Tomco Production Services Ltd v Smith, 2015 ABQB 820

Court of Queen’s Bench of Alberta Citation: Tomco Production Services Ltd v Smith, 2015 ABQB 820 Date: 20151221 Docket: 1403 04687 Registry: Edmonton Between: Tomco Production Services Ltd. and Tomco Industrial Ltd. Respondents/Plaintiffs - and - Bradley Smith and Jimbob Rentals

(2000) Ltd. operating as Jimbob Oilfield Services Applicants/Defendants _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice D. B. Nixon _______________________________________________________ Introduction [ 1 ] Mr. Bradley Smith had been employed by the Respondents/Plaintiffs, Tomco Production Services Ltd. and Tomco Industrial Ltd. (“Tomco”). He shifted employers, and became an employee of the Applicant/Defendant, Jimbob Rentals

(2000) Ltd., operating as Jimbob Oilfield Services (“Jimbob”). [ 2 ] Tomco commenced the underlying action against Mr. Smith and Jimbob, alleging that they were using its confidential

information. The Applicants/Defendants brought this Application for

summary judgment dismissing the action and other relief. [ 3 ] The Applicants/Defendants lost on virtually every point in a decision given orally on April 16, 2015. The parties were unable to agree upon costs. Tomco now seeks costs.

Summary Judgment Application [ 4 ] The Application for

Summary Judgment on behalf of the Applicants/Defendants sought four remedies. The Applicants/Defendants then raised two additional remedies in their Brief. [ 5 ] Tomco prepared a thorough Brief to respond to all six remedies sought by the Applicants/Defendants. In particular, the Tomco Brief addressed the four original remedies sought in the application and, as a protective step, it also addressed the two additional remedies raised, which were not in that

Summary Judgment Application. [ 6 ] The Application failed on all six of the remedies sought by Jimbob and Mr. Smith. The Application was dismissed. [ 7 ] Three of the six remedies sought on the Application were dismissed by the Court with the concurrence of the parties (the “Conceded Claims”). Jimbob and Mr. Smith agreed to the Conceded Claims at the commencement of the hearing on April 15, 2015. [ 8 ] There is some relevant background to the dismissal of these Conceded Claims.

Of particular note is that prior to the hearing, Tomco offered to agree that a clause in the Non-Disclosure/Non-Competition Agreement was unenforceable, which was one of the Conceded Claims that the Applicants/Defendants ultimately did not pursue on their Application. [ 9 ] Jimbob and Mr. Smith did not respond to that concession offer. As a consequence, Tomco was forced to prepare a lengthy Brief which addressed all matters, including the three Conceded Claims. [ 10 ] Tomco’s work on the three Conceded Claims would have been avoided if Jimbob and Mr.

Smith had made their concessions earlier, and work on one of the Conceded Claims would have been avoided if they had responded on a timely basis to Tomco’s concession offer. By agreeing to the Conceded Claims on the day of the hearing, Tomco saved no time. Tomco had done all of the work on its Brief by that date. [ 11 ] The fourth remedy requested in the Application was an Order to deny Tomco the right and entitlement to bring an injunction that would block Jimbob and Mr. Smith from using the confidential and proprietary information in issue. In effect, Jimbob and Mr.

Smith were asking the Court to predetermine that an injunctive application by Tomco would fail in the event such an application is ever made in the future. [ 12 ] This Court denied the fourth remedy requested in the

Summary Judgment Application, emphasizing that if Tomco brought an injunction application in the future, Jimbob and Mr. Smith would be entitled to raise any argument at that time. In the interim, it is not appropriate for the Court to render a decision on whether Tomco has met the test for an injunction before that application has even been filed. [ 13 ] The Court turns next to the two remedies that Jimbob and Mr. Smith raised in their Brief but which were not included in the Application.

The Court refers to these two additional matters as the fifth and sixth remedies raised. [ 14 ] Concerning the fifth remedy raised, the Applicants/Defendants argued for the first time in their Brief that Mr. Smith was not a fiduciary. As noted above, the Application included no such remedy. Further, the Application did not include any claim for relief in respect of the fiduciary matter. [ 15 ] On the Application, the Court denied the Applicants/Defendants’ request regarding the fifth remedy.

That denial was based on subsection 6.3(2) of the Alberta Rules of Court , AR 124/2010 (the “Rules”), which require applications to state briefly the grounds relied upon, the evidence and the relief sought, among other requirements. [ 16 ] The purpose of Rule 6.3(2) is to ensure that a respondent (in this case, Tomco) knows the arguments to be addressed. That Rule also allows the Court to properly prepare for the hearing. While there are some exceptions, those exceptions do not apply in this case. [ 17 ] Absent this Rule, both the Respondent and the Court could be blindsided. That is inappropriate.

Our adversarial judicial system operates on a principle of disclosure so that all participants can prepare themselves appropriately. The system does not tolerate an ambush. [ 18 ] Concerning the sixth remedy raised, the Applicants/Defendants submitted that Tomco’s claim for damages be dismissed on the grounds that no competition occurred during the material period. As the Court understood it, the parties agreed to the dismissal of this remedy as well. In the alternative, the Court indicated that it dismissed the arguments relating to the sixth remedy raised because it was not included in the Application.

Parties’ Positions [ 19 ] As a result of the dismissal of the Applicants/Defendants’ Application for

Summary Judgment, Tomco asks for costs under Column 4 of

Schedule C to the Rules. Tomco submits that an award of costs under Column 4 is justified for a couple of reasons. First, Tomco notes that it was successful on all six points argued by the Applicants/Defendants. Second, notwithstanding its early offer to agree that a clause in the above-noted agreement was unenforceable, Tomco had to address all of the remedies sought by Jimbob and

Mr. Smith because they did not concede on any item until April 15, 2015, the day the hearing commenced. As such, Tomco had to file a full Brief on all six items. Also, the matter was time-consuming, with the cross-examination taking a full day, for which the Applicants/Defendants made Tomco pay conduct money. [ 20 ] Jimbob and Mr. Smith argue that costs should be payable in the cause, rather than forthwith. Alternatively, they argue that costs should be calculated based on Column 1 of

Schedule C. [ 21 ] In response, Tomco argues that

summary judgment applications should not result in costs in the cause. Issues [ 22 ] The issues for determination regarding costs include the appropriate column for costs under

Schedule C of the Rules , whether a multiple for costs is appropriate in this case, and whether costs should be awarded in the cause or forthwith. Analysis [ 23 ] The general rule, subject to the Court’s discretion, is that a successful party is entitled to costs payable forthwith: Rules 10.29(1). [ 24 ] In exercising its discretion to award costs, the Court may consider any or all of the following pursuant to Rule 10.33(1): (

a) the result of the action and the degree of success of each party; (

b) the amount claimed and the amount recovered; (

c) the importance of the issues; (

d) the complexity of the action; (

e) the apportionment of liability; (

f) the conduct of a party that tended to shorten the action; and (

g) any other matter related to the question of reasonable and proper costs that the Court considers appropriate. [ 25 ] Further, in deciding whether to impose an amount for costs, the Court may also consider any or all of the following, which are set out in Rule 10.33(2): (

a) the conduct of a party that was unnecessary or that unnecessarily lengthened or delayed the action or any stage or step of the action; (

b) a party’s denial of or refusal to admit anything that should have been admitted; (

c) whether a party started separate actions for claims that should have been filed in one action or whether a party unnecessarily separated that party’s defence from that of another party; (

d) whether any application, proceeding or step in an action was unnecessary, improper or a mistake; (

e) an irregularity in a commencement document, pleading, affidavit, notice, prescribed form or document; (

f) a contravention of or non-compliance with these rules or an order; and (

g) whether a party has engaged in misconduct. [ 26 ] The columns in

Schedule C relate to the amount claimed in an action. Where there is no amount claimed, such as where an injunction was sought as in the present case, Column 1 will apply unless otherwise ordered. [ 27 ] It is not possible to articulate a general principle as to when a higher cost column or a multiple of a cost column should be applied. If a single principle existed, presumably it would be incorporated into

Schedule C: Northland Material Handling Inc v Parkland (County) , 2012 ABQB 586 at para 25 . [ 28 ] Each case is to be assessed on its own circumstances. Relevant factors in this case include complexity, duration, difficulty, cooperativeness of the parties, and the result. The Court must assess matters, and exercise its judgment. [ 29 ] Four factors justify costs in favour of Tomco, payable forthwith.

Further, the circumstances justify costs on a basis that is more than Column 1 simpliciter. [ 30 ] First, Tomco had to address six issues, notwithstanding that only four issues were included in the Application that was filed by Jimbob and Mr. Smith. This required Tomco to take protective steps, notwithstanding that the additional two items requested in the Jimbob Brief were contrary to

section 6.3(2) of the Rules . [ 31 ] Second, the Applicants/Defendants asked the Court to predetermine an injunction application that Tomco has not yet made. That is not appropriate. It is speculative. Except in the most unusual of circumstances, this Court would not render a decision on

whether Tomco has met the test for an injunction before it has filed an application in respect of the matter. [ 32 ] Third, Tomco effectively won on all six issues. While Jimbob and Mr. Smith did concede certain matters, they did not do so until the hearing commenced on April 15, 2015. By that time, Tomco had done all of the work. [ 33 ] Fourth, when a respondent is successful in avoiding a

summary judgment application, costs should not be granted in the cause. That would be inconsistent with the nature of that application, and the results that flow to, and for, the benefit of the respondent. It may be that an application for

summary judgment fails and should not have been brought, but the applicant could ultimately succeed at trial. In such a case, the respondent still has had to incur time and expense to defend an unsuccessful application which was not necessary. Conclusion [ 34 ] Based on the above findings and analysis, I conclude that costs should be awarded under Column 1, at a multiple of 2 times the amounts in Column 1, payable forthwith. The rationale for this award is twofold. First, Column 1 is the appropriate column in these circumstances, as no quantum is claimed in the underlying action.

That is, therefore, the appropriate starting point for costs in this case. Second, the multiple of 2 reflects the fact that the Applicants/Defendants did not accept the concession offered until the day of the hearing, requested an injunction that was premature because it was based on a hypothetical future event, and raised two arguments in their Brief that were not included in their Application. Each of these items imposed an unnecessary burden on Tomco, and that extra burden must be compensated in an appropriate manner. Heard on the 16 th day of April, 2015.

Dated at the City of Calgary, Alberta this 21 th day of December, 2015. Justice D.B. Nixon J.C.Q.B.A. Appearances: F. Franceschi for the Respondents/Plaintiffs G.J. Thorlakson for the Applicants/Defendants