HZ v Unger, 2013 ABQB 638

Court of Queen ’ s Bench of Alberta Citation: HZ v Unger, 2013 ABQB 638 Date: 20131028 Docket: 0403 14625 and 0703 15607 Registry: Edmonton Action No. 0403 14625 Between: HZ Plaintiff - and - Linda Unger, Boris Nahornick, Terrence Nugent, Her Majesty the Queen In Right of Alberta and John Doe Defendants And Between: Action No. 0703 15607 HZ Plaintiff -and- Lionel Whittaker, Her Majesty the Queen in Right of Alberta, Linda Unger, Cal Wrathall and John Doe Defendants Editorial Notice: On behalf of the Government of Alberta i dentifying information has been removed from this unofficial electronic version of the judgment. _ ________________________________________ ______________ Reasons for Judgment of W.

S. Schlosser , Master in Chambers _________________________________________ ______________

[ 1 ] The issue here is thrown-away costs of abandoned cross applications in two actions. [ 2 ] The actions are complex. They are, respectively, six and nine years old. Tens of millions of dollars are claimed. Application No. 1 [ 3 ] The Defendants raised a limitations defence in their 2005 and 2008 statements of defence. In May, 2012, plaintiff’s counsel advised that he might be a witness at trial regarding this defence. The Defendants brought an application to have him disqualified from continuing to act as counsel. [ 4 ] Much correspondence ensued.

In June, Plaintiff’s counsel notified Defence counsel (pursuant to Rule 8.15) that Plaintiff’s counsel was not intended to be called as a witness. [ 5 ] Rule 8.15(1) provides: 8.15(1) When an adverse inference might be drawn from the failure of a party to call a person as a witness, the party may serve on every other party a notice of the names of those persons that the party does not intend to call as witnesses. [ 6 ] Defence counsel was of the view that Plaintiff’s counsel’s evidence would be important on the limitations issue and they objected, as Rule 8.15(3) requires.

They were not willing to agree that they would not seek an adverse inference for the failure to call this evidence at trial. [ 7 ] It is not necessary to detail the events between June and December 2012 but in December, Plaintiff’s counsel confirmed that he would not be called, even though that meant there might be an adverse inference. The certainty of his position was affirmed in subsequent correspondence in January, and in an Affidavit. The application to remove Plaintiff’s counsel was withdrawn. [ 8 ] The Plaintiff’s position was that this should have happened much earlier.

Once it became unlikely that her counsel would be called, the Defendants’ application to disqualify him was not likely to be successful, and despite the potential negative inference, it had been unlikely that he would be called since the summer. She referred to Forward v. Zurich Insurance Co., 2002 ABCA 123 at para. 7 : 7 Counsel for Dr. Forward argues that removing solicitors prior to trial on the basis of a mere possibility that counsel may give evidence is insufficient. We agree.

Counsel concedes, however, that the rule “only operates in terms that there is a likelihood that this will happen.” (paragraph 23 of the Forward Appellant Factum). The same factum goes on to argue that “without a definitive finding that Mr. MacNeil will be called as a witness and that his giving evidence will pose a threat to the public’s interest in the administration of justice,” removal is not warranted. That, in our opinion is not the threshold. All that need be established is that Mr. McNeal is a likely witness. The learned chambers judge stated that Mr.

McNeal is “potentially a witness in this matter and potentially a tort feasor, the conflict is apparent [sic].” We do not read that statement as an expression of “possibility”; rather, considered in context, it equates with a finding that Mr. McNeal is a likely witness. On this record we would not disturb the order that he be removed as counsel of record. (emphasis added) Application No. 2 [ 9 ] The Plaintiff sought

summary determination of the Defendants’ limitations defence. She admitted that this application was taken out partly as a strategic response to the Defendants’ application to disqualify her lawyer. [ 10 ] These two actions had been case managed but the Case Management Judge recused himself following remarks made by the Plaintiff in a fall, 2012, Affidavit. The applications, which would have been heard early on by the Case Management Judge, were then rescheduled to be heard at the next available special chambers dates, which were March 5 and 6, 2013. The trial had been scheduled to begin April 2, 2013.

The applications had a significant potential to affect the trial date. [ 11 ] The rescheduling of the applications, in part, prompted a defence application to adjourn the trial. The application was allowed January 28, 2013. A.C.J. Rooke’s Order provided: 1. Based on the representation that Mr. Lee will not testify at trial, the Plaintiff’s Application for

Summary Judgment and the Defendants’ Application to remove Mr. Lee as counsel will not be proceeded with by the parties. 2. Costs in respect of the above noted motions in paragraph 1 of this Order will be dealt with by separate application by the parties or by the trial judge at a later date. [ 12 ] Briefs had been filed in support of the applications. The briefs were lengthy and detailed, which was not uncharacteristic of the proceedings in these two actions. [ 13 ] It cannot be said that the applications were pointless.

From the Defendants’ perspective, it became certain that plaintiff’s counsel would not testify on the limitations issue, which would likely have solidified defence strategy about asking for an adverse inference. [ 14 ] From the Plaintiff’s perspective, one of the Defendants conceded (though informally, in his Brief), that he had no limitations defence. Costs of Abandoned Applications

[ 15 ] Item 7(3) in

Schedule C is as follows: 7(3) Abandoned applications. A fee equivalent to 50% of the fee that would be payable under this item if the application had not been abandoned. [ 16 ] Costs are in the discretion of the court. Rule 10.33 provides a list of factors the court may consider in making a costs award. Rule 10.33(2)(

d) invites the court to consider whether ‘any application ... was unnecessary, improper or a mistake.’ Rule 10.31(1)(a), speaks of the costs to ‘file an application’. However, apart from item 7(3) in

Schedule C, the Rules do not specifically deal with costs of applications that do not go ahead. [ 17 ] It seems to me that the threshold for applying item 7(3) is that the application be in keeping with Rule 1.2 and be bona fide; not frivolous or vexatious. The court need not look behind the application or judge it on its merits, but only ask whether it was taken out for a valid purpose and perhaps whether something of that purpose was achieved. (See also Luzia v. Baptista , 2012 ABQB 491 ) [ 18 ] I cannot say that these applications were frivolous or vexatious. [ 19 ]

Schedule C is the measure of a costs award, though the court can depart from this in appropriate circumstances: (Rules 10.31(3) and 10.31(1)). These actions have seen a series of pitched battles but, in my view, the circumstances of the cases and the conduct of the parties do not warrant a departure from

Schedule C, or justify an award of costs on a higher scale; such as solicitor and client costs. [ 20 ] The result of the Defendants’ application was a commitment by the Plaintiff not to call Plaintiff’s counsel. It may have been slow in coming and there may have been some uncertainty on the Defendants’ part but it bore fruit nonetheless.

The result of the Plaintiff’s Motion was the acknowledgment by one Defendant that he had no limitations defence. [ 21 ] This is an appropriate situation to apply Item 7(3) to both Applications and have the costs of Defendants’ abandoned application set off the costs of the Plaintiff’s abandoned application. Heard on the 6 th day of August, 2013. Dated at the City of Edmonton, Alberta this 28 th day of October, 2013. W. S. Schlosser M.C.C.Q.B.A. Appearances: Robert Lee Old Strathcona Law Office for the Plaintiff Graham McLennan, Q.C. McLeannan Ross for the Defendants