Skrepnek v Krochak, 2014 ABQB 699

Court of Queen ’ s Bench of Alberta Citation: Skrepnek v Krochak, 2014 ABQB 699 Date: 20141114 Docket: 0403 14005 Registry: Edmonton Between: Olive Skrepnek and East Texas National Bank, Trustee of the Estate of Olive Skrepnek Plaintiff - and - Peterson Krochak and Dale A. Strebchuk Defendants - and - Douglas Skrepnek and Peace River Shopping Centre Ltd. Third Parties _______________________________________________________ Reasons for Judgment on Prejudgment Interest and Costs of the Honourable Madam Justice D.C. Read _______________________________________________________

[ 1 ] The parties dispute four issues of interest and costs arising from the Reasons for Judgment issued on June 17, 2014 found at 2014 ABQB 358 . They provided written submissions. [ 2 ] The issues in dispute are as follows: • Should the Plaintiff’s pre-judgment interest be reduced because of delay getting to trial? • Should the Plaintiff’s photocopy costs be reduced? • Should the costs of the Plaintiff’s expert be reduced? • Under what column of

Schedule C are the Plaintiff’s costs payable? A. Claim for Reduction of Pre-judgment Interest : [ 3 ] The Plaintiff seeks pre-judgment interest from October of 2001 until October 2013 rather than the actual date of trial. Originally, the trial was scheduled to start in October 2013 but was adjourned because of illness of Plaintiff’s counsel.

The Plaintiff does not seek pre-judgment interest for the period of delay occasioned by this adjournment. [ 4 ] The Defendant argues that the matter was not complicated and the Plaintiff was not diligent in prosecuting this action, pointing out that it took almost eleven years from the discovery of the Defendant’s error in February of 2003 until the trial. The Plaintiff says that the matter was complex and says there is no evidence before the court by which fault can be found for the time it took the case to get to trial. [ 5 ]

Section 2 of the Judgment Interest Act, RSA 2000, c. J-1 sets out the applicable law. The general rule, as set out in s. 2(1) is that a court shall award interest to a person who obtains a money judgment “from the date the cause of action arose to the date of the judgment”.

However, section 2(3) gives the Court a discretion to refuse to award interest or to determine the appropriate period under which pre-judgment interest is to be awarded “if it considers it just to do so” having regard to “the circumstances...or conduct of the action”. [ 6 ] Section 2(3) permits a court to reduce or refuse to award pre-judgment interest if a successful litigant has delayed the proceeding in some unjustified or unexplained manner. [ 7 ] In this case, the Statement of Claim was filed on July 15, 2004 and it did not come to trial until June 2014, almost ten years later.

The Defendant points, in particular, to four periods of delay: • Fourteen months between August 24, 2004-October 4, 2005 – the time it took the Plaintiff to provide undertaking responses; • Seventeen months between August 2006-January 2008 – when Defendant’s counsel says there was no contact from Plaintiff’s counsel; • Ten months between January 2009-October 2009 – when the Defendant says there was again no contact from Plaintiff’s counsel; and • Four months between October 2012-February 2013 – when the Defendant says there was a further period of no contact from Plaintiff’s counsel. [ 8 ] Over all, the Defendant notes that 87 months passed between the completion of discoveries in July 2006 and October 2013 when this matter was first scheduled for trial. [ 9 ] In response, the Plaintiff provides a detailed breakdown of steps taken to get to trial.

In particular, in respect to the four periods outlined above, the Plaintiff has specific comments. [ 10 ] The Plaintiff says that a number of significant steps were taken during the fourteen month gap: the Affidavit of Records of a Texas bank (then one of the Plaintiffs) was filed; a series of settlement offers and counter-offers were exchanged; the Defendant filed and served a Third Party Notice, bringing an additional lawyer onto the file; amendments were made to the Statement of Claim and Counsel agreed to discovery dates. [ 11 ] During the seventeen month gap, the Plaintiff says that a settlement meeting was held on August 18, 2006 but agrees that there was no other contact with the Defendant during this period.

However, the Plaintiff says that significant steps were taken to move the lawsuit forward. Counsel obtained an expert to provide an opinion and prepared a Statement of Assumed Facts which the expert used to form his opinion and which later formed the basis for the agreed statement of facts used at trial. [ 12 ] The Plaintiff says that in January 2009, during the ten month gap, counsel for the Plaintiff received a reply to an Offer to Settle and a Notice to Admit provided in December of 2008.

Given this reply, the Plaintiff concluded settlement was unlikely and began a process to obtain documents from the Bank of Nova Scotia on a particular account that both parties decided were important. The Plaintiff did not control that account.

In September 2009, Plaintiff’s counsel heard from Defendant’s counsel that the file was to be transferred to new counsel. [ 13 ] During the final four month gap, the Plaintiff says that counsel was working with the expert they hoped to call with respect to damages. [ 14 ] Alberta courts have reduced or refused pre-judgment interest due to delay in the litigation process in a number of cases cited

by the Defendants. See for example Rayani v. Yule & Co. (Hong Kong) Ltd , 1996 ABCA 35 , [1996] A.J. No 27; Pettipas v.Klingbeil, 2000 ABQB 988; Chapell v. Canadian Pacific Railway, 2011 ABQB 74. [15] In 321665 Alberta Ltd. v. Exxon Mobil Canada Ltd., 2012 ABQB 76, the Court set out a number of helpful factors as beingrelevant in determining whether the party in that case should be deprived of pre-judgment interest for some period of time. I consider thefollowing factors to be important here: • The complexity of the action: This action was not overly complex in terms of the law at issue or the facts.

However, it involvedcoordination of a number of actors, on the Plaintiffs’ side, notably three members of a family now resident in Texas. Although the causeof action arose in Alberta, the distance between the plaintiffs and their counsel made obtaining their physical presence in Alberta moretime consuming. Further, the father of the family was aged and, in fact, died during the course of the lawsuit; the mother was also agedand suffered injury with broken bones during the course of the lawsuit, which undoubtedly slowed her ability to respond to counsel.

Thefamily’s son, also a Texas resident, and a corporation were made third parties to the action and, as a consequence, had to obtain separatecounsel. The son was an instrumental player in the series of events leading to the litigation and therefore, a necessary part of thelawsuit. However, he was legally disabled from leaving the state of Texas to come to Alberta for a time period. This disability resultedin a scheduled mediation having to be cancelled.

A Texas bank was also party to the action for a time and their interests had to beconsidered. • Changes in counsel: Counsel for the Plaintiff changed firms during the course of the proceeding and later became ill so that theaction had to be handed off to another lawyer in the firm. Counsel for the Defendant changed to another firm. There was delay on bothsides after these changes while new counsel got up to speed. • Changes made by the new Rules of Court: The new rules required alternate dispute steps be taken.

Mediation was planned, had tobe rescheduled once, and was ultimately unsuccessful. • Delay in answering undertakings: Both the Plaintiff and the Defendant delayed in giving answers to undertakings: The Plaintiff tookabout 6.5 months. The Defendant took a similar period of time. • Search for witnesses: An important witness (Marty Peterson) could not be located. Two other potential witnesses proved difficult tolocate. • Expert reports delay: There was delay in getting the Plaintiff’s expert’s report finalized. [16] Over all there was delay and this action took too long to get to trial.

Having said that, it is not possible to set out a specificlitigation plan during which this matter ought to have proceeded to trial. [17] Some of these delays were justified. While the Plaintiff can be faulted for others, some were also caused by the Defendant. Changes in counsel were unfortunate but not the fault of either party. [18] The policy behind s. 2 is to encourage promptness and to penalize delay if it occurs. The goal must be, however, to be fair toboth parties. Over all, I conclude there were no periods during which the Plaintiff allowed the file to simply sit dormant.

Yet there wereperiods during which matters were delayed by difficulties of the Plaintiff for which the Defendant was not responsible. For example,after the Plaintiff’s expert was chosen, there appears to have been considerable delay in communications with him and in obtaining hisopinion. The expert was first contacted in December of 2006, yet judging from the record of communications with him, his opinion doesnot appear to have been near finality until February 2008. There is no explanation for this delay, other than the brief notation that theexpert has “been busy”.

Under the circumstances, I have concluded it would be fair to disable the Plaintiff from collecting one year ofinterest, particularly for the time period included in the seventeen month gap set out above. Otherwise, I have concluded the delays,while unfortunate, cannot be called unjustified. B. Should Photocopy Costs be Reduced? [19] The Plaintiff seeks $5,240.55 in photocopying costs, based upon 34,937 pages at $0.15 per page. The Defendant argues thesecharges are unreasonably high and says, by comparison, that the Defendant has less than 12,000 photocopies charged to its file.

Nowcounsel for the Plaintiff was not counsel on the file throughout and says he cannot provide an explanation for the necessity for all thephotocopying. He suggests a compromise of $3,000 on the basis that the Defendant’s photocopying costs would be in the range of$1,800 and a plaintiff in a case like this would normally do more photocopying than would a defendant. That compromise seemsreasonable to me and I will cap the Plaintiff’s photocopy charges at $3,000. C.

Should Expert Costs be Reduced? [20] The Plaintiff seeks $31,475.28 with respect to the charges for an expert, based upon 15 invoices issued between 2007 and2014. The Defendant argues this cost is unreasonably high and should not be allowed in full. [21] The expert was not called at trial by agreement. However, his report was made an exhibit and the Court used it in reaching itsconclusions.

[ 22 ] Rules 10.30 to 10.33 generally govern costs. The relevant provisions are as follows: rule 10.31(1) After considering the matters described in rule 10.33 the Court may order one party to pay another party, as a costs award, one or a combination of the following: (

a) The reasonable and proper costs that a party incurred to...take proceedings or to carry on an action,...

(2) Reasonable and proper costs under subrule (1)(a) (

a) include the reasonable and proper costs that a party incurred to bring an action; ... (

d) do not include, unless the Court otherwise orders, the fees and other charges of an expert for an investigation or inquiry or the fees and other charges of an expert for assisting in the conduct of... a trial. [ 23 ] Courts in Alberta may order reimbursement for incurred expert’s fees where these are reasonable and proper: Meehan v. Holt 2011 ABQB 110 . Costs orders including expert’s fees are exceedingly common. However, where a court concludes that the expense is not reasonable in the circumstances, it is appropriate to reduce the amount: Copithorne v. Transalta Utilities Corp. , 2007 ABQB 82 , at para 7 .

In Meehan at para 38 , the Court noted that it is the party claiming the expense who has the burden to show that the expense complained of is reasonable. [ 24 ] Here, the Defendant admitted, at the opening of the trial, that Mr. Strebchuk failed to meet the standard of care of a reasonable and prudent barrister and solicitor in one respect: his failure to register the security as soon as possible after being retained. They also agreed to permit the expert’s opinion report to be admitted without the necessity of calling him to give evidence. [ 25 ] I concluded, partly based upon the expert’s report, that Mr.

Strebchuk was also negligent in failing to do the necessary searches both when he was retained and before funds were disbursed, in failing to warn the Plaintiff of the danger in advancing funds before the loan documents were signed and registration effected; in failing to inform his client of the necessity to tell the lawyer before funds were disbursed; and in failing to report to his client. [ 26 ] However, the liability issue the expert was asked to address was not complex and the factual nature of the action was not complicated except for numerous evidentiary issues caused by lack of documentation by both the Plaintiff and the Defendant and by credibility issues.

I have already alluded as well, to the fact that the delay in obtaining his opinion slowed the progress of the lawsuit. [ 27 ] The Plaintiff agrees that some duplication of effort was required because the Plaintiff’s original counsel became ill and other counsel had to step in. This resulted in several meetings with the expert which would not otherwise have been necessary.

The Plaintiff suggests that the expert’s disbursements be reduced by $4,526.03 to account for this duplication. [ 28 ] The time to assess the reasonableness of obtaining an expert’s opinion is at the time the expense was incurred: Copithorne , at para 7 . On this basis, there is little doubt that retainer of the expert was reasonable. However, while it was helpful, the cost of the opinion seems disproportionate to the complexity of the legal issue and the factual nature of the action. As well, it took too long to obtain and delayed trial preparation.

I conclude that under the circumstances a reasonable and proper cost for the expert’s report should be limited to $22,500. D. What Column of

Schedule C Should be Used? [ 29 ] I awarded damages to the Plaintiff of $365,919.06. Unless the allowable amount of pre-judgment interest raises the total award to more than $500,001 costs should be under column 3. Dated at the City of Edmonton, Alberta this 14 th day of November, 2014. D.C. Read J.C.Q.B.A.

Appearances: John M. Hope, QC and Erin Burton Duncan Craig LLP for the Plaintiff Kenneth J. Warren, QC and Timothy Stock-Bateman Gowling Lafleur Henderson LLP for the Defendant