directly or indirectly. [ 19 ] The Appellant also argues that a foreclosure sale such as this can be more complex when the occupants do not provide access to the property, or provide possession but leave behind personal property.

In the latter case it is submitted that the personal property must either be disposed of or stored, depending on its value with the result that fees and disbursements charged in those cases should not be reduced. [ 20 ] When personal property is left behind after possession is to be provided, it is my understanding that the disposal and storage of that personal property is not an issue that the foreclosing party needs to deal with, because the property is sold on an “as is, where is” basis.

The ultimate purchaser of the property through the final Court Order is responsible for storing or disposing of the property, depending on its value. Counsel submits that it is their standard practice on behalf of the foreclosing party to dispose of or store left behind personal property, but this is once again something they do at their own cost when it is not a legal requirement to do so. [ 21 ] In the present case access to the property may have been difficult to access at times, but given the transcript, any access to the property issue has been provided for in the charges granted.

It was also a minor item in any event, likely caused by the substantial equity left in the property. Accordingly none of these items are recoverable by the Appellant. [ 22 ] In the end result the Appellant’s appeal is dismissed in its entirety. Heard on the 31 st day of July, 2013. Dated at the City of Edmonton, Alberta this 9 th day of August, 2013. Donald Lee J.C.Q.B.A. Appearances: N. Maggisano For the Appellant No Appearance By the Respondent