Hudye Inc v Rosowsky, 2015 ABQB 771

Court of Queen ’ s Bench of Alberta Citation: Hudye Inc v Rosowsky, 2015 ABQB 771 Date: 20151207 Docket: 1401 02217 Registry: Calgary Between: Hudye Inc., Hudye Inc., As Administrator Acting on Behalf of the Trustee of the Hudye Group Trust, Hudye Soil Services Inc., Hudye Farms Inc., Hudye Energy Inc., Hudye Energy LLC, Hudye Group LP, Hudye Management LLC, Hudye Farms US Inc., Nutri Rx Inc. and 101234125 Saskatchewan Ltd.

Plaintiffs - and - James Rosowsky and James Rosowsky Professional Law Corporation Defendants - and- James Rosowsky and James Rosowsky Professional Law Corporation Plaintiffs by Counterclaim - and - Hudye Inc., Hudye Inc., As Administrator Acting on Behalf of the Trustee of the Hudye Group Trust, Hudye Soil Services Inc., Hudye Farms Inc., Hudye Energy Inc., Hudye Energy LLc, Hudye Group LP, Hudye Management LLC, Hudye Farms US Inc., Nutri Rx Inc. Benedict J.N. Hudye, and Braden Hudye Defendants by Counterclaim _______________________________________________________

Memorandum of Decision of the Honourable Mr. Justice M. David.

Gates _______________________________________________________ Introduction and Overview [ 1 ] This is an application brought by the Defendants by Counterclaim, Hudye Inc. et al. pursuant to Rules 4.22 and 4.23 of the Alberta Rules of Court, and s. 254 of the Alberta Business Corporations Act (“ABCA”) seeking an order directing the Defendant to provide security for costs in the Plaintiff’s favour relative to the Counterclaim, and an order directing that the Counterclaim be stayed until the Plaintiff by Counterclaim pays the amount awarded into court. [ 2 ] This application was heard by me on November 25, 2015.

At the conclusion of the oral submissions of counsel I reserved to consider my decision. These are my reasons for decision. [ 3 ] For the reasons that follow, the application is granted and the Plaintiff by Counterclaim is directed to provide security for costs in favour of the Defendants by Counterclaim in the amount of $62,500. The Counterclaim is stayed until the Plaintiff by Counterclaim pays the amount of $62,500 into court. Facts [ 4 ] This litigation involves two related claims.

In the first claim, the Plaintiff (Defendant by Counterclaim) seeks a declaration that the General Trust Agreement, General Counsel Retainer Agreement, Hudye Farms Commission Agreement and the Fee for Services Agreement entered into by the Plaintiff and the Defendant are null and void. The claim also seeks an order requiring the Defendant to disgorge to the Hudye Group all of the benefits received as a result of breaches of Mr. Rosowsky’s professional and/or fiduciary obligations owed to the Hudye Group. In the second action, Mr.

Rosowsky filed a counterclaim claiming breach of trust, breach of contract and oppression. Benedict Hudye and Braden Hudye are named by Mr. Rosowsky in their personal capacities as defendants in the counterclaim. [ 5 ] In his Counterclaim, Mr. Rosowsky seeks a declaration that he is entitled to:

a) His financial interests arising from the General Counsel Agreement, the Trust Agreement and the Hudye Farms Inc. Agreement; b) $14,662.50 in unpaid invoices; c) $77,689.70 in Savant Fees. He also seeks a declaration as to the validity of the above-noted Agreements and any other fee for service arrangements. He seeks a further order requiring the valuation of the assets of the Trust and a full purchase of his 10% interest in the Trust for its value by the Trust or, alternatively, by Hudye Inc. or, alternatively by [Benedict] Hudye and/or Braden Hudye.

In the further alternative, he seeks an order removing Hudye Inc. as Administrator of the Trust and removing [Benedict] Hudye and Braden Hudye as Trustees and appoint a Justice of the Court of Queen’s Bench of Alberta as the Trustee. Finally, the Plaintiff by Counterclaim seeks punitive damages, interest, and costs on a solicitor and client basis. [ 6 ] The parties filed extensive materials in support of their respective positions relative to this application.

A parallel application brought by the Defendant in the principal action for security for costs was also scheduled to be heard before me on November 25, 2015. However, the parties resolved this matter by way of a consent order several days before the scheduled hearing date. Analysis [ 7 ] Near the conclusion of a half-day special application, counsel for both parties made significant concessions relative to the positions advanced in their extensive written materials and earlier oral submissions.

Counsel for the Plaintiffs by Counterclaim effectively conceded that an award for security of costs was warranted in the circumstances, though challenged the quantum proposed by the Defendants by Counterclaim.

At the same time, counsel for the Defendants by Counterclaim conceded that some of the items in his submitted Bill of Costs ($167,249.23 – Exhibit A, Affidavit of Braden Hudye sworn July 27, 2015) are costs related to the principal action. [ 8 ] Having carefully considered the submissions of the parties, I am satisfied that the Plaintiff by Counterclaim should, under all of the circumstances, be required to post security for costs in favour of the Defendants by Counterclaim. It fix that amount at $62,500. The Counterclaim is stayed until the Plaintiff by Counterclaim pays the amount of $62,500 into court.

Costs [ 9 ] Given the mixed result of this application, each party shall bear their own costs.

Heard on the 25 th day of November, 2015 . Dated at the City of Calgary, Alberta this 7 th day of December, 2015. M. David. Gates J.C.Q.B.A. Appearances: Paul J. Stein Q.C./Taryn C. Burnett, Gowling Lafleur Henderson LLP for the Plaintiff William s. Klym, Docken Klym for the Defendants